South Sudan: Running On Empty?

Two interesting articles on South Sudan.  The first, via The Guardian, provides a humbling look at country and where it has to go:

A new country isn’t a new toy. It isn’t a new computer that you unwrap from its box, all shiny and modern and clean. You don’t plug it into the wall, switch it on and live happily ever after. A new country, almost by definition these days given the long-established hierarchy of states, means quite the opposite: it means that something, somewhere, has gone very badly wrong. A new country is a damaged country, a broken country, a country that is starting again from scratch.

Welcome to South Sudan.

To call it a country stretches the definition somewhat. The government has barely any money. Its authority spreads only as far as it can enforce it (which isn’t far at all, especially during the rainy season when most of the country becomes impassable). Borders, especially with Sudan, remain hazy and ill-defined.

But it has a flag, an anthem, a president and even a place in the United Nations general assembly; urban legend in Juba has it that when South Sudan’s delegation first arrived in New York, panicked UN staffers had to rush out and buy chairs in order to squeeze them in. After their long struggle against the Sudanese regime in Khartoum, the rebels have become the governors.

Their seat, the centre of their limited authority, is Juba, South Sudan’s capital and commercial hub. It’s a basic, low-rise town of cheap buildings and high walls, the paint everywhere cracking under the relentless heat. The main roads are tarmac, but they don’t extend all that far, and even this is a vast improvement since independence day last July, when it was widely (if not exactly accurately) reported that there was just 60km of concrete road in the entire country. This number is a lot bigger now.

Still, big 4x4s are the vehicle of choice for the nouveau riche – the fighters-turned-fatcats and the returning diaspora – and international aid workers, who know that it doesn’t take long for the tarmac to run out. For everyone else, there are minibuses or the ubiquitous boda-bodas: motorcycles that will take you anywhere you want (and sometimes places you don’t) for a few South Sudanese pounds. It is remarkable how clean the boda-bodas are; in fact, how clean all the vehicles are, despite the ever-present dust. Windscreens gleam, bonnets shine, rims sparkle. On every street corner is a young man with a bucket of soap and a pressure hose attached to a portable generator. As every passing truck kicks up another cloud of dust, it’s a Sisyphean task.

Along with the boda-bodas, generators are another constant of life in Juba. The city provides no electricity whatsoever. Every watt must be produced with the aid of loud, smoky motors and expensive diesel. You can’t escape the Juba hum, a constant buzzing in your ear at all times of day and night, except if you stay in a certain cheap hotel, which thoughtfully cuts the power (and the air-conditioning – not so thoughtful) at 11pm every evening. And except if you live, as do most people, out of the centre of Juba; as you head out into the surrounds, the city becomes noticeably poorer, and the generators used more sparingly. This holds true for the rest of the country. The further from Juba you go, the less developed its likely to be.

The plan is to change all this, of course. The biggest reason for the long civil war was that the south was marginalised by the north, which excluded southerners from real political power and used the south’s wealth (especially the oil wealth, when it came along) to fund the opulent lifestyles of Khartoum’s elite, and to buy the quiescence of the citizens of the north with lots of investment and subsidies. The south was an irrelevance.

Now the south is in charge of its own destiny, and so far it’s not going all that well. Sure, the superficial indicators of wealth are present: the glossy new banks, the western-style supermarkets, the overpriced hotels and, of course, those plush 4x4s. But it’s yet to trickle down. Clement, 28, is a boda-boda driver, born and raised in Juba. He’s not happy: “There is lots of money here, but if you want some, you need big friends. Only big friends will give you jobs.” Big friends are people with money and connections, and they are far more important still than education and experience (which anyway is in short supply).

The government, meanwhile, is running on empty itself. More than 90% of its revenues come from oil, and since January it hasn’t pumped a barrel due to on-going quarrels with the north. It’s done its best to try and collect taxes for the first time, and impose customs duties, but this was never going to come close to plugging the gap. For several months, government salaries have not been paid, and all forms of social assistance have been suspended (A notice in the Ministry of Finance and Economic Planning told people who usually received social grants to stop asking for them, as they were becoming “annoying”.)

In theory, this should change soon. A deal was struck with the north in September, and the oil taps are in the process of being switched on. This will bring in lots of new money, which should revive the stagnant economy. First on the agenda is building infrastructure, especially electricity. Without electricity, industry and entrepreneurship are essentially dead. One official from the ministry of finance gave me a great example: without electricity, a man who has cows just has cows. With electricity, a man who has cows can make ice-cream. And everybody likes ice-cream. The second priority is developing agriculture. South Sudan is a vast, sprawling country, most of which is in the lush, fertile Nile river basin. Managed properly, South Sudan could be the bread basket of east Africa.

The one thing the government is not doing is worrying too much about developing its own industry and manufacturing sectors. A flood of cheap imports and skilled labour from neighbouring countries, especially Ethiopia, Kenya and Uganda, has made it virtually impossible for South Sudanese to compete. So they’re not even trying: implicit in their bid to join the free trade area of the East African Community is a recognition that South Sudan is not going to be an industrial or manufacturing powerhouse in the near or medium term. Instead, removing tariffs will merely make the imports even cheaper (and, incidentally, eliminate the government’s only non-oil revenue stream). This is not a problem, says the finance ministry, because eventually South Sudan’s agriculture will be producing enough to export, and the free market will work in their favour.

I am sceptical. Such a gamble requires a strong, visionary leadership that’s willing to put in the necessary hard work to reap the eventual rewards. This doesn’t square with my impression of the current government, which like the country, is still finding its feet. Bureaucracy and red tape are a nightmare, and petty corruption is rife. More damaging is the evident lack of coordination between different ministries, and the lack of defined roles. This leads to infighting and power struggles, and means that actually getting things done is a long, difficult and arduous process. A simple case in point: when South Sudan imposed its oil boycott last year, the president promised to build a new pipeline through Kenya which would free South Sudan of its reliance on Khartoum. He promised to have it up and running in nine months. This was always an ambitious time scale, but it’s been 11 months, and a contract has yet to be signed. If government can’t even make progress on this – a matter of urgent financial and political importance – then how can they be expected to develop the more mundane areas of governance: education policy, say, or rural development?

For now, many of these functions have been delegated in practice to international aid organisations. The UN presence in Juba is huge; it occupies several large compounds, one of which resembles its own small town, albeit one made up entirely of rectangular pre-fabricated containers.

The relationship between the international community and the government is generally friendly, although it has its difficult moments. Earlier this month, a UN official was expelled for writing a report criticising South Sudan’s human rights record. According to every government source I spoke to, the issue was not about whether or not human rights abuses are committed – everyone acknowledges that some soldiers, after decades fighting in the bush, haven’t learned to tone down their tactics – but that the government would prefer not have these abuses pointed out to them.

Granted, all these problems are teething issues. As I said before: a new country is not a new toy. It is damaged goods, and a lot of time and blood and sweat will go into repairing the ruptures of South Sudan’s history.

It was never going to be an easy process, and it was inevitable that after the euphoria of independence the reality of self-rule would be an anti-climax. And perhaps it is too early to rush to judgment. So far, however, independence has not proved to be the panacea that South Sudanese were hoping for. The only difference is that this time there’s no one to blame for their problems but themselves – which, I suppose, is the point.

The second, via China Dialogue, looks at China’s role in helping it resolve disputes with its northern neighbor:

In January, South Sudan’s government brought oil production to a dramatic standstill, accusing its neighbour, Sudan, of charging excessive export fees and seizing oil shipments. A few days later, the head of the major Chinese-led oil consortium was expelled from the country for “non cooperation”. Oil companies, caught by surprise, were forced to close wells so quickly that congealing crude oil risked damaging the pipelines, a Chinese oil executive told Reuters.

An agreement signed by Sudan and South Sudan at the end of September, backed by Beijing, was due to see production resume last week, pulling the two countries back from the brink of war.

China’s role in resolving the dispute has prompted speculation that it is ready to take a more active role in conflict resolution in the war-torn region. But is this really the case? China’s authorities, in fact, appear reluctant, while larger territory disputes between Sudan and South Sudan, combined with internal ethnic conflict, still threaten to take the region beyond the help of intervention.

Chinese diplomacy?

South Sudan – which depends on oil revenues for 98% of its annual budget – broke away from Sudan after an independence vote last July, the culmination of a peace deal forged in 2005. It followed decades of war in which more than 2 million people died. Before the country divided in two, Sudan produced around 500,000 barrels of crude oil per day. The split left 75% of the oil fields in South Sudan and the north in control of a Chinese-built pipeline and port for export. Lack of agreement over how to divide the country’s vast oil wealth has become an inevitable flashpoint.

To keep the oil flowing, China, as South Sudan’s biggest oil investor and consumer (accounting for 82% of its oil exports), has been drawn uncomfortably into the high-stakes conflict between north and south. China’s envoy for African affairs, Liu Guijin, was dispatched to break this year’s deadlock, warning that if the two sides fail to resolve the problem, the “whole region would be affected; the repercussions would be very serious”.

The state-owned China National Petroleum Company (CNPC) led the development of Sudan’s oil industry during the 1990s in what was then China’s first major overseas investment, when raging civil war in Darfur kept most western companies away.

Chinese involvement in South Sudan is newer, but nonetheless crucial to the continuity of Beijing’s oil investments, which are now situated primarily in the south. Other Chinese companies and private entrepreneurs have flocked to Juba, South Sudan’s capital, looking for opportunities in infrastructure and new markets to push their products, along with Indian, Malaysian and other international counterparts.

China also has political reasons for intervening, says Luke Patey, expert on oil investment in the Sudans at the Danish Institute of Development Studies. The government wants to be seen as a responsible player by the international community for “doing their share to build peace alongside other international actors, particularly the US,” he says.

This appears to sit uncomfortably with the cornerstone of China’s foreign policy – non-interference in other countries’ affairs. Deborah Brautigam, expert in China-Africa relations and author of The Dragon’s Gift: The Real Story of China in Africa, said in a recent interview with Voice of America: “Sudan is fascinating because it’s a good example of how China is getting pushed out of its comfort zone in its non-interference policy. You can see that in trying to broker this recent agreement. They’ve had their first special envoy – shuttle diplomacy. The Chinese never did that before.”

Mounting risks, falling returns

The recent oil deal may have soothed international concerns, but the real challenges facing China are framed outside the agreement. “The elephant in the room,” explains Daniel Large, a UK based scholar on China-Sudan relations, are the other conflicts in the border region. “The international community have hoped that China could offer ‘a quick fix’ when really the conflict is down to the two parties involved.”

Final status of the contested oil-rich Abyei state remains unresolved, while on the northern side of the border, rebellions in South Kordofan and Blue Nile states are worsening. In South Sudan, independence has inflamed internal conflicts, with militia contesting the legitimacy of central government, and between ethnic groups, fighting over scare resources and access to political power.  

Heightened conflict has affected oil production and put workers at huge risk. In January, 29 Chinese construction workers were kidnapped in South Kordofan. In an earlier incident in 2008, Chinese oil workers were kidnapped and killed in the same region, sending shock waves back home.

At the same time, oil in South Sudan is no longer as important as it once was to China’s global energy strategy; other regions, such as Iraq and Venezuela, now offer more lucrative opportunities for CNPC. “Oil production in South Sudan was stagnating before the shutdown took place”, says Patey. “What the industry needs now is new discoveries…and also a lot of investment in advanced recovery techniques, water and gas pumping, and horizontal drilling.” But savvy investors are unlikely to step forward in the current climate.

Chinese diplomats also seem to be taking a wait and see approach. The new government in South Sudan, which desperately needs infrastructure, has recognised the necessity of Chinese investment. But an US$8 billion infrastructure package reportedly agreed during South Sudan president Salva Kirr’s state visit to Beijing in April notably went unconfirmed by the Chinese government.  

Set against these concerns, however, is the symbolic importance China attaches to the region: Sudan is one of the Chinese Communist Party’s longest standing allies in Africa and the first site of China’s “go out” policy. Every Sudan-watcher chinadialogue spoke to stressed that this status is likely to ensure China takes a long-term perspective and holds out for more peaceful times.

Environmental and human impacts of oil investment

Even if China gets what it wants – oil pouring out of the country – the environmental and human impacts of oil activities in the region still raise huge concerns. The end of civil war may have stopped the most egregious human rights abuses, the massacres and displacements, associated with oil activities. But significant problems remain, according to Leben Nelson Moro, from the University of Juba. Continued property destruction, land expropriated without compensation and massive environmental damage is serving to fuel local resentment towards oil companies, also seen complicit in the abuses committed during the war.

The extent to which companies act responsibly will, say observers, depend on the strength of local laws. The vast savannah ecosystems and swamplands of South Sudan – home to elephants, giraffe, water buffalo and which hosts the migration of Kob antelopes – are particularly vulnerable in the face of renewed oil activities. “Chinese companies will follow suit on the government’s lead,” says Dana Wilkins, campaigner at Global Witness, which is preparing to release a report analysing South Sudan’s oil laws.

“Just look at CNPC at home,” says Patey. “They’ve been involved in major environmental disasters in the past 10 years: oil spills into Bohai Bay, gas spills in rivers, a huge gas explosion that killed people in 2005. So how these companies operate at home does not bode well for how they will operate in Sudan and South Sudan if there is no strong regulation from the government there.”

This entry was posted on Monday, November 26th, 2012 at 4:22 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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