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South Sudan oil export ban brings self-inflicted pain

- The Washington Times - Tuesday, March 13, 2012

Tribal conflict, financial crisis and a humanitarian emergency are threatening stability in South Sudan, only eight months after the world's newest nation gained independence.

In a dispute with Sudan, the southern government cut off the flow of oil to Sudanese refineries, crippling the economies of both nations in a move that could spark a new conflict. South Sudan accuses its northern neighbor of stealing oil and charging an exorbitant fee to use its pipelines.

South Sudan is now shifting its budget priorities toward social programs and awayfrom infrastructure projects in a country the size of France with less than 100 miles of paved roads.

In the eastern part of the country, hundreds of civilians have died in a renewed tribal conflict that dates back several generations.

South Sudan became independent on July 9. A two-decade war between the Arab Muslims of the north and the black Christians and animists of the south claimed about 2 million lives and ended in a 2005 peace deal. But peace between the two nations has remained elusive.

Ongoing talks in the Ethiopian capital, Addis Ababa, to resolve differences between Sudan and South Sudan over oil and other outstanding post-independence issues have been deadlocked.

South Sudanese President Salva Kiir Mayardit's decision in January to cut off the flow of oil to refineries in Sudan has deprived South Sudan of 98 percent of its revenue. Sudan lost 95 percent.

The potential for instability is high, particularly in Sudan, where President Omar Bashir's government is under international sanctions over charges of genocide in Darfur and support for terrorists.

Last week, the U.N. Security Council expressed "grave concern" about cross-border violence between Sudan and South Sudan, neighboring countries in northeastern Africa.

Unease in military

The decision to shut off the oil has created unease in the top echelons of the Sudan People's Liberation Army, the former rebel movement that is now the South Sudanese military, in the capital, Juba. Those officers are worried that the cutoff of oil could lead to a new conflict with Sudan.

"Some of the army elite are now talking about a coup," said a Western official, who spoke on the condition of anonymity because he is not permitted to discuss sensitive matters with the press.

"The generals don't want another war and will topple the government if that's what it takes to prevent this from happening."

Jennifer Christian, a Sudan policy analyst with the anti-genocide Enough Project, said Lt. Gen. Bashir is losing support in Sudan.

"As Bashir's regime feels more isolated, as his popular support diminishes because of a lack of money in the country, his regime will become desperate and lash out against the south, whether it is by supporting militias, pumping arms into the south or taking over its oil fields," she said.

South Sudanese officials accuse the north of amassing troops near the border and bombarding territories in the south, but they insist that the likelihood of an all-out war is remote.

"We really want to avoid any conflict by all means, but we are ready to defend ourselves if it comes to it," said South Sudanese Vice President Riek Machar.

"The north has its own problems. It is fighting wars on three fronts," he added in a phone interview. "I don't think they can afford the opening of a fourth front."

Sudanese troops are battling militants in Darfur and rebels in the southern border states of Blue Nile and Southern Kordofan.

Austerity measures

The loss of oil revenue has forced South Sudan to announce austerity measures. The government has also dipped into its foreign reserves, but refuses to disclose how much money is in those reserves.

"We can continue like this for 18 months," said Mr. Machar.

Deng Deng Nhial, the top South Sudanese official in Washington, said that since his country is not an advanced economy, "shutting down the oil will not lead to a doomsday."

"In the Bible, it says, 'Man does not live on bread alone.' I would say, 'South Sudan does not live on oil alone,' " he added.

Landlocked South Sudan is now building oil pipelines through Kenya and Ethiopia to reach Indian Ocean ports and avoid shipping through Sudan. However, analysts say these projects will take at least three years to complete and cost billions of dollars.

The southern government also has been forced to readjust its budget priorities from infrastructure projects to spending on health care, education, national security and food security.

The government also will have to raise taxes to make up for lost oil revenue, said Lual Acuek Lual Deng, a former Sudanese finance minister.

The gains from higher taxes would be marginal in a country where 97 percent of the population is unemployed.

"The government will have to reduce its size, and prices will have to go up," said Mr. Deng. But if this situation continues for many months, "people will go onto the streets," he added.

South Sudan's bloated army accounts for a large part of the government's expenditure, but any attempt to trim army salaries will lead to unrest, analysts say.

"A lot of very well-armed men will be very upset if they don't get their salaries," said the Enough Project's Ms. Christian.

The government is also reluctant to cut the size of the army at a time when it faces internal as well as external security threats.

Tribal conflict in east

In Jonglei, the country's eastern and largest state, hundreds of civilians have been killed in a dispute between the Lou Nuer and Murle tribes.

Cattle, the lifeline for the local economy, are at the heart of the dispute as both sides routinely steal each other's livestock.

Over the weekend, Murle cattle raiders from Jonglei attacked the Lou Nuer in neighboring Upper Nile state. More than 200 people were reportedly killed.

In a dangerous development, armed Nuer youths have mobilized under the banner of the so-called "White Army," which also could threaten stability.

The government has deployed its troops in Jonglei to disarm the warring groups. Tribal leaders and analysts say putting a disarmament campaign before peace increases the potential for more bloodshed.

"If the government tries to forcibly disarm the groups, it will result in the killing of many innocent civilians," said Gai L. Ngundeng, a grandson of a prophet revered by the Nuer.

"If they try a forceful disarmament today, they will face the consequence tomorrow. I can take this country to civil war," warned Mr. Ngundeng, who claims to have a large following because of his ancestry.

South Sudanese officials are unfazed by such threats.

"Disarmament is a must," said Mr. Machar, the vice president.

The government has little control in Jonglei, and residents are particularly angry about the lack of development in their state.

"Until now, the government hasn't done any development in our area. How will they go to collect the arms? We don't even have roads," said Mr. Ngundeng.

The violence has displaced thousands of civilians. Fighting in Sudan's Blue Nile and Southern Kordofan has also sent more than 100,000 refugees streaming into South Sudan.

South Sudan was facing a humanitarian crisis even before its government's decision to shut off the oil, said Lise Grande, the U.N. humanitarian coordinator in South Sudan.

"But with the decision to shut down oil production, it has become clear that the humanitarian impact will be hugely significant," she added.

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