Sudan: Oil Crisis – Extortion and Misappropriation Are Not ‘Negotiations”

Accused war criminal Al-Bashir

A crisis that has been months, indeed years in the making has come to a head with the decision by the sovereign nation of the Republic of South Sudan to shut down all Southern oil production in the face of continuing extortion, theft, and misrepresentation of oil production and oil revenues by the Arab minority regime in Khartoum. Predictably, the international response takes the form of urgent pleas for Khartoum and Juba to “compromise.” But this urgency should have been evident months ago, certainly when Khartoum first cleaved to a preposterous transport fee of $32 per barrel of crude oil (subsequently raised to $36 per barrel). This is not a negotiating starting point; indeed, it is the opposite of negotiation: with such a demand Khartoum is creating such a vast gulf between a reasonable starting point and what might actually be negotiated as to make those negotiations impossible.

And yet, unilaterally, Khartoum has imposed this massive transit fee–without even a remote parallel anywhere else in the oil-transport world—and applied it retroactively to all oil that the South has shipped to the terminal at Port Sudan on the Red Sea. Here it is important to recall that the regime’s machinations have been multiple and complex: they include seven years of manipulating figures for oil revenues and production, costing the South hundreds of millions of dollars; over-pumping wells in the South in ways inconsistent with maximum lifetime production; drilling horizontally from northern wells into reserves in the South—and the list goes on. Most recently Reuters reports that Khartoum is selling Southern crude at a steep $14 per barrel discount as a way of accelerating purchase.

Despite the clearly articulated declaration by Juba that it would be compelled to shut down Southern oil production if Khartoum insisted in “negotiation” by extortion and outright theft (a number the details of this theft have been confirmed by oil companies operating out of Port Sudan. In announcing formally the decision of his government to shut down production and commit to a new pipeline running south to the Kenyan coast, President Salva Kiir specified just what had occurred to prompt this final decision:

“I am here today to brief this august house about the current crisis in our oil industry. The crisis has reached a stage that is unacceptable. On the 6th of December 2011, the Minister of Finance of the Republic of Sudan informed our Minister of Petroleum that based on their Petroleum Transit and Service Fees Act of 2011, as from 25 December 2011, all shipments will be allowed to leave Port Sudan only after paying fees amounting to 32.2 dollars per barrel. Immediately following this warning, they proceeded to block four ships with 3.5 million barrels of Dar blend from sailing out of Port Sudan. They have further prevented four other ships from docking at Port Sudan. These ships have purchased 2.8 million barrels of Nile and Dar blends but are unable to collect their purchases. To date, these eight vessels remain under the control of the Government of Sudan with oil worth 630 million dollars.”

“In addition to this, they have forcibly taken another 185 million dollars’ worth of oil. In total, the revenue that the Government of Sudan has looted since December amounts to approximately 815 million dollars. Furthermore, they have completed constructing a tie-in pipeline designed to permanently divert 120,000 barrels per day of South Sudan oil [to refineries in the north] …. ” (Statement to the National Legislature of South Sudan on the current oil crisis, January 23, 2012)

But while the move toward this decision has been in evidence for months, only now are the AU, the UN, and the U.S. responding—and predictably (certainly predictable for Khartoum) the pressure is almost equally on both countries. And, in a despicable conflation of issues, both the UN Secretary-General and the U.S. special envoy Princeton Lyman are linking the humanitarian crises in Blue Nile and South Kordofan to resolution of the oil dispute:

“South Sudan and Sudan could face a ‘major humanitarian crisis’ if they fail to solve a running oil dispute, a top U.S. envoy [Princeton Lyman] said Sunday [January 29, 2012] as African heads of state converged on Ethiopia’s capital for an African Union summit.”

This is simply outrageous: Khartoum militarily seized Abyei (and its Diffra oil production site) on May 21, 2011, immediately creating an urgent humanitarian crisis for the more than 100,000 Dinka Ngok who were forced to flee to the South. On June 5 Khartoum began its assault on South Kordofan and the Nuba people, all in the name of suppressing the Sudan People’s Liberation Army-North. Atrocity crimes and violations of international law were rampant. Ethnic slaughter, aerial bombardment of civilians and civilian agriculture, and the denial of virtually all humanitarian access have been the hallmarks of this brutal campaign. The international reaction to both these military actions by Khartoum was feeble and disingenuous. Predictably, Khartoum then launched yet another military assault, on Blue Nile, beginning September 1; this assault has followed the same pattern of massive civilian displacement, relentless aerial bombardment, and virtually total collapse of the critical fall sorghum harvest. And again, all humanitarian access to civilian populations is being denied by Khartoum, even for assessment purposes.

This—not the failure of Juba to yield to an extortionate deal on oil revenues—is what has created the massive humanitarian crisis in the border regions. These are the actions that have already taken a great many civilian lives, and will continue to take more lives as people begin to starve or die from malnutrition-related causes in ever greater numbers.

The scale of this rapidly growing humanitarian crisis has become steadily more apparent over the past half year; we know that many hundreds of thousands of civilians in Blue Nile and South Kordofan are in desperate need of food. The Famine Early Warning System Network (FEWS-Net) has since December been predicting famine-like conditions soon in the Nuba Mountains of South Kordofan and much of Blue Nile; in early October the UN’s Food and Agriculture Organization declared that the harvest in Blue Nile would “largely fail.” And yet the reaction of the international community was slow, diffident, and unjustifiably skeptical of evidence that was rapidly accumulating. Only now are some actors of consequence finally acknowledging what is at stake in civilian lives.

But to connect this vast, ongoing humanitarian crisis to the economic crisis created by Khartoum’s intransigent, extortionate, and duplicitous negotiating behavior is an outrage. Instead of condemning this identifiable theft and misappropriation, the AU, UN, U.S. and UK have all put pressure on Juba to accommodate Khartoum’s behavior, trying simply to compel a deal, whether fair or not. This is diplomatically grotesquerie. At the very time that Khartoum’s military aircraft continue their deliberate attacks against civilians in northern Sudan, as well as refugee camps and refugee gathering points in South Sudan, the regime is being accorded an unencumbered negotiating position in Addis Ababa. Indeed, there are some voices, even among journalists reporting from Addis, that would seek to make this a matter of Southern intransigence in refusing to accept an oil deal that is unfair and illegal.

The leaders of the noble South see this international accommodation of Khartoum, and realize that there will never be any meaningful pressure on the regime to honor any agreement it might make about the future of oil revenues, transit fees, port fees, etc. The leaders in the South and in the border states of northern Sudan see that even as Khartoum is creating a vast military encirclement of the Nuba Mountains, even as its artillery fire has blocked a choke-point for civilians fleeing South Kordofan, the world says nothing and does nothing to change the thinking within the regime. How likely is it, they ask, that the same international community—now expediently pressuring them to avert war by making a conspicuously unfair deal—will serve as guarantor of the terms of any agreement reached? To ask the question is to see all too clearly the answer.

To be sure, Khartoum has bowed to pressure from Ethiopia’s Meles Zenawi and others, and has released three ships loaded with South Sudanese crude. But this is a gesture—perhaps significant, perhaps not—that does not address the fundamental problem of Khartoum’s attitude toward the issue of oil revenues through transit fees. Nor does it rectify the losses incurred by the South, coming to many hundreds of millions of dollars beyond the cargo of these ships. Presently, Khartoum continues to calculate, unilaterally, what it is “owed” by the South on the basis of a $32 per barrel transit fee. And again, this figure is simply extortionate and serves no meaningful purpose in true negotiations of a reasonable transit fee. Its only logic is that it would afford Khartoum the means to close the yawning gap in this year’s national budget.

Diplomacy based on “moral equivalence” is doomed

The crises in Sudan cannot be addressed from a posture of “moral equivalence,” one that sees the political, diplomatic, and moral equities of the two parties as somehow equal. And yet this continues to be the pattern—one reason that the north/south civil war lasted as long as it did. A recent piece by AU advisor Alex de Waal in The New York Times (January 24, 2012) offers a glaring example of just such specious equivalence, focusing on the crisis in negotiations over oil, but with a tendentious elision of key facts.

In one sense, what we are seeing is a reprise of the international response to the dispute over Abyei, in which again an intransigent Khartoum first refused to allow the stipulated self-determination referendum in Abyei—this followed excessive high-level U.S. pressure on Juba to “compromise”—and then shortly before Southern independence, Khartoum simply ignored the terms of the Abyei Protocol and the findings of the Permanent Court of Arbitration (PCA; The Hague, July 2009), and brought overwhelming military force to bear in seizing the region. Abyei is deeply important to the South historically and a fertile region that, even as geographically attenuated by the PCA, is almost the size of the state of Connecticut.

Why should the South put any trust in those who betrayed them on Abyei, refused to respond to the well-documented atrocity crimes in South Kordofan, and have refused to compel Khartoum to allow humanitarian relief corridors for many hundreds of thousands of displaced and highly distressed civilians. The UN High Commission for Refugees (UNHCR), which confirmed the recent (January 23) aerial attack on the refugee staging point of el-Fog (Upper Nile, South Sudan), and declared itself “alarmed,” nonetheless can’t even bring itself to name the attacking aircraft as belonging to Khartoum’s Sudan Armed Forces—the only force in the area with offensive military aircraft. Khartoum of course simply denies that it was responsible, and there the matter rests—except for those attacked. Seeing itself so timidly accommodated, Khartoum has, unsurprisingly, been yet further emboldened. Aerial attacks on the sovereign territory of South Sudan, going back to November 2010, now number twenty-nine (www.sudanbombing.org). There were two attacks in Raja County, Western Bahr el Ghazal on December 28 – 29, 2011; a spokesman for the South reported that 40 people had been killed in these attacks. There was another attack on Khor Yabous, which has received almost no news attention, except from the BBC (January 24, 2012):

“Upper Nile’s Information Minister Peter Lam Both did accuse Sudan of carrying out another air raid in the state on Sunday [January 21, 2012]. He told the BBC that three people were killed and four wounded in Khor Yabous, near the border with Sudan. He also said South Sudan’s army had fought off an attack by militias around this time.”

Moral equivalency finds yet another form in the assertion that Juba and Khartoum are somehow equally responsible for proxy forces operating in one another’s territory. But while we have very substantial, indeed compelling evidence from the Small Arms Survey of weapons shipments by Khartoum to Southern renegade militia forces, there is no comparable evidence that Juba is doing the same in either South Kordofan or Blue Nile. This is not to say that there is no such assistance, though the consensus of regional observers is that Juba’s support is more of the moral than the material sort. Rather, it is highly improbably that significant quantities of either men or materiel are moving from the South into the conflict regions. Notably, there is no evidence that weapons captured by the SAF from the Sudan People’s Liberation Army-North (SPLA-N) have their origin in the South, and we may be sure that if such evidence existed Khartoum, would immediately exploit it for maximum propaganda effect. Sheer repetition of the charge of Southern assistance to northern rebels has translated into the view that something has actually been established. This is misguided.