South Sudan referendum complicated by oil revenue

The South Sudan referendum will likely end in an overwhelming vote for independence, but Sudan is reluctant to give up claims to southern Sudan's oil wealth.

I have visited Juba twice this year. The second time President Omar Bashir – a man on the most wanted list of the International Criminal Court in The Hague – was in town for the celebration of the Comprehensive Peace Agreement and I was quick enough on the draw to take this picture. My Sudanese companion was seriously unhappy with my photography. The SPLA may have turned into a functioning ruling party in south Sudan, but it still roams Juba like a rebel army and the reasons for that are no secret.

President Bashir made a speech in Juba where he said that if the South elected for independence this January, during the South’s planned referendum, he would be the first to congratulate President Salva Kiir. It was hardly reported anywhere but I heard him loud and clear. I remember turning to my companions, all of whom were in the government of Southern Sudan. They were unimpressed.

“Aly-Khan, we are Bashir's back garden,” one of my companions said. “We have most of the wealth.” They certainly have most of the oil, an estimated 80 percent of proven reserves, and they are taking a haircut on their share in the current 50-50 split of oil revenues. “Now how does someone agree to just letting their back garden go?”

If this referendum is held on time, this election will register something like a 97 percent vote for independence. This will be an actual example where a 97 percent outcome was not a figment of the imagination (as so many 90 percent votes are), but the real deal. There can be no doubt where this vote is going, and how real the public sentiment is for independence. The folks in Khartoum would have to be completely deluded to believe there is any chance of any other outcome.

For the international community, Sudan’s referendum, and its outcome, are matters of serious concern. China gets 7 percent of its global oil supplies from Sudan. They have been big investors in the oil business, and close partners with the unified government in Khartoum. It is surely not in their national interest for this supply to be disrupted or discontinued. The United States, which brokered the Comprehensive Peace Agreement in 2005, is seen as the guarantor of Southern Sudan, for all practical purposes. But the North and South see different things in the same document. The South sees liberation in the referendum. The North was led to expect reconciliation, closer cooperation, and an eventual renaissance for Bashir, in the way that Libya’s once-shunned President Qaddafi received in the past decade. Instead, Bashir got caught up in a new conflict in Darfur, a conflict that led to his indictment on war crimes by the International Criminal Court. Rapprochement was over before it had gotten started.

So now we find ourselves fast approaching the vote in January. President Kiir is reported to see the vote as “sacred.”

“We see this timing as sacred,” he said at the International Peace Institute in New York. “There is a risk of a return to war in case of delay or denial of this exercise, and it would be on a very massive scale.”

It is no great secret that both sides are prepared for war.

Salva then said, “We have fought enough. We have seen war is no good. We are genuinely willing to negotiate with our brothers in the north. It is in our interest that the north remains a viable state. But it is unfair to expect Southern Sudan to make all the compromises, that we should be expected to buy our freedom.”

And there you have it.

Inflexion points often occur when we least expect them. It seems to me that both sides need to be persuaded that it would be a win-win solution if history were to remember Bashir and Kiir for finally leading their peoples to prosperity and not to war. Make no mistake: Sudan is a pot of undiscovered gold in this 21^st century. The migration in the South is bigger than that more famous one in the Serengeti and the Masai Mara.

I flew in a helicopter and the maps my hosts were using were from 70 to 80 years ago. The prize is an enormous one and a great deal of it is in Khartoum's “back garden.”

Will it be war?

-- Aly-Khan Satchu is an investment banker who blogs at Rich Management.