The future of the two Sudans

By Aidan Eyakuze

It didn’t last very long, did it? In January, Africa celebrated the successful referendum in which the South voted for independence. Four months later, Abyei, a region nestled between the North and South Sudan was violently “seized” by the North, risking war with the South.

Between the vote for secession and the seizure, a colleague and I reflected on the future of relations between the two countries. We argued that for both, it is time to turn their gaze from a past overwhelmed by war and destruction to a future focused on rebirth and renewal. At the heart of this are two imperatives.

The first is the imperative of securing domestic political legitimacy in which the vast majority of citizens in both countries accept the administrations that govern currently and in the future, as well as the processes that put them in power, as legitimate. On this point, the Khartoum government enjoys significant regime stability due largely to a tight grip on power, near-exclusive control of the means of violence and a political opposition that is not sure-footed. The democratic space has expanded and will continue to do so, driven by the end of the conflict with the South and the ruling National Congress Party needs to forge a new coalition with political rivals in the North in order to stay in power.

The Sudan People’s Liberation Movement’s (SPLM) quest for broad political legitimacy in South Sudan faces much tougher challenges. The perception and reality of Dinka domination of the party and government will have to be faced quickly and squarely. There are few clues to suggest this is happening. The process of transitioning to a permanent constitutional dispensation will also be fraught with difficulty, especially around the question of who will drive it. Relatedly, the strength of President Salva Kiir’s hold on power and ability to lead a fragmented SPLM are under severe pressure. A spirit of pluralism must prevail if the forces of division and the instinct for concentrating power are not to overwhelm the young country if they collide.

The second imperative is that of assuring the economic future of the two countries. A key insight that emerges from looking just at Sudan’s foreign-debt burden, its allocation options and the source(s) of debt-servicing export revenues is that northern Sudan’s economic prognosis looks more precarious than that of South Sudan. As a result of the decision to separate, Khartoum will lose 80% of the country’s proven oil reserves, 50% of government revenues, one third of its territory and 20% of the population.

There are three ways of dividing Sudan’s external debt of nearly $35 billion between North and South, who benefitted from the loans, size of population or size of the economy. Whichever method is used, North Sudan faces an unsustainable external debt burden ranging between $27 billion and $34 billion. In contrast, South Sudan’s debt burden ranges from a low of $0.7 billion to $7.3 billion, which, given the oil reserves it sits on, is deemed sustainable.

This devastatingly counter-intuitive insight implies that Khartoum, which one would expect to be the bigger and stronger economy, is essentially bankrupt, while the new and ostensibly weaker South Sudan has a better international credit rating.

The divergent prognoses for the two Sudans — a politically stable but economically precarious North versus a politically fractious but economically stable South — suggests that the two countries need each other and must consciously forge a deliberate symbiotic relationship with one another. Khartoum needs Juba’s oil revenues in the short term for its external economic viability and Juba needs Khartoum to secure its internal political legitimacy.

Three scenarios are possible for their future relationship.

A collaboration scenario would see Khartoum and Juba crafting and formalising a deep mutual interdependence. Juba would take on more than its “fair” share of the foreign debt in order to qualify for debt relief and on more favourable terms. They would also commit to transporting the oil produced in the South through the pipeline infrastructure in the north. In return, Khartoum would disclose more fully than it is alleged to do at the moment, the oil production levels and attendant revenues to share with South Sudan. They would also work to disrupt any rebel activity against the South Sudan government. The strategy resonates politically in the North since it responds to the opposition’s desire to forge a peaceful accommodation with the South. It receives a hostile welcome from some in the South who question the rationale behind deepening economic interdependence after the bitter fight for political independence. Nevertheless, the outcome is two countries that have separated politically, but deliberately forged a deep and mutually beneficial economic integration.

The competition scenario sees each of the two mutually suspicious countries trying to seal the best deal for them as they negotiate the final status issues. Khartoum’s goal is to minimise its losses while Juba’s is to maximise its gains. Juba lobbies Sudan’s creditors furiously to ensure Khartoum is saddled with the largest possible share of the foreign debt of $35 billion. It also hitches its economic and political future to its southern neighbours by joining the East African Community and securing a deal to build an oil pipeline and transport infrastructure to the Indian Ocean through Kenya. Khartoum knows it has a limited amount of time before the southern oil pipeline is completed. It sucks the existing oil through its infrastructure as fast as possible while understating the true production figures to minimise the revenues paid to South Sudan. Politics in both countries is exclusionary, conducted to the advantage of special interest groups, particularly those involved in the oil and infrastructure-building sectors.

The conflict scenario sees the two Sudans engage in thinly-veiled covert operations each against the other. It starts with the post-referendum talks grinding to an acrimonious halt with each side accusing the other of ill-will and negotiating with malicious intent. Khartoum openly supports anti-SPLM rebels with funds, weapons and information. South Sudan stops oil production and its transport through the northbound pipelines. Juba appeals to the rich countries for financial and diplomatic pressure against Khartoum, including the immediate recall of all official and commercial debt. An open war between the two countries does not break out because neither side can fund full-scale military operations. Instead, the feud settles into a medium conflict located mostly in South Sudan. Regional and international investors flee for their safety, as the country is essentially stillborn.

The wise choice facing both countries leaders is patently clear.

Aidan Eyakuze leads the East Africa Futures Programme for the Society for International Development. He is also a director at Serengeti Advisers, a consultancy based in Dar es Salaam, Tanzania.