South Sudan: Who Will Gain From Expanded Oil Production?

Juba is keen to see the black gold pumping as South Sudan emerges out of a civil war that caused close on 400,000 deaths. DW asked Sudan expert Alex de Waal who stands to gain from expanded oil production.

South Sudan's post-independence civil war meant billions lost in oil revenue. Expanded production is now on the cards as part of a power-sharing peace deal signed in August. The war between the parties to that deal has caused the death of at least 382,900 people since 2013, a studycommissioned by the US Institute for Peace shows.

DW; How realistic is it that oil production will expand in South Sudan?

Alex de Waal: Oil production never entirely ceased, The aim is to expand it to its pre-conflict levels, bringing on stream some of the fields that were shut down in 2012. The security for those oil fields will be provided, in large part, by the government of Sudan. So the former government of the united Sudan and the historic adversary of South Sudan. So this represents in many ways a capitulation of South Sudan to the dominance of its former governing entity of Khartoum and its agenda. In that context, I think its likely that many, but not all of those oil fields, will come back into production. The reason why not all is that some of them, when they were closed down, were already operating at a reduced level with most of their reserves depleted and it wouldn't be profitable for the oil companies to reopen them after six years of them being closed.

What effect will the expansion of oil production have on the stability of South Sudan?

The formular for peace that has been agreed upon, primarily by the government of Sudan and Uganda is that they will essentially share out the material benefits of peace in Sudan between those two governments, with a lesser share going to the ruling elites of South Sudan. So, according to this agreement, Sudan will dominate the oil fields in the north and Uganda will dominate the economy of the capital Juba and the Equatoria in the south. This agreement has potentially the advantage that it can reduce and even eliminate the fighting. Most of the material benefits will not go to the ordinary Sudanese. They will go to the oil companies, to the governments in Khartoum and Kampala and to the elites. It is essentially a share-out of the material benefits and the greatest danger of this is that that type of bargain is only as good as the money keeps flowing and the key players are satisfied with their shares of the pie. If the money dries up - let's say there's a crash in the price of oil or a disruption to the oil supply, or if some of the elites become discontented - then the whole bargain can unravel.

Is it too far-fetched to say that this is not the best plan for South Sudan?

Basically, it is not a peace deal that involves a transformation of the war economy or the structure of politics of South Sudan. It is not partly democratization. It is simply a bargain in a political market between the elites of South Sudan and their neighbors. And so, it is not at all a best plan for peace. However, South Sudanese are so desperate for peace that they will welcome peace - whatever form it takes.

Is it clear how oil revenues will be distributed?

The oil financing is extremely opaque - no one really knows how much money it is and who's getting it. First of all, the government of South Sudan has mortgaged alot of its future oil production by borrowing money from the oil companies at commercial rates. So they are hugely in debt and the oil companies will insist on those debts being repayed. The financial arrangements with Khartoum are not open for public scrutiny, so we don't know what South Sudan will be paying to Sudan for pumping the oil to market and any other charges the Sudanese may put on that. Thirdly, the history of oil revenues with South Sudan is that the great majority of them have either been used for military expenditure or have been stolen by the elites. So, if there's anything left at the end of the day for the ordinary people of South Sudan, I think we can be pretty skeptical that actually they are going to benefit substantially from it.

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South Sudan's Civil War

What is the likely outcome of expanded oil production in South Sudan?

I think its likely that for a brief period we'll see a more stable kleptocracy, a more consensual sharing out of the natural wealth of South Sudan among the leaders. I don't think it is a recipe for stability and peace in the longer term. I think that the basic structure of this violent kleptocracy of South Sudan needs to be transformed. I don't think that is going to happen while the current flows of revenue go directly into their pockets and while the neighboring countries - Sudan and Uganda - have an interest in materially looting the resources of South Sudan and maintaining the current elites in power. I think we need a more transformational change.

This interview was conducted by Eddy Micah Jr.

27.09.2018