Sudan, South Sudan Still Far From Deal - Wall Street Journal

By NICHOLAS BARIYO

KAMPALA, Uganda—Sudan and South Sudan appear far from a deal that would allow resumption of oil output, after Khartoum rejected on Tuesday an offer for what its neighbor would pay to transport crude through its borders.

The moves come as the two countries continue negotiations in Ethiopia, in an attempt to find a solution to a continuing feud that has led to armed border clashes and crippled both economies. A deadline of Aug. 2 has been set by the United Nations, after which sanctions may be imposed on both countries, which are already struggling with the loss of billions of dollars in oil revenues.

South Sudan has offered a range of concessions in its latest proposal, including an increase in the amount it is prepared to pay to transport its oil through Sudan for export and a write-off of billions of dollars in debt. But Sudan's government spokesman Rabie Abdelaty called the proposal "useless" without a deal on security at the shared border, where Sudanese troops are battling rebels allegedly backed by its southern neighbor.

South Sudan is willing to increase its offer on oil transit fees from less than $1 a barrel to as much as $9.10 a barrel, still less than $36 a barrel being requested by Sudan.

"Now isn't the time to discuss oil, even if they offered $40 a barrel in transit fees," Sudan's Mr. Abdelaty said.

A South Sudanese official at the country's Information Ministry said the rejection is in "bad faith" and underscores Khartoum's unwillingness to co-exist peacefully with an independent South Sudan state. "The hard-liners in Khartoum don't want peace, they are trying to squeeze us economically," he said.

South Sudan seceded from Sudan last July, creating the world's newest nation, but the neighbors are still working out how to share oil revenue and define borders. South Sudan in late January shut down its production of roughly 350,000 barrels a day, plunging itself into an acute foreign-exchange shortage and threatening its viability.

Sudan, which used to rely on oil-export earnings for the bulk of its foreign revenue, is also feeling the pinch of shrinking foreign-exchange reserves, leading to steep prices of imported goods.

"Unless a deal is struck in Addis Ababa … then the South will need to move extremely rapidly to create a credible plan for export to the south," such as Kenya or Tanzania, said Eric Reeves, an independent researcher on Sudan. "Indeed, they should have done this urgently in January when they shut down oil production."

Mutrif Siqqiq, spokesman for the Sudanese negotiating team, said the Aug. 2 deadline doesn't mean the "end of everything."

"That deadline doesn't mean that the two parties have to halt the negotiations, but it means to show the keenness and to put the two parties in the right track on the thorny issues," Mr. Siqqiq said.

Sudan accuses its southern neighbor of backing rebels in the restive states of Darfur, South Kordofan and Blue Nile. South Sudan denies the charges, and over the weekend it accused Sudan of launching fresh aerial bombardments within its territory. Both governments dispute the precise position of the 1,120-mile shared border.

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