Sudan Cracks Up

South Sudan's Oil Curse
Notes from different corners of the world.
March 4 2011 7:18 AM

Sudan Cracks Up

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Slide Show: Scenes From the Sudanese Independence Referendum. Click image to launch.

JUBA, Sudan—Call it Peter Adwok Nyaba's modest proposal.

As southern Sudan hurtles toward its July debut as the world's newest country, Adwok, a highly respected Cabinet minister who hails from southern Sudan's Upper Nile oil patch, has a simple plan to ensure his homeland's economic security: shut down the oil wells.

This may sound like suicide to a less radical observer of Sudan, given the south's Stone Age poverty and its reliance on oil for 98 percent of its revenues. But to Adwok, the $10 billion of oil revenue that has kept south Sudan afloat in recent years has also made the region a model of corruption and inequality. He would destroy the economy to save it.

"Cut the oil," he says, and he's serious. "It would be good for the country."

Oil has a lot to answer for in south Sudan. Chevron's discovery of oil there helped reignite Sudan's civil war in 1983 after a decade of peace. Amid a conflict of medieval brutality that killed more than 2 million people, thousands of southerners were murdered and more than 200,000 made homeless specifically to make room for the wells that today sustain both north and south.

Southerners watched with envy during the 21-year civil war as their oil funded an economic surge in northern Sudan. Sudan's gross domestic product grew from $10 billion in 1999, when oil exports began, to $53 billion in 2008. Per capita income jumped from $334 to $532 in the same period. Almost all of that growth was in the north. Today, Sudan's north boasts thousands of miles of highways and a giant new hydroelectric dam. The south, meanwhile, has just 60 miles of paved road.

That growth hasn't come without cost. Oil money has warped the north's economy, harming its other exports and leading to sharp inflation and price increases, a phenomenon known as "Dutch disease." Then there's corruption: You know there's an excess of dirty money floating around a developing country when the Hummers and Range Rovers appear, as they have in both Juba and Khartoum. ("It's one thing to have a Land Cruiser," a Khartoum businessman told me. "All the mechanics know how to fix them. But you can't even get parts here for a Range Rover, much less the Hummer. It's all about showing off.")

Still, southern Sudanese are eager for the day when their share of the oil money increases from half to nearly all.

While 75 percent of Sudan's oil wells lie in the currently semi-autonomous south, the pipelines all run north to Port Sudan on the Red Sea. On Feb. 16, Pagan Amum, secretary-general of the south's ruling party, announced that the south would not share oil revenues with the north after its July 9 independence. Instead, he said, the southern government will pay a transit fee for use of the northern pipelines. (Amum didn't provide details, but it's likely the fees will be above the industry average to cushion the economic blow to northern Sudan. Southern oil accounts for more than half the north's budget.)

If the transit agreement represents an important step in Sudan's pending divorce, it also masks the deep mistrust and even hatred with which many southerners regard the north. The Islamist government of President Omar al-Bashir declared the 1983–2005 civil war a jihad; later, it worked to sabotage key provisions of the 2005 peace treaty that ended the civil war. Successive governments in Khartoum, both democratically elected and dictatorships, have perpetrated atrocities on the south.

Peter Adwok Nyaba. Click image to expand.
Peter Adwok Nyaba

That's why Adwok and others are keen to build a new pipeline through Kenya that would cut northern Sudan out of the oil equation altogether.

In Adwok's preferred course of action, South Sudan would cease to be an oil-producing state while the proposed $4 billion Kenya pipeline is laid. (Southern officials say a new pipeline would only be justified by new oil discoveries in the south.) "People would be forced to go back to agriculture to grow cash crops and find more ways of making money," he says. "The oil money doesn't go to development anyway—it all goes to pay government salaries."

What, I asked, would become of Juba's 100,000 civil servants, many of them illiterate, in the south's swollen bureaucracy? "They can dig," he spat. "Grow something."

Adwok is not the average Sudanese politician. He took part in the Anyaya rebellion, Sudan's first civil war, from 1965 to 1972, and held a Ph.D. in geology when, in 1985, he joined the Sudan People's Liberation Army to fight in the second one. He lost his left leg in battle, served as an administrator in rebel-controlled territory, and, in the early 1990s, supported a breakaway faction of the rebel army that tried to unseat its autocratic leader, the late John Garang.

That civil war within Sudan's civil war was a disaster for the southern cause, and it killed tens of thousands. Elements of the breakaway faction took part in clearing parts of Unity state for oil development. Adwok abandoned the mutineers and later wrote a book about that period, The Politics of Liberation in South Sudan. It's a rare political memoir in which the author blames only himself for his errors and their consequences.

Sitting in the front room of his home in Juba, Adwok insisted his oil plan could work, even as he acknowledged there was no chance the government would consider it. "Yes, a government needs money to function," he said. "You can borrow money to get through those two years, and by the time oil returns, you would have a better economy. More diversified. This is what I would do."

It is also what no one else would do. Instead, the south is looking to China, the engineers of northern Sudan's economic ascent, to kick-start their new state. Sudan exports 60 percent of its oil to China, and Sudanese crude accounts for 7 percent of China's annual consumption. The south's wells, pipelines, and transit facilities were all built by Chinese companies. The road signs in the oil areas of the Upper Nile region are written in both English and Chinese.

China's role in Sudan has had its destructive side, of course. Chinese weapons have been used to kill civilians in Darfur, despite a U.N. arms embargo, and China has long been Khartoum's best friend on the U.N. Security Council.

But Beijing and Juba are fast becoming friends. Last August, Anne Itto, the south's agriculture minister and deputy chief of the south's ruling party, delivered a slap to those wary of Chinese influence. "Whether anybody likes it or not, China is providing leadership in the development of developing countries," she told reporters. "They are stepping up. They are funding, particularly in the area of agriculture and exploration of natural resources."

The Chinese offer is a difficult one to refuse: Using untapped oil as collateral, they provide the funding, engineering, and skilled labor for speedy development. These cashless deals leave less room for kickbacks and other corruption, says Deborah Brautigam, an economist at American University and author of The Dragon's Gift. In the end, Mao's children will stand in the way of Peter Adwok's agrarian revolution.

Click here to read a slide show  on the Sudanese referendum.

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