Sudan Conflict Puts China In A Bind

Southern Sudan and Sudan proper got a bit of a wholesale slap this week. The UN Security Council said to both North and South to stop it, right now, and to sit down and resume talks chaperoned by the African Union – again.

Everyone has told everyone repeatedly to sit down and talk with limited success to date – hence the de-facto war situation. What made this latest admonishment slightly different was that there was an ‘or else’ contained in the UN Security Council resolution, too: the threat of sanctions against both countries. And both China and Russia have eventually come round to backing the resolution, too.

I expect Sudan and Southern Sudan to make some conciliatory noises, although I am not sure how far even the threat of sanctions will motivate anyone. At this stage, both countries seem determined that they have very little to lose, and everything to gain. There are many dimensions to this complex conflict and president Bashir’s figures of speech invoking a slave holder relationship with the South were a truly chilling reminder of its ethnic facets. But the economics of it play a key role – alongside Bashir’s political survival.

Khartoum should have prepared the country for the loss of the bulk of its oil revenues: the referendum on the secession in 2011 was included in the 2005 Comprehensive Peace Agreement. But this is a massive challenge even if a government acts in good faith. Khartoum may have been churning out news about new investment projects, ramping up gold production, diversifying the economy, new investments from the Middle East – but it takes time, a lot of time, to diversify an economy that has been heavily dependent on oil for so long.

And Sudan’s periphery is fragmented: the different rebel groups in Darfur, South Kordofan and Blue Nile State have recently formed an alliance. Khartoum is pushing ahead with the implementation of the Doha peace agreement for Darfur, but not all rebel groups have signed up to it. Fighting continues – and Khartoum might not have the one thing that could nudge this along: money. The government had been criticised for not making the USD200m available for the Darfur Regional Authority. This stood out for me: Of course it is difficult such a cash-strapped country to find money – if Khartoum asks ministers and civil servants to donate part of their salary to the ‘Campaign for Repulsion of Aggression’, then it will struggle to find a spare USD200m and keep prioritising expenditures for the military and allied militia.

In this scenario, and given the fact that the US still haven’t lifted the sanctions against Sudan as a state sponsor of terrorism, how much does the new threat of sanctions really matter to a regime that is hanging by a thread?

Southern Sudan’s economy has obviously been heavily affected by the decision to shut down oil production. The budget had to be revised, the South is grappling with fuel and dollar shortages, supplies from the north have been cut off as Khartoum has declared any cross-border transports ‘smuggling’. I have some sympathy for this gutsiness. Southern Sudan thought that they were getting so little for their oil that they might as well leave it in the ground for a few years. However, Southern Sudan may have also overreached with the Heglig invasion: it went down badly internationally, even if there are legitimate reasons to challenge which country the territory belongs to. I assume that Southern Sudan has been given some international backing (and promises of budget support) by members of the international community to halt oil production, so you could argue that it would not be in their best interest to disgruntle them. But then Southern Sudan has a long tradition of being the underdog: the country has fought for decades against a better equipped northern army. So why not go back to the bush and do it again?

In the current situation, I doubt that if left alone, north and south would pursue peace rather than war. The EAC has postponed its decision on Southern Sudan’s membership, but the South has become part of the regional economy: Kenyans and Ugandans are heavily invested next door, and Kenya’s Northern Corridor and LAPSSET plans are based on giving Southern Sudan access to a seaport and generally creating trade routes – crucial for the South’s economy, but far more viable if the South is at peace (and helped, obviously, by a more peaceful Somalia).

Uganda’s military have recently said that they were ready to back Southern Sudan’s fight: an extremely risky scenario that threatens to have wider regional implications. China is bound to be a key factor in this scenario as it is a major buyer of Sudanese oil. This is now Southern Sudanese oil and after a long, close, supplying-weapons-to-fight-the-South relationship with the North, making new friends isn’t easy. To make friends with the South, China will have to spend. But that won’t pacify desperately broke Khartoum and dissuade it from fighting – and how much money does China have left to commit to Sudan if there’s very little oil left up North? Unriddle me this.