Wednesday, June 22, 2011


Sudan, Africa’s largest country by territory, is at the crossroads. On January 9, 2011 its semi-autonomous South began a week-long referendum to decide whether to remain part of Sudan or secede. For the Sudan Liberation Movement (SPLM), the main party in the South led by Salva Kiir, it is the culmination of half a century of struggle for recognition against successive regimes in Khartoum. By the time fighting stopped in 2005, Africa’s longest war had cost 2.5 million lives and displaced many millions more. The Comprehensive Peace Agreement (CPA) that ended the war set up the semi-autonomous region of South Sudan, to be ruled by SPLM, as well as a Government of National Unity (GoNU) in Khartoum led by President Omar al Bashir. The CPA also mandated a referendum in the South.

At the moment public opinion in the South is building towards independence. According to the latest survey 95 per cent of Southerners voted for secession. There are fears that the North may try to manipulate the results. However chances of electoral fraud are minimal, given that 14,000 Sudanese along with 2,000 observers from the African Union, European Union, United States and China are monitoring the elections. Sudan’s referendum has attracted interest among the international community. The United States and European Union have in the past few months been pressuring the National Congress Party (NCP) government to meet the referendum deadline. China and India, with considerable investments in energy and other sectors in Sudan, are equally keen on a smooth and stable referendum process.
Post Referendum Complexities

One of the crucial issues that would confront Sudan in the post referendum period is that of citizenship. The status of the Southerners living permanently in Northern Sudan is still not clear. Similar is the case of Northerners settled in South Sudan. The likelihood of a new independent state in the South, and also to some extent fears of reprisals in the North, have already led to over 55,000 Southern Sudanese returning to the South ahead of the referendum.

Another crucial area of dispute is over the boundaries between North and South Sudan. The location of oil fields in these frontier areas has intensified the dispute. The oil rich region of Abyei, astride the boundary of North and South Sudan and some 500 miles south of Khartoum, has been the centre of dispute. According to some reports Abeyi accounted for roughly 13 per cent of the country’s total income from oil exports. The NCP government has refused to redraw the boundaries as suggested in the provisions of the Abyei protocol which was signed as part of the CPA. The protocol calls for a simultaneous referendum in Abyei to decide whether the region will be part of North or South Sudan. But the NCP government has stalled this process.

The question of management of natural resources, mainly oil, is another issue that has thrown open several challenges. According to Oil and Gas Journal, Sudan’s proven reserves are estimated at five billion barrels, with the majority of these reserves located in the South. Recent estimates suggest an average daily production of 480,000 barrels a day. More importantly oil makes up over half of the revenue of the Government of National Unity and over 95 per cent of the autonomous government of Sudan.

The CPA called for equal sharing of the revenue generated from the oilfields in the South. However there have been concerns in the South over transparency in allocations. There is no doubt that the North is heavily dependent on the oil wealth generated from the South. These revenues feed the development and economic progress of the North. A substantial number of Northerners are also employed in the oil fields in the South. Unless the two sides come to an agreement, a split would most likely lead to these opportunities and advantages vanishing for the North.

For the South, the dilemma is one of access to the oil infrastructure. Most of the downstream facilities like pipelines, refineries, and storage and export terminals are in the North. More importantly, Southern Sudan is land locked, with the ports needed for export of oil located in the North. Though the Southern Sudan government has been exploring alternative routes through Kenya, these pipelines are uneconomical. It appears that in the short term both North and South Sudan will continue to be dependent on each other for the utilisation of the oil wealth.

To a lesser extent there is the issue of sharing the water resources in the Nile river basin. It appears that North and South Sudan have reached a preliminary agreement to share the Nile waters. However the Nile basin initiative is steeped in controversy with upper riparian states – Burundi, Democratic Republic of Congo, Ethiopia, Kenya, Rwanda, Tanzania and Uganda – on one side and the lower riparian states – Egypt and Sudan – on the other. Egypt in particular fears that an independent South may tilt the balance in favour of the upper riparian states.

Moreover, there are fears that the secession vote might encourage similar demands from insurgents within (Darfur) and outside Sudan (Uganda or Nigeria in particular). Within the region the neighbours are slowly coming to terms with the eventual separation of South Sudan. Finally, the referendum reflects on the relationship of the Asian countries – particularly India with Sudan. With considerable economic and political ties India is caught in the middle.
India’s Predicament

India’s relationship with Sudan dates back to ancient times. Over the years India has developed close ties with Khartoum; however until very recently India had minimal contact with the South. The upcoming referendum has left India in a dilemma. It has substantial investments in Sudan’s energy sector, mainly in the South. ONGC Videsh Ltd (OVL) has invested around $2.5 million in acquiring exploration and production assets in Sudan’s oil sector. OVL’s blocks in Sudan give it approximately 2.4 million tons of crude oil annually.

However for India and OVL in particular the fate of these investments in Southern Sudan is unclear. The first challenge would be that of access; given that most of the oil infrastructure is in the control of the North, much would depend on the terms and conditions worked out between the two sides after the referendum. Another challenge is the possibility of the new Southern Sudan government changing the policies guiding the energy sector and in the worst case scenario, cancelling the contracts.

As India mulls over measures to deal with the challenges of the impending referendum, its strategy to build simultaneous relations with the Government of Southern Sudan (GoSS) since the 2005 CPA may buffer the adverse impact. Over the years India has maintained close political ties with the NCP government. The visit of Indian President Kalam to Khartoum in 2003 sealed the relationship. Subsequently there has been exchange of high level delegations from both sides. However after the political transformation in Sudan in 2005 the Indian government has slowly warmed up to the GoSS. In 2005, the Indian Minister of State for External affairs E. Ahmed led an eighteen member business delegation to Juba. In 2007 India opened a consulate in Juba. Later, in continuation of its traditional policy of supporting human resource development in Africa, India provided training to a group of South Sudanese diplomats at the Foreign Service Training Institute in New Delhi. However, lack of infrastructure, rising food insecurity and health concerns provide India Inc. with opportunity to do brisk business with the new government in Juba.

At the same time India’s generic policy in Africa to build economic ties beyond oil may help in restructuring its relations with North Sudan in the post referendum period. At present the cumulative Indian investment and loans to Sudan are estimated at over US$ 3 billion. Apart from energy India has also been involved in the Sugar industry, thermal power sector and revamping the railways. It appears there over 50 Indian companies including Reliance, Kirloskars, Tatas, Mohan Exports, Angelique International Ltd., Mahindras and L&T are doing business in Sudan. Thus India should utilize this leverage towards improving commercial ties with the North.

However India should be cautious of the great power politics in Sudan. If the South secedes, India should be prepared to accept that its relationship with Khartoum will change. The Bashir government has been constantly engaged by the United States and other European countries in the countdown to the referendum. They have used a carrot and stick policy to pressure the North to meet the referendum deadline. The American desire to contain the rise of China in Sudan has shaped their policy towards Sudan. Moreover there are chances that the US Africa Command might be located in the newly independent South. Hence once the South secedes India should be prepared to face competition from the oil majors and try to avoid repetition of developments in Iraq, where India lost out most of its investments with the emergence of a new dispensation. Moreover India should also accept the continued presence of China in the region. In recent years China has taken steps to safeguard its interests in Sudan by engaging the Southern Sudan government in a big way while at the same time continuing to maintain close relations with the North.

Given the strategic importance of Sudan, it will be in India’s interest to push for a fair and just referendum and influence both the North and the South to respect the outcome of the vote.
India should not be a bystander or simply disguise its interests in the slogan of non-interference
If the South votes against secession, India should push the region’s leadership to uphold the outcome while at the same time urging the North to address the concerns of the South;
If the South votes to secede, India should immediately recognise the government and press the North to respect the outcome.
The South will urgently need infrastructure development should it secede; and will need all possible help towards strengthening its institutions, its capacities to govern, and meeting the development requisites. Indian companies will get an opportunity to invest.
The North needs to be assured of the security of livelihood without the oil wealth flowing from the South. Indian companies should continue their business interactions in the North.
Finally, India should support the decisions and measures suggested by the African Union in the post referendum period.