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An oily triangle: Relations between Sudan, South Sudan and China

18th February 2011

By: In On Africa IOA

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On 9 January 2011, the Republic of Sudan went to vote in a landmark referendum that would ultimately result in the landslide decision by a largely Christian South Sudan to secede from their northern Muslim countrymen. After over two decades of civil war, these two nations have finally made good on the promises made in the 2005 Comprehensive Peace Agreement (CPA).(2) However, many issues are yet to be discussed, most importantly the distribution of oil wealth, now that the bulk of the Sudanese oil fields are found in what will become South Sudanese territories.(3) This article aims to discuss the triangular relationship between Sudan, South Sudan and the People's Republic of China, focusing on the division of land, oil resources and Chinese financial investments.

The big vote

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The signing of the CPA in 2005 not only brought to an end to the 21-year civil war in Sudan, but gave the Christian south a high degree of autonomy for a period of six years, an equal share of the oil revenues produced from the oil fields, followed by a choice in the year 2011 to either unite with the north, or secede completely.(4) In October 2010, the decision was made that the south would hold a referendum to let the people decide once and for all.(5) The referendum, held in January 2011, resulted in a staggering 99% of South Sudanese voters choosing secession.(6)

Sudanese President Omar al-Bashir announced on 7 February 2011 in Khartoum that he accepted the preliminary outcome of the referendum, and would thus respect the choice of the southern Sudanese and further intended maintaining good relations between the two nations.(7) It is now the task of the Khartoum-based National Congress Party (NCP) and the Juba based Sudan Peoples’ Liberation Movement (SPLM) to work out the finer details of this decision, such as issues of citizenship, security, border demarcation and the sharing of oil wealth.(8) The last is most important, given that both states rely heavily on oil revenue.(9)

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Contested lands

While the referendum as to whether South Sudan should secede ran smoothly and was considered internationally to have been a resounding success, a separate, simultaneous vote failed to take place.(10) This vote entailed the decision by the Abyei region to either join the South, or remain united with Khartoum. This referendum was postponed indefinitely after disputes between the NCP and the SPLM failed to determine who exactly would be eligible to vote, but the SLPM insists that Khartoum has refused to allow this referendum to take place due to the fact that Abyei, which is described as being the bridge between the people of the north and south, is an oil-rich region.(11)

The region is home to two separate ethnic groups, namely the northern Misseriya nomads and the southern Dinka Ngok who have historically co-existed peacefully.(12) Issues have arisen due to the fact that the land of the Abyei area falls under the territory of South Sudan and the people of the Dinka tribe, like most other southerners, wish to secede.(13) The northern nomads oppose this decision for fear of being deprived of their agreed grazing rights in the fertile southern lands and reliable water sources that prove a vital lifeline during the dry season,(14) and their lifestyle being hindered by the erecting of fences demarcating a state borderline.

Prior to the January referendum, clashes between the two tribes erupted amid whispers of the involvement of Khartoum-funded mercenaries, aimed at provoking the south to war.(15) Scholars at the University of Sudan noted with disdain however, that it seemed that political parties have simply begun to use these two communities to fight their political wars.(16) Regardless, a UN Security Council Special report on the situation in Sudan in early January 2011 revealed that the abilities of UN peacekeeping patrols had been restricted by both tribes, thus making it increasingly difficult to effectively prevent the further outbreak of conflict.(17)

China - the big brother with deep pockets

As is a recent characteristic among most African economies, China is responsible for a great deal of trade in Sudan, with an estimated 58.29% of all exports from Sudan in 2009 being destined for China.(18) However, trade is not Sudan’s only dependence on China. The China National Petroleum Company (CNPC) is a Sino state-owned entity that owns at least 40% of the Sudanese Greater Nile Petroleum Operating Company (GNPOC).(19) China was willing to invest in the Sudanese oil industry at a time when other less patient states preferred to look elsewhere, and so China constructed the infrastructure necessary for the development of a fully fledged crude producer, including cross-country pipelines, two fully equipped marine terminals in Port Sudan, as well as various road and rail projects.(20) These projects were all completed with the understanding that China would then receive preferential access to the Sudanese oil market.

However, independence will hand control of over 80% of Sudan’s oil production to the South, given that the bulk of the Sudanese oil fields are geographically situated in the southern part of Sudan.(21) Historically, relations between China and South Sudan have been strained, with many Government officials declaring China a primary enemy of South Sudan due to their long support of President Bashir.(22) Recently, things have had to change. Beijing has begun fostering good relations with Juba that seem to strengthen with each passing day. In 2007, First Vice-President Salva Kiir assured Beijing their oil investments would remain secure after the planned secession and Beijing reciprocated with a promise of hydro-electric and infrastructure construction.(23)

However, this friendliness should not be mistaken for an effort by South Sudan to continue relations with China, because the north and China are trade partners. Opinion has changed due to the fact that South Sudan is forced to make use of the Chinese built pipelines and terminals in order for their crude to reach the market.(24) As it stands, South Sudan has no infrastructure to exploit its crude resources without the use of Chinese-built infrastructure of pipelines, export terminals or refineries.(25) Without the Chinese, South Sudan would simply have a (large) puddle of oil and nothing to do with it.

In the interests of oil

In a speech made to the public days before the referendum, President Bashir declared that what was between the people of the north and the people of the south was more than what was between any other neighbouring countries.(26) Bashir was referring to oil. Before the referendum, all oil revenues were equally split between Sudan and the autonomous South. Khartoum is reliant on these revenues for at least 60% of its annual budget, while the southern Juba budget comprises 98% oil revenue.(27) According to the CPA, revenues will continue to be split equally between the two nations until South Sudan’s formal independence is declared in July 2011, and thereafter negotiations will be entered into. It is highly likely that this equal split will continue given the fact that the South is reliant on Khartoum pipelines and export terminals.(28)

While China would have most likely preferred for Sudan to stay united, as shown by its pledge to further assist the strengthening of unity,(29) it has quite effectively shown support, promising to cooperate with both the north and south in an effort to seek mutual benefit, regardless of the outcome of the referendum.(30) Noting the move as an important step towards lasting peace,(31) China reiterated its commitment to development and sustainability of the African continent.

While the referendum and split of the state of Sudan has required that China’s policy become more flexible(32) with regards to the production and supply by the African state, one should remember that China has already invested large quantities of capital into the development of the exiting oil resources. Sudan may account for only 6% of the overall crude requirement in China,(33) but the Asian leader cannot afford to just squander its investment. It is thus in China’s interest that Sudan splits peacefully.

Concluding remarks

Oil is the main connection linking relations between Sudan, South Sudan and China. Despite the initial wishes of China and Sudan, South Sudan has chosen the path of independence and both states have little choice but to assist this new nation to find its feet. Similarly, China and Sudan would have preferred Sudanese unity, as oil supply would not be interrupted and investments would have remained sound, with as little disturbance as possible, not to mention Khartoum would still be in control of some of the richest resource regions on the African continent.

However, this is not to be so. Come July 2011, South Sudan will become the 193rd internationally recognised state in the world, and will be faced with an array of issues it has never before encountered. Most importantly, it is in the interest of all states involved to ensure a smooth and peaceful transition. No one can afford for Sudan to burn.

NOTES:

(1) Contact Megan Erasmus through Consultancy Africa Intelligence's Asia Dimension Unit (asia.dimension@consultancyafrica.com).
(2) BBC News, ‘Sudan Country Profile’, 13 January 2011, http://news.bbc.co.uk.
(3) Davidson, W. & Cohen, M., ‘UN's Ban seeks talks on dividing Sudan's oil wealth amid vote on secession’, Bloomberg, 30 January 2011, http://www.bloomberg.com.
(4) CIA World Factbook, ‘Sudan’, 1 February 2011, https://www.cia.gov.
(5) International Crisis Group, ‘Preventing Implosion in Sudan’, January 2010, http://www.crisisgroup.org.
(6) ‘Sudan announces referendum preliminary results’, Sudan Tribune, 2 February 2011, http://www.sudantribune.com.
(7) ‘Al-Bashir accepts South secession’, Times Live, 7 February 2011, http://www.timeslive.co.za.
(8) ‘Sudan leaders working together: Mbeki’, Times Live, 1 February 2011, http://www.timeslive.co.za.
(9) Hamilton, R., 2011, ‘Sudan Referendum: Will oil keep the peace?’, Pulitzer Centre, http://pulitzercenter.org.
(10) Garang, N. A., ‘South Sudan accuses Khartoum of “unjustifiably” holding Abyei’, Sudan Tribune, 4 February 2011, http://www.sudantribune.com.
(11) Ibid.
(12) Ibid.
(13) Ibid.
(14) Hamilton, R., ‘Abyei, Sudan – The next civil war?’, Pulitzer Centre, 24 January 2011, http://pulitzercenter.org.
(15) Garang, N. A., ‘South Sudan accuses Khartoum of “unjustifiably” holding Abyei’, Sudan Tribune, 4 February 2011, http://www.sudantribune.com.
(16) Ibid.
(17) Hamilton, R., ‘Abyei, Sudan – The next civil war?’, Pulitzer Centre, 24 January 2011, http://pulitzercenter.org.
(18) CIA World Factbook, ‘Sudan’, 1 February 2011, https://www.cia.gov.
(19) ‘Investing in Tragedy: China’s Money, Arms and Politics in Sudan’, Human Rights First, March 2008, http://www.humanrightsfirst.org.
(20) Ibid.
(21) Davidson, W. & Cohen, M., ‘UN's Ban seeks talks on dividing Sudan's oil wealth amid vote on secession’, Bloomberg, 30 January 2011, http://www.bloomberg.com.
(22) ‘Investing in Tragedy: China’s Money, Arms and Politics in Sudan’, Human Rights First, March 2008, http://www.humanrightsfirst.org.
(23) Ibid.
(24) Ibid.
(25) Vertin, Z., ‘Now the real work begins in Sudan’, International Crisis Group, 24 January 2011, http://www.crisisgroup.org.
(26) Hamilton, R., ‘Sudan Referendum: Will oil keep the peace?', Pulitzer Centre, 7 January 2011, http://pulitzercenter.org.
(27) Ibid.
(28) Vertin, Z., ‘Now the real work begins in Sudan’, International Crisis Group, 24 January 2011, http://www.crisisgroup.org.
(29) ’China grants Sudan $3m for north-south unity’, China Digital Times, 1 December 2008, http://chinadigitaltimes.net.
(30) ‘China still partners of Sudan’s north, south after referendum’, People’s Daily Online, 7 January 2011, http://english.peopledaily.com.cn.
(31) ‘China says Sudan referendum a step towards peace’, Times Live, 1 February 2011, http://www.timeslive.co.za.
(32) Large, D., 2008, ‘Sudan’s Foreign Relations with Asia: China and the politics of “looking east”’, Institute of Security Studies, Paper 158, p.13.
(33) Ibid.


Written by Megan Erasmus (1)

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