(December 2011-January 2012) The relationship between Sudan and South Sudan continued to deteriorate in early 2012. Negotiations between the two Comprehensive Peace Agreement (CPA) partners over key “post- referendum” arrangements have been ongoing since 2010 with facilitation by the African Union High Level Implementation Panel (AUHIP). Thus far, talks have failed to reach lasting agreements on a number of issues critical to the security and economic well-being of the two countries. At the heart of these arrangements are the intertwined issues of oil revenues, the status of the contested region of Abyei and the transitional areas of South Kordofan and Blue Nile, and management of the border between the two countries. The International Monetary Fund (IMF) estimated that Sudan could lose approximately half of its oil revenues and 90% of exports as a result of Southern independence. South Sudan took an estimated 75% of the former unified Sudan’s oil wealth with it when it seceded, but remains dependent on Sudan’s infrastructure and ports for exportation. Negotiations intended to reach agreements on the transit fees that South Sudan would pay for the use of Sudan’s pipeline collapsed in November 2011. South Sudan reportedly offered to pay Sudan US $5.4 billion per year in fees, an offer which was rejected by Sudan, which demanded US $7.4 billion in fees. Sudan has demanded that South Sudan pay $32 per barrel, an amount that is well above the international average of US $0.5 – $2 per barrel.
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