South Sudan Referendum – Unresolved Issues

The Southern Sudan referendum is the result of a collection of peacekeeping agreements, known as the Comprehensive Peacekeeping Agreement (CPA) or the Naivasha Agreement, between North and South Sudan.

When the CPA was signed in 2005, it signified the end of the most recent two decade-long civil war by creating a power sharing agreement between President Omar al-Basir’s Government and the southern secular Sudan People’s Liberation Movement (SPLM).  The CPA allowed the SPLM and the South to essentially govern itself as an autonomous state.  While credited as bringing a shaky peace, which at times has been tested, this agreement was only temporary pending the outcome of a referendum in 2011 on whether the South would choose to secede from the North.

Prior to the referendum, the CPA had made provisions to negotiate a number of issues that would be important post-referendum. However in the period leading up to the referendum, despite international support, it became apparent that a number of these issues would remain unresolved before the referendum date. Rather than delaying the referendum and therefore testing the shaky peace, the referendum was pushed through -- despite key issues not being addressed. As such there are a number of significant unresolved matters that will be extremely important if the South, as expected, chooses to secede from the North. Three key issues are explored below:

Border Demarcation, Specifically the Abyei Region

Even in Sudan’s colonial times when the British governed the North and South as two separate states, the North-South border has never been clearly defined. Seemingly without consideration, the border region dissects water basins, differing tribal areas and even oil reserves (see below). While there has been some agreement over the exact demarcation along some areas of the border, other areas remain contested between both the two governments and between local communities and tribes who fail to recognize any north-south demarcation. For nomads who migrate between the North and South depending on their farming patterns, the refusal of President Omar al-Bashir to offer dual citizenship means any border demarcation could become seriously contentious -- especially if any border enforcement disrupts the nomad’s normal livelihood patterns.

One area of particular contention along the border is the oil-rich Abyei region in the center of the country. Both the North and South perceive the area as part of their respective districts.  A separate referendum was meant to take place in Abyei in which the region would decide whether to be part of the North or the South. After the governments failed to agree, however, this has been indefinitely delayed.

Post referendum, if the South chooses, as is likely, to secede, the fate of the Abyei region will be particularly contentious. Fighting already is reported in the region as local rebels loyal to one side or the other fight for dominance over the area before the referendum outcome is announced.  Although the two rival rebel groups reportedly came to an interim peace deal last Friday, if this peace fails and the rebel attacks are linked to government support underhandedly trying to claim the region, it could risk sparking a wider conflict.

Debt sharing

The Sudanese government currently has a nearly $38 billion sovereign debt.  If the country should divide, a decision will be needed on how to split the debt.  Historically when debt is divided like this, each new countries’ share has been determined by where the original money flowing from each loan has been spent. Under this scenario, the North would take on the vast majority of debt and the South very little.  However, this scenario may not be palatable for the North since it would leave the North with an almost crippling debt ratio that will be difficult to manage, particularly if the South keeps hold of most of the oil revenues (see below). Yet the South can argue that there is very little justification for it to take on the debt since few of the loans benefited that area of Sudan.

Both countries will be looking for debt relief post-referendum and the North has highlighted the debt issue as one of its key points for negotiation if the South chooses to secede. President Omar al-Bashir has recently offered to accept all debt responsibility, although any conditions associated with offer are not clear. It is very likely that the resolution of this debt issue will actually be determined in combination with any oil sharing agreement. A number of these scenarios have been discussed in a paper by Ben Leo from the Center for Global Development.

Oil revenue sharing

Two of Sudan’s largest oil fields straddle the North-South border. Although current CPA agreements split tax revenues from the oil and gas exploitation 50:50, it is not clear if this arrangement will continue.  These oil and gas revenues are critically important to both countries. Currently 98 percent of government revenue comes from the South, and 50 percent of the Northern government revenue is derived from this oil’s taxation revenues. More than two-thirds of the oil fields are located south of the North-South border, to some this may initially suggest that Southern Sudan has more rights over the oil as more of it will be located in their country, but in reality the issue is more complicated than that.

This will be a highly controversial issue that is further complicated by the fact that Northern Sudan holds the vast majority of infrastructure which is needed to export the oil from South Sudan. In the immediate timeframe, if the South wishes to continue to receive oil and gas tax revenues, something it will desperately need in order to finance development plans, it will remain dependant upon the North. This more than any other reason is a cause for the North and South to keep the peace. Both will want to continue receiving the financial revenues from the oil extraction, but how much right each country has over the oil and who will calculate this remains undecided.

Both countries have agreed that the oil will continue to flow post referendum, but how long this will last is unclear. Most likely a finalized agreement on this will be linked to an agreement on how the debt burden will be shared, particularly as this revenue will be the largest source of income either country has for paying off the Sudanese debt.