South Sudan: Will Oil Lead It Out Of Poverty?

Posted: December 14, 2011 by PaanLuel Wël Media Ltd. in Economy

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South Sudan, the world’s newest nation, is still trying to find its feet, and private companies, international aid experts and diplomats have gathered in Washington this week to see if they can help. The 5-month-old country is one of the most underdeveloped places in the world, and it still has many lingering disputes with its former rulers in Sudan — disputes that could scare off potential investors. Secretary of State Hillary Clinton kicked off the two-day International Engagement Conference for South Sudan by likening the new state to a tiny infant in need of intensive care.

She talked about the challenges facing a country that has few paved roads and little in the way of infrastructure. But, she said, one thing South Sudan does have going for it is potential oil wealth — and that needs to be well-managed. “South Sudan defied the odds simply by being born,” Clinton said. “We know that [the oil] will either help your country finance its own path out of poverty, or you will fall prey to the natural resource curse, which will enrich a small elite, outside interests, corporations and countries, and leave your people hardly better off than when you started.”

Clinton urged South Sudanese President Salva Kiir to look at Norway and Botswana as examples of countries with well-managed natural resources. Kiir told the audience that he is working on transparency rules and hopes for big investments. He pointed out that the American oil company Chevron was the first to discover oil in the region, but war and U.S. sanctions have kept American companies out.

Map Of Sudan And South Sudan
Credit: Alyson Hurt/NPR

Will American Companies Invest? Now, Kiir said, the Obama administration is changing its licensing rules and making it possible for American energy companies to invest. Kiir told the crowd, “I want to invite you today to come with me to South Sudan after this conference to help develop our potential in oil, gas and mineral resources.” But he also appealed for patience, saying the challenges are great for a country born out of decades of war, and acknowledging ongoing tensions with Sudan. Sudan accuses South Sudan of arming rebels in two regions in the north, which South Sudan denies.

Princeton Lyman, U.S. envoy for both Sudans, has been keeping a close watch on the situation along the border. “It is a flashpoint,” Lyman says, “not that we think the two are going to go to war in that sense, but the conflict on the border [and] the clashes that take place raise a lot of tension, and they impact on the ability of the two to negotiate other issues.” And the two Sudans have many outstanding issues to negotiate. Lyman thinks the North should focus on those negotiations as well as on its own financial woes, having lost a lot of its oil wealth and territory to the South. “What we are saying is this is no time to go to war in three or four of the states of your country,” Lyman says. “It is important to get a negotiated solution to the oil sector with the South.”

The tensions between the two Sudans were high on everyone’s mind at the conference in Washington, even as South Sudan tried to encourage investors to bring their money and ideas to the world’s newest nation.

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