Archive for January 24, 2012

Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq.  Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought – and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.  For the first time in nine years, there are no Americans fighting in Iraq.  For the first time in two decades, Osama bin Laden is not a threat to this country.  Most of al Qaeda’s top lieutenants have been defeated.  The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

These achievements are a testament to the courage, selflessness, and teamwork of America’s Armed Forces.  At a time when too many of our institutions have let us down, they exceed all expectations.  They’re not consumed with personal ambition.  They don’t obsess over their differences.  They focus on the mission at hand.  They work together. 

Imagine what we could accomplish if we followed their example.  Think about the America within our reach:  A country that leads the world in educating its people.  An America that attracts a new generation of high-tech manufacturing and high-paying jobs.  A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world.  An economy built to last, where hard work pays off, and responsibility is rewarded. 

We can do this.  I know we can, because we’ve done it before.  At the end of World War II, when another generation of heroes returned home from combat, they built the strongest economy and middle class the world has ever known.  My grandfather, a veteran of Patton’s Army, got the chance to go to college on the GI Bill.  My grandmother, who worked on a bomber assembly line, was part of a workforce that turned out the best products on Earth. 

The two of them shared the optimism of a Nation that had triumphed over a depression and fascism.  They understood they were part of something larger; that they were contributing to a story of success that every American had a chance to share – the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement. 

The defining issue of our time is how to keep that promise alive.  No challenge is more urgent.  No debate is more important.  We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by.  Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.  What’s at stake are not Democratic values or Republican values, but American values.  We have to reclaim them. 

Let’s remember how we got here.  Long before the recession, jobs and manufacturing began leaving our shores.   Technology made businesses more efficient, but also made some jobs obsolete.  Folks at the top saw their incomes rise like never before, but most hardworking Americans struggled with costs that were growing, paychecks that weren’t, and personal debt that kept piling up.

In 2008, the house of cards collapsed.  We learned that mortgages had been sold to people who couldn’t afford or understand them.  Banks had made huge bets and bonuses with other people’s money.  Regulators had looked the other way, or didn’t have the authority to stop the bad behavior.

It was wrong.  It was irresponsible.  And it plunged our economy into a crisis that put millions out of work, saddled us with more debt, and left innocent, hard-working Americans holding the bag.  In the six months before I took office, we lost nearly four million jobs.  And we lost another four million before our policies were in full effect. 

Those are the facts.  But so are these.  In the last 22 months, businesses have created more than three million jobs.  Last year, they created the most jobs since 2005.  American manufacturers are hiring again, creating jobs for the first time since the late 1990s.  Together, we’ve agreed to cut the deficit by more than $2 trillion.  And we’ve put in place new rules to hold Wall Street accountable, so a crisis like that never happens again. 

The state of our Union is getting stronger.  And we’ve come too far to turn back now.  As long as I’m President, I will work with anyone in this chamber to build on this momentum.  But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place. 

No, we will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits.  Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last – an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

This blueprint begins with American manufacturing.

On the day I took office, our auto industry was on the verge of collapse.  Some even said we should let it die.  With a million jobs at stake, I refused to let that happen.  In exchange for help, we demanded responsibility.  We got workers and automakers to settle their differences.  We got the industry to retool and restructure.  Today, General Motors is back on top as the world’s number one automaker.  Chrysler has grown faster in the U.S. than any major car company.  Ford is investing billions in U.S. plants and factories.  And together, the entire industry added nearly 160,000 jobs.   

We bet on American workers.  We bet on American ingenuity.  And tonight, the American auto industry is back. 

What’s happening in Detroit can happen in other industries.  It can happen in Cleveland and Pittsburgh and Raleigh.  We can’t bring back every job that’s left our shores.  But right now, it’s getting more expensive to do business in places like China.  Meanwhile, America is more productive.  A few weeks ago, the CEO of Master Lock told me that it now makes business sense for him to bring jobs back home.  Today, for the first time in fifteen years, Master Lock’s unionized plant in Milwaukee is running at full capacity.

So we have a huge opportunity, at this moment, to bring manufacturing back.  But we have to seize it.  Tonight, my message to business leaders is simple:  Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed. 

We should start with our tax code.  Right now, companies get tax breaks for moving jobs and profits overseas.  Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world.  It makes no sense, and everyone knows it. 

So let’s change it.  First, if you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it.  That money should be used to cover moving expenses for companies like Master Lock that decide to bring jobs home.

Second, no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas.  From now on, every multinational company should have to pay a basic minimum tax.  And every penny should go towards lowering taxes for companies that choose to stay here and hire here.  

Third, if you’re an American manufacturer, you should get a bigger tax cut.  If you’re a high-tech manufacturer, we should double the tax deduction you get for making products here.  And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.

My message is simple.  It’s time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America.  Send me these tax reforms, and I’ll sign them right away.   

We’re also making it easier for American businesses to sell products all over the world.  Two years ago, I set a goal of doubling U.S. exports over five years.  With the bipartisan trade agreements I signed into law, we are on track to meet that goal – ahead of schedule.  Soon, there will be millions of new customers for American goods in Panama, Colombia, and South Korea.  Soon, there will be new cars on the streets of Seoul imported from Detroit, and Toledo, and Chicago.     

I will go anywhere in the world to open new markets for American products.  And I will not stand by when our competitors don’t play by the rules.  We’ve brought trade cases against China at nearly twice the rate as the last administration – and it’s made a difference.  Over a thousand Americans are working today because we stopped a surge in Chinese tires.  But we need to do more.  It’s not right when another country lets our movies, music, and software be pirated.  It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China.  There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders.  And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia.  Our workers are the most productive on Earth, and if the playing field is level, I promise you – America will always win.

I also hear from many business leaders who want to hire in the United States but can’t find workers with the right skills.  Growing industries in science and technology have twice as many openings as we have workers who can do the job.  Think about that – openings at a time when millions of Americans are looking for work.   

That’s inexcusable.  And we know how to fix it.  

Jackie Bray is a single mom from North Carolina who was laid off from her job as a mechanic.  Then Siemens opened a gas turbine factory in Charlotte, and formed a partnership with Central Piedmont Community College.  The company helped the college design courses in laser and robotics training.  It paid Jackie’s tuition, then hired her to help operate their plant.

I want every American looking for work to have the same opportunity as Jackie did.  Join me in a national commitment to train two million Americans with skills that will lead directly to a job.  My Administration has already lined up more companies that want to help.  Model partnerships between businesses like Siemens and community colleges in places like Charlotte, Orlando, and Louisville are up and running.   Now you need to give more community colleges the resources they need to become community career centers – places that teach people skills that local businesses are looking for right now, from data management to high-tech manufacturing. 

And I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help they need.  It’s time to turn our unemployment system into a reemployment system that puts people to work.   

These reforms will help people get jobs that are open today.  But to prepare for the jobs of tomorrow, our commitment to skills and education has to start earlier.

For less than one percent of what our Nation spends on education each year, we’ve convinced nearly every State in the country to raise their standards for teaching and learning – the first time that’s happened in a generation. 

But challenges remain.  And we know how to solve them.

At a time when other countries are doubling down on education, tight budgets have forced States to lay off thousands of teachers.  We know a good teacher can increase the lifetime income of a classroom by over $250,000.  A great teacher can offer an escape from poverty to the child who dreams beyond his circumstance.   Every person in this chamber can point to a teacher who changed the trajectory of their lives.  Most teachers work tirelessly, with modest pay, sometimes digging into their own pocket for school supplies – just to make a difference. 

Teachers matter.  So instead of bashing them, or defending the status quo, let’s offer schools a deal.  Give them the resources to keep good teachers on the job, and reward the best ones.  In return, grant schools flexibility:  To teach with creativity and passion; to stop teaching to the test; and to replace teachers who just aren’t helping kids learn.

We also know that when students aren’t allowed to walk away from their education, more of them walk the stage to get their diploma.  So tonight, I call on every State to require that all students stay in high school until they graduate or turn eighteen.

When kids do graduate, the most daunting challenge can be the cost of college.  At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July.  Extend the tuition tax credit we started that saves middle-class families thousands of dollars.  And give more young people the chance to earn their way through college by doubling the number of work-study jobs in the next five years.

Of course, it’s not enough for us to increase student aid.  We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money.  States also need to do their part, by making higher education a higher priority in their budgets.  And colleges and universities have to do their part by working to keep costs down.  Recently, I spoke with a group of college presidents who’ve done just that.  Some schools re-design courses to help students finish more quickly.  Some use better technology.  The point is, it’s possible.  So let me put colleges and universities on notice:  If you can’t stop tuition from going up, the funding you get from taxpayers will go down.  Higher education can’t be a luxury – it’s an economic imperative that every family in America should be able to afford.

Let’s also remember that hundreds of thousands of talented, hardworking students in this country face another challenge:  The fact that they aren’t yet American citizens.  Many were brought here as small children, are American through and through, yet they live every day with the threat of deportation.  Others came more recently, to study business and science and engineering, but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else. 

That doesn’t make sense.   

I believe as strongly as ever that we should take on illegal immigration. That’s why my Administration has put more boots on the border than ever before.  That’s why there are fewer illegal crossings than when I took office. 

The opponents of action are out of excuses.  We should be working on comprehensive immigration reform right now.   But if election-year politics keeps Congress from acting on a comprehensive plan, let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, and defend this country.  Send me a law that gives them the chance to earn their citizenship.  I will sign it right away.

You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country.  That means women should earn equal pay for equal work.  It means we should support everyone who’s willing to work; and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.  

After all, innovation is what America has always been about.  Most new jobs are created in start-ups and small businesses.  So let’s pass an agenda that helps them succeed.  Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.  Expand tax relief to small businesses that are raising wages and creating good jobs.  Both parties agree on these ideas.  So put them in a bill, and get it on my desk this year. 

Innovation also demands basic research.  Today, the discoveries taking place in our federally-financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched.  New lightweight vests for cops and soldiers that can stop any bullet.  Don’t gut these investments in our budget.  Don’t let other countries win the race for the future.  Support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries.  

Nowhere is the promise of innovation greater than in American-made energy.  Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources.  Right now, American oil production is the highest that it’s been in eight years.  That’s right – eight years.  Not only that – last year, we relied less on foreign oil than in any of the past sixteen years.

But with only 2 percent of the world’s oil reserves, oil isn’t enough.  This country needs an all-out, all-of-the-above strategy that develops every available source of American energy – a strategy that’s cleaner, cheaper, and full of new jobs. 

We have a supply of natural gas that can last America nearly one hundred years, and my Administration will take every possible action to safely develop this energy.  Experts believe this will support more than 600,000 jobs by the end of the decade.  And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use.  America will develop this resource without putting the health and safety of our citizens at risk.

The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy.  And by the way, it was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock – reminding us that Government support is critical in helping businesses get new energy ideas off the ground.         


What’s true for natural gas is true for clean energy.  In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries.  Because of federal investments, renewable energy use has nearly doubled.  And thousands of Americans have jobs because of it. 

When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance.  But he found work at Energetx, a wind turbine manufacturer in Michigan.  Before the recession, the factory only made luxury yachts.  Today, it’s hiring workers like Bryan, who said, “I’m proud to be working in the industry of the future.”

Our experience with shale gas shows us that the payoffs on these public investments don’t always come right away.  Some technologies don’t pan out; some companies fail.  But I will not walk away from the promise of clean energy.  I will not walk away from workers like Bryan.  I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.  We have subsidized oil companies for a century.  That’s long enough.  It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising.   Pass clean energy tax credits and create these jobs.   

We can also spur energy innovation with new incentives.  The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change.  But there’s no reason why Congress shouldn’t at least set a clean energy standard that creates a market for innovation.  So far, you haven’t acted.  Well tonight, I will.  I’m directing my Administration to allow the development of clean energy on enough public land to power three million homes.  And I’m proud to announce that the Department of Defense, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history – with the Navy purchasing enough capacity to power a quarter of a million homes a year.

Of course, the easiest way to save money is to waste less energy.  So here’s another proposal:  Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings.  Their energy bills will be $100 billion lower over the next decade, and America will have less pollution, more manufacturing, and more jobs for construction workers who need them.  Send me a bill that creates these jobs. 

Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure.  So much of America needs to be rebuilt.  We’ve got crumbling roads and bridges.  A power grid that wastes too much energy.  An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world. 

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge.  After World War II, we connected our States with a system of highways.  Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects.  But you need to fund these projects.  Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

There’s never been a better time to build, especially since the construction industry was one of the hardest-hit when the housing bubble burst.  Of course, construction workers weren’t the only ones hurt.  So were millions of innocent Americans who’ve seen their home values decline.  And while Government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.  

That’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates.  No more red tape.  No more runaround from the banks.  A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.

Let’s never forget:  Millions of Americans who work hard and play by the rules every day deserve a Government and a financial system that do the same.  It’s time to apply the same rules from top to bottom:  No bailouts, no handouts, and no copouts.  An America built to last insists on responsibility from everybody. 

We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them, and buyers who knew they couldn’t afford them.  That’s why we need smart regulations to prevent irresponsible behavior.  Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don’t destroy the free market.  They make the free market work better.   

There is no question that some regulations are outdated, unnecessary, or too costly.  In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his.  I’ve ordered every federal agency to eliminate rules that don’t make sense.  We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.  We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill – because milk was somehow classified as an oil.  With a rule like that, I guess it was worth crying over spilled milk.   

I’m confident a farmer can contain a milk spill without a federal agency looking over his shoulder.  But I will not back down from making sure an oil company can contain the kind of oil spill we saw in the Gulf two years ago.  I will not back down from protecting our kids from mercury pollution, or making sure that our food is safe and our water is clean.  I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men. 

And I will not go back to the days when Wall Street was allowed to play by its own set of rules.  The new rules we passed restore what should be any financial system’s core purpose:  Getting funding to entrepreneurs with the best ideas, and getting loans to responsible families who want to buy a home, start a business, or send a kid to college.

So if you’re a big bank or financial institution, you are no longer allowed to make risky bets with your customers’ deposits.  You’re required to write out a “living will” that details exactly how you’ll pay the bills if you fail – because the rest of us aren’t bailing you out ever again.  And if you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices are over.  Today, American consumers finally have a watchdog in Richard Cordray with one job: To look out for them. 

We will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments.  Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender.  That’s bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing.  So pass legislation that makes the penalties for fraud count. 

And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans. 

A return to the American values of fair play and shared responsibility will help us protect our people and our economy.  But it should also guide us as we look to pay down our debt and invest in our future.

Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile.  People cannot afford losing $40 out of each paycheck this year.  There are plenty of ways to get this done.  So let’s agree right here, right now:  No side issues.  No drama.  Pass the payroll tax cut without delay. 

When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings.  But we need to do more, and that means making choices.  Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans.  Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households.  Right now, Warren Buffett pays a lower tax rate than his secretary.  

Do we want to keep these tax cuts for the wealthiest Americans?  Or do we want to keep our investments in everything else – like education and medical research; a strong military and care for our veterans?  Because if we’re serious about paying down our debt, we can’t do both.  

The American people know what the right choice is.  So do I.  As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors. 

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes.  Tax reform should follow the Buffett rule:  If you make more than $1 million a year, you should not pay less than 30 percent in taxes.  And my Republican friend Tom Coburn is right:  Washington should stop subsidizing millionaires.  In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions.  On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up.  You’re the ones struggling with rising costs and stagnant wages.  You’re the ones who need relief.   

Now, you can call this class warfare all you want.  But asking a billionaire to pay at least as much as his secretary in taxes?  Most Americans would call that common sense. 

We don’t begrudge financial success in this country.  We admire it.  When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich.  It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference – like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet.  That’s not right.  Americans know it’s not right.  They know that this generation’s success is only possible because past generations felt a responsibility to each other, and to their country’s future, and they know our way of life will only endure if we feel that same sense of shared responsibility.  That’s how we’ll reduce our deficit.  That’s an America built to last.  

I recognize that people watching tonight have differing views about taxes and debt; energy and health care.  But no matter what party they belong to, I bet most Americans are thinking the same thing right now:  Nothing will get done this year, or next year, or maybe even the year after that, because Washington is broken. 

Can you blame them for feeling a little cynical? 

The greatest blow to confidence in our economy last year didn’t come from events beyond our control.  It came from a debate in Washington over whether the United States would pay its bills or not.  Who benefited from that fiasco?  

I’ve talked tonight about the deficit of trust between Main Street and Wall Street.  But the divide between this city and the rest of the country is at least as bad – and it seems to get worse every year.

Some of this has to do with the corrosive influence of money in politics.  So together, let’s take some steps to fix that.  Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow.  Let’s limit any elected official from owning stocks in industries they impact.  Let’s make sure people who bundle campaign contributions for Congress can’t lobby Congress, and vice versa – an idea that has bipartisan support, at least outside of Washington. 

Some of what’s broken has to do with the way Congress does its business these days.  A simple majority is no longer enough to get anything – even routine business – passed through the Senate.  Neither party has been blameless in these tactics.  Now both parties should put an end to it.  For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.

The executive branch also needs to change.  Too often, it’s inefficient, outdated and remote.  That’s why I’ve asked this Congress to grant me the authority to consolidate the federal bureaucracy so that our Government is leaner, quicker, and more responsive to the needs of the American people. 

Finally, none of these reforms can happen unless we also lower the temperature in this town.  We need to end the notion that the two parties must be locked in a perpetual campaign of mutual destruction; that politics is about clinging to rigid ideologies instead of building consensus around common sense ideas. 

I’m a Democrat.  But I believe what Republican Abraham Lincoln believed:  That Government should do for people only what they cannot do better by themselves, and no more.  That’s why my education reform offers more competition, and more control for schools and States.  That’s why we’re getting rid of regulations that don’t work.  That’s why our health care law relies on a reformed private market, not a Government program. 

On the other hand, even my Republican friends who complain the most about Government spending have supported federally-financed roads, and clean energy projects, and federal offices for the folks back home. 

The point is, we should all want a smarter, more effective Government.  And while we may not be able to bridge our biggest philosophical differences this year, we can make real progress.  With or without this Congress, I will keep taking actions that help the economy grow.  But I can do a whole lot more with your help.  Because when we act together, there is nothing the United States of America can’t achieve. 

That is the lesson we’ve learned from our actions abroad over the last few years.

Ending the Iraq war has allowed us to strike decisive blows against our enemies.  From Pakistan to Yemen, the al Qaeda operatives who remain are scrambling, knowing that they can’t escape the reach of the United States of America.

From this position of strength, we’ve begun to wind down the war in Afghanistan.  Ten thousand of our troops have come home.  Twenty-three thousand more will leave by the end of this summer. This transition to Afghan lead will continue, and we will build an enduring partnership with Afghanistan, so that it is never again a source of attacks against America.

As the tide of war recedes, a wave of change has washed across the Middle East and North Africa, from Tunis to Cairo; from Sana’a to Tripoli.  A year ago, Qadhafi was one of the world’s longest-serving dictators – a murderer with American blood on his hands.  Today, he is gone.  And in Syria, I have no doubt that the Assad regime will soon discover that the forces of change can’t be reversed, and that human dignity can’t be denied.

How this incredible transformation will end remains uncertain.  But we have a huge stake in the outcome.  And while it is ultimately up to the people of the region to decide their fate, we will advocate for those values that have served our own country so well.  We will stand against violence and intimidation. We will stand for the rights and dignity of all human beings – men and women; Christians, Muslims, and Jews.  We will support policies that lead to strong and stable democracies and open markets, because tyranny is no match for liberty.

And we will safeguard America’s own security against those who threaten our citizens, our friends, and our interests.  Look at Iran.  Through the power of our diplomacy, a world that was once divided about how to deal with Iran’s nuclear program now stands as one.  The regime is more isolated than ever before; its leaders are faced with crippling sanctions, and as long as they shirk their responsibilities, this pressure will not relent.  Let there be no doubt:  America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal.  But a peaceful resolution of this issue is still possible, and far better, and if Iran changes course and meets its obligations, it can rejoin the community of nations.

The renewal of American leadership can be felt across the globe.  Our oldest alliances in Europe and Asia are stronger than ever.  Our ties to the Americas are deeper.  Our iron-clad commitment to Israel’s security has meant the closest military cooperation between our two countries in history.  We’ve made it clear that America is a Pacific power, and a new beginning in Burma has lit a new hope. From the coalitions we’ve built to secure nuclear materials, to the missions we’ve led against hunger and disease; from the blows we’ve dealt to our enemies; to the enduring power of our moral example, America is back. 

Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about.  That’s not the message we get from leaders around the world, all of whom are eager to work with us.  That’s not how people feel from Tokyo to Berlin; from Cape Town to Rio; where opinions of America are higher than they’ve been in years.  Yes, the world is changing; no, we can’t control every event.  But America remains the one indispensable nation in world affairs – and as long as I’m President, I intend to keep it that way. 

That’s why, working with our military leaders, I have proposed a new defense strategy that ensures we maintain the finest military in the world, while saving nearly half a trillion dollars in our budget.  To stay one step ahead of our adversaries, I have already sent this Congress legislation that will secure our country from the growing danger of cyber-threats.

Above all, our freedom endures because of the men and women in uniform who defend it.  As they come home, we must serve them as well as they served us.  That includes giving them the care and benefits they have earned – which is why we’ve increased annual VA spending every year I’ve been President.  And it means enlisting our veterans in the work of rebuilding our Nation.

With the bipartisan support of this Congress, we are providing new tax credits to companies that hire vets.  Michelle and Jill Biden have worked with American businesses to secure a pledge of 135,000 jobs for veterans and their families.  And tonight, I’m proposing a Veterans Job Corps that will help our communities hire veterans as cops and firefighters, so that America is as strong as those who defend her.

Which brings me back to where I began.  Those of us who’ve been sent here to serve can learn from the service of our troops.  When you put on that uniform, it doesn’t matter if you’re black or white; Asian or Latino; conservative or liberal; rich or poor; gay or straight.  When you’re marching into battle, you look out for the person next to you, or the mission fails.  When you’re in the thick of the fight, you rise or fall as one unit, serving one Nation, leaving no one behind.

One of my proudest possessions is the flag that the SEAL Team took with them on the mission to get bin Laden.  On it are each of their names.  Some may be Democrats.  Some may be Republicans.  But that doesn’t matter.  Just like it didn’t matter that day in the Situation Room, when I sat next to Bob Gates – a man who was George Bush’s defense secretary; and Hillary Clinton, a woman who ran against me for president. 

All that mattered that day was the mission.  No one thought about politics.  No one thought about themselves.  One of the young men involved in the raid later told me that he didn’t deserve credit for the mission.  It only succeeded, he said, because every single member of that unit did their job – the pilot who landed the helicopter that spun out of control; the translator who kept others from entering the compound; the troops who separated the women and children from the fight; the SEALs who charged up the stairs.  More than that, the mission only succeeded because every member of that unit trusted each other – because you can’t charge up those stairs, into darkness and danger, unless you know that there’s someone behind you, watching your back.

So it is with America.  Each time I look at that flag, I’m reminded that our destiny is stitched together like those fifty stars and those thirteen stripes.  No one built this country on their own.  This Nation is great because we built it together.  This Nation is great because we worked as a team.  This Nation is great because we get each other’s backs.  And if we hold fast to that truth, in this moment of trial, there is no challenge too great; no mission too hard.  As long as we’re joined in common purpose, as long as we maintain our common resolve, our journey moves forward, our future is hopeful, and the state of our Union will always be strong.

Thank you, God bless you, and may God bless the United States of America.

Sudan Open to Mediation, Willing to Reach Deal with South Sudan on Oil

Posted: January 24, 2012 by PaanLuel Wël Media Ltd. in Junub Sudan, Sudan

Khartoum – The Sudan government has accepted mediation in the oil dispute with South Sudan and is looking forward to reaching a deal, the National Congress Party (NCP) affirmed Tuesday.

“We are for reaching an agreement with the Government of the South on oil and that is why we are directly engaged in talks with southern negotiators,” Presidential Assistant and Deputy Chairman of the ruling National Congress Party (NCP), Dr. Nafie Ali Nafie said
Nafie, who was speaking to reporters said, “Our top option is to reach an agreement on this issue.”

The government’s position is that export of oil should continue, Nafie stressed indicating that oil is more important for the South than the North.

He said in the event that an agreement is not reached with the government of the South, Sudan is capable of taking its full rights in kind, expecting the South to accept final settlement, adding the final decision for halt of oil operations lies with the government of the South. ”We have no right to say that the Government of the South does not want to export its oil.”

Presidential Assistant downplayed the decision of the South to shut down oil operations, saying it has no bearing on the outstanding issues between the two countries.

With regard to the role of China and possible mediation between the two countries, he said “We welcome all efforts. China is the largest investor and has the right to make efforts to that end.”

Reacting to reports about “oil for Abyei deal” he said, “We will not accept that. Each issue will be discussed separately.” He added that if an agreement is reached on oil it would not be at the expense of Abyei. “We will foil any attempt to compromise Abyei,” he said.

On the Kenyan Mediation between President Al Bashir and Salva Kiir, Nafie said it would be good if Kenya mediates otherwise the AUHIP mediation will continue.

Commenting on the protests witnessed in Nyala Monday, Dr. Nafie downplayed the event, considering it as a minority expression of rejection of the appointment of a new governor, saying the new governor was widely welcomed in South Darfur.

He revealed that the former governor Abdul Hamid Musa Kasha has resigned for logical reasons and it was accepted, adding that a new governor for East Darfur State will be appointed soon.
He denied the resignation of Qutbi Al Mahdi, NCP political chair, but pointed out that the ruling party has made changes in all sectors and Qutbi was informed about that.

By Zuleikha Abdul Raziq, 2 hours 40 minutes ago

Published: January 24, 2012

South Sudan was born as an independent nation on July 9, 2011, with good will and a bounty. Three hundred and fifty thousand barrels of oil per day provided the government with $1,000 per year for each of its 8 million citizens.

But the only pipeline to market runs through northern Sudan, giving the government in Khartoum control over South Sudan’s economic artery. And on independence day there was no agreement on the terms of pipeline use.

When Sudan was still one country, 50 percent of the revenue from southern oil went to the central treasury, comprising 40 percent of its budget. After July 9, Khartoum received nothing — not even a transit fee. International promises of debt relief and lifting economic sanctions, to fill a part of the budget gap, came to nothing. Continued negotiations — convened by the African Union High-Level Implementation Panel on Sudan, which is headed by former President Thabo Mbeki of South Africa and to which I am an adviser — have failed to resolve the issue.

On Jan. 20, South Sudan announced the dramatic step of shutting down oil production, with immediate effect. As oil money comprises 97 percent of the South’s budget, it seems a suicidal step. The rationale is that for the last month, Khartoum has been diverting the oil to its own refinery and filling three tankers.

A year ago, President Omar al-Bashir congratulated his southern counterpart, President Salva Kiir, on independence and promised a new and peaceable chapter in the troubled history of north-south relations. This quickly turned sour, particularly with the outbreak of war in two areas of northern Sudan — Southern Kordofan and Blue Nile — where about half of the population is loyal to the former rebels of the Sudan People’s Liberation Movement, who are now the government in the South. Although the northern branch of the party supposedly split off, the South does not disguise its solidarity with its former comrades in arms.

Khartoum’s delegates to the just-concluding talks in Addis Ababa complain bitterly. “Why should we allow Southern oil to go free to market, when the money from its sales is used to arm rebels who want to destroy us?” They follow it up with a promise — we will reconcile our respective claims after we agree on a transit fee that matches a third of the budget gap.

The South counters, “Why do we allow our oil to be stolen and the money used to buy weapons to kill our comrades in arms? Khartoum has always wanted to control the South and its readiness to strangle us financially shows that they will never allow us to be truly free.” The Southern government in Juba has floated plans for a new pipeline through Kenya. Optimistically, this may cost $3 billion to $4 billion and take three years to build, but many Southern leaders would rather leave their oil in the ground than submit to Sudan’s coercion.

So South Sudan has set off its economic doomsday machine. The shutdown of wells is already beginning and within a week the oil companies will begin flushing the pipeline with water, so that the oil it contains doesn’t jam and turn into a 600-mile asphalt tube. After that, the best case would be six months’ work to reopen exports.

The South’s lead negotiator, Pagan Amum, said he was at peace with himself when he explained: “This is a matter of respect. We may be poor but we will be free.”

But South Sudan is a fragile state, as the recent interethnic killings in the Jonglei area show, and it will need massive foreign aid to compensate for the lost $650 million per month.

A northern general remarked, “The shutdown will hurt us but it will kill them.” But Sudan cannot be stable if its southern neighbor is in crisis.

Based on its principle that Sudan and South Sudan should be two viable states, at peace and mutually supportive, the African Union panel has proposed an agreement. This will keep the oil flowing, stop the unilateral diversion of southern oil by the north, and provide enough funds to cushion the economic crisis in the north. China — the main buyer of Sudanese oil — the United States and the United Nations have endorsed the African Union’s plan.

President Bashir and President Kiir are due to meet in Addis Ababa on Friday. This is the last chance, not only for the two to snatch a deal on oil, but also to stop an escalation into a wider north-south war. The two must step back from the brink.

Alex de Waal is the executive director of the World Peace Foundation.

“Sudan, South Sudan, and the Oil Revenues Controversy:
Khartoum’s Obstructionism Threatens War”
There has been much discussion about the intensifying dispute between Khartoum and Juba over how much in transit fees the Republic of South Sudan (RSS) should pay the northern regime in order to transport its oil to Port Sudan on the Red Sea.  This has all been brought into the sharpest possible focus with the January 20 decision by the Government of South Sudan to halt shipments to northern Sudan and begin constructing an alternate pipeline route to the Kenyan coast.  Formal announcement was made by RSS President Salva Kiir on January 23.  This is not, however, one bad decision somehow mirroring Khartoum’s “equally bad” decision to begin massive sequestration of South Sudanese oil and oil revenues, as some would have it.  Alex de Waal, an advisor for the almost inexplicably ineffective African Union mediating team, writes tendentiously:
“When Sudan was still one country, 50 percent of the revenue from southern oil went to the central treasury, comprising 40 percent of its budget. After July 9, Khartoum received nothing—not even a transit fee.” (New York Times, January 24, 2012)
What de Waal does not mention here is the expressed, indeed eager willingness of the leadership in South Sudan to arrive at some reasonable agreement on transit fees.  But instead of negotiating such a fee, Khartoum has proposed a fee of $32 per barrel (more recently, this was upped to $36 per barrel)—roughly a third the cost of a barrel of Sudanese crude oil.  This is a preposterous figure compared with other transit fee arrangements (e.g., the Russian oil pipeline through Ukraine, Chad’s oil pipeline through Cameroon; see below).  Moreover, de Waal’s implicit suggestion that an independent South Sudan should be obliged to replace 40 percent of Khartoum’s budget revenues is absurd, the more so since the budget gap is largely a function of profligate military and security expenditures, amounting to roughly half the real budget.  Much of this military force and equipment continues to be directed against the South, as well as the border regions of South Kordofan, Blue Nile, and Darfur.
The South did make an offer of some $5.4 billion dollars to assist in Khartoum’s transition from dependence on Southern oil revenues, a figure judged reasonable by economists of the International Monetary Fund’s and the AU, according to Pagan Amum, chairman of the Sudan People’s Liberation Movement and chief RSS negotiator on oil issues:
“[Pagan] said that the International Monetary Fund, the African Union and South Sudan have agreed on a figure of $5.4 billion.” But in reply, “[northern] Sudan is demanding $15 billion in compensation for lost oil revenues after South Sudan’s independence.”  Also according to Pagan, and confirmed by subsequent statements from Khartoum, the regime “doesn’t want the African Union to mediate negotiations with the south.” (Bloomberg News, November 22, 2011)
Khartoum’s demand for $15 billion, almost three times the figure cited by Amum as having been judged fair by the IMF and AU, is not an economic calculation but rather a transparent grab, based on nothing but greed and a desire to push negotiations to the brink.  Like the $36 per barrel transit fee, this is simply not a good faith negotiating starting point.  Rather, it is a deliberate obstructionism.
With the sequestration of oil and oil revenues—in an amount that now approaches $1 billion—Khartoum has effectively compelled South Sudan to conclude that the regime has no intention of arriving at a reasonable resolution of these issues. The regime clearly felt that Juba had no choice except to capitulate.  The decision to build to the south, announced and vigorously defended by President Salva Kiir, demonstrates that this calculation by Khartoum was a serious error—if, in fact, Khartoum was simply playing a kind of negotiating brinksmanship.
But the regime’s actions have a larger context than de Waal’s narrow and misleading analysis would have us believe.  One key part of that context is the report today from the UN High Commission for Refugees that Khartoum’s military aircraft have again attacked Sudanese civilians in a refugee encampment inside South Sudan’s Upper Nile State, very close to the previous bombing of (New) Guffa on November 8, 2011.  The attack on Elfog refugee encampment wounded one boy, and has left fourteen people missing (Reuters [Juba] January 24, 2012). It bears comparison with yet another aerial attack by Khartoum, this on the refugee camp in Yida, Unity State (November 10, 2011), where one bomb landed right on the edge of a makeshift school in which shortly before some 200 students had been present.
This is not new.  Khartoum has bombed what is now the sovereign territory South Sudan repeatedly over the past 15 months—in Unity State, Upper Nile State, Western Bahr el Ghazal, and Northern Bahr el Ghazal.  An aerial attack on December 28 and 29 in Western Bahr el Ghazal reportedly killed some 40 people.  All these attacks are chronicled at
Why these aerial attacks on civilians and humanitarians matter—beyond their brutal human destruction and displacement—is that they demonstrate, yet again, Khartoum’s continuous and flagrant violations of signed agreements, in this instance the Comprehensive Peace Agreement (2005), which guaranteed the South the right of self-determination.  This self-determination exercise has taken final form in the creation of the Republic of South Sudan, a sovereign nation whose territory cannot be bombed without violating Khartoum’s commitment to uphold the outcome of the Southern self-determination referendum (January 9, 2011). Khartoum’s cross-border aerial attacks also constitute egregious violations of international law, including international humanitarian law.
All this poses an inescapable question in the mind of Southerners: why should we trust any agreement—whether on transit fees or some other future contractual arrangement—with a regime that, without hesitation, bombs our people on our land?  The fate of Abyei—seized militarily by Khartoum on May 21, 2011—also weighs heavily in the calculations of the Southern leadership.  Here again, in conspicuous violation of the Abyei Protocol of the CPA and the decision of the Permanent Court of Arbitration (PCA) (July 2009), Khartoum first denied the promised self-determination for the “residents of Abyei” as that region is defined geographically by the PCA.  Then—in the wake of a silent military coup that secured a firm grip on political power in Khartoum—the regime moved into Abyei with its Sudan Armed Forces (SAF) and heavily armed Misseriya militia forces in May.  The more than 100,000 indigenous Dinka Ngok displaced from Abyei into South Sudan have no prospect of returning to their homeland as long as Khartoum retains military control of the region, as it clearly intends.  This seizure included the Diffra oil site, which though not especially productive, nonetheless generates approximately 2,000 to 2,500 barrels of crude oil per day, or roughly $75 million per year.  This is not an inconsequential amount of revenue for South Sudan, especially since there is evidence of other potential oil reserves near Diffra.
De Waal reduces all of this to a single sentence: “The rationale [for the decision of the South to stop transporting oil to the north] is that for the last month, Khartoum has been diverting the oil to its own refinery and filling three tankers.”  This is hardly trivial for cash-strapped South Sudan.  Moreover, it is a disingenuously partial explanation of the difficult and costly decision by the South, and reflects nothing so much as the African Union’s penchant for “moral equivalence” when attempting to arbitrate between Khartoum and Juba—and frequently siding with Khartoum in ways large and small.  The AU mediation team led by former South African president Thabo Mbeki, and which de Waal advises, failed miserably in Darfur, and then moved on to Abyei, where it failed just as miserably.  In both cases failure came in large part because the African Union, and Mbeki in particular, were perceived by both Darfuris and the Dinka Ngok of Abyei as siding with Khartoum.
There is, crucially, another reason that Khartoum may have compelled this decision by Juba concerning the future of Southern oil.  For it continues a pattern of sustained, intense, and destructive economic warfare against the South by Khartoum—something de Waal makes no mention of, even as it has been conspicuous for more than a year.  And the purpose of this warfare is not only to destabilize the South, to deny it as much as possible the opportunity for economic development, but to provoke actual military confrontation and to create from this a casus belli for renewed war.  In such a war, Khartoum’s generals presume that they would be able to seize at least some of the South’s oil fields by force.  Ominously, on several occasions the SAF has attacked South Sudan on the ground in the oil regions, not simply from the air (most notably at Jau in Unity State).  These actions are so clearly provocative that it is difficult not to see them, along with aerial attacks on military and civilian sites inside South Sudan, as attempts to spark a response that will grow into a much larger conflagration, for which (Khartoum assumes) both sides will be blamed equally and urged to “show restraint,” without any acknowledgement of what is even now clearly aggression on the part of Khartoum’s forces.
None of this is mentioned by de Waal, nor does he mention the compelling evidence that Khartoum is supporting renegade militia groups operating in South Sudan.  Much of this evidence comes from the Small Arms Survey, which has in a number of authoritative reports compared equipment captured from rebel groups by the (southern) Sudan People’s Liberation Army, as well as by the SPLA-North, with equipment captured from Khartoum’s regular and militia and regular forces in South Kordofan and Blue Nile.  Instead of mentioning this highly destabilizing proxy military campaign by Khartoum, de Waal emphasizes instead only that “the northern branch of the party [the Sudan People’s Liberation Movement/Army-North] supposedly split off [from the Southern SPLA/M, but] the South does not disguise its solidarity with its former comrades in arms.”  In fact, the SPLA/M-North—which has linked with other rebel movements from (north) Sudan’s marginalized regions—formally separated from the SPLM/A (South) on September 8, in accordance with the terms of the CPA.  There is no evidence of substantial aid from the South to the rebels fighting in South Kordofan or Blue Nile; every regional source I have consulted, while admitting we can’t know for sure, indicates a belief that material support, if it exists, is minimal.  Again, in an effort to fashion a moral equivalence between Khartoum and Juba, de Waal tendentiously and selectively presents current realities on the ground.
If Khartoum were attempting to create a factitious casus belli—one whose only requirement is that it not be immediately dismissed by the Arab League, the African Union, various allies at the UN, or the UN Secretariat—its actions would be exactly what we have seen since the seizure of Abyei on May 21: move next to attack South Kordofan (June 5), then Blue Nile (September 1), all the while denying humanitarian access to increasingly distressed populations.  This has created an enormous population of internally displaced persons and refugees, in both Ethiopia and South Sudan, and further strains the capacity of Juba to respond to crises elsewhere in the country.  The international community seems painfully ill-equipped diplomatically to respond to Khartoum’s military attacks on civilians, the consequent humanitarian issues, and the growing stream of refugees, now likely exceeding 150,000.
At the same time, receiving so little focused international diplomatic attention, Khartoum refuses to negotiate reasonably about border delineation (20 percent of the 2,100-kilometer north/south border remains undelineated, more than half a year after Southern independence); and the regime refuses to permit demarcation of what actually has been delineated (including the delineation of Abyei as rendered in the “final and binding” decision of the Permanent Court of Arbitration).  Southerners—defined ethnically, not by place of birth—are being stripped of their citizenship in (north) Sudan, and are subject to increasing harassment and denial of opportunities for education, medical treatment, and other services, as well as jobs.  Christians and Christian churches in the north are facing an unprecedented assault by the regime, whose president, Omar al-Bashir, insists on a constitution based on sharia (Islamic law) and on an exclusively Arab identity in defining Sudan.
Despite the effort by de Waal and others, including the Obama administration in the U.S., to frame the dispute over oil transit fees as one involving two equally recalcitrant parties, equally guilty of peremptory and dangerous decisions, any fuller look at the history of the past year will reveal clearly that neither the political nor the moral equities in this dispute are at all comparable (see detailed timeline for this period at   Khartoum has assumed the posture of aggressor, both in the realm of economic relations and in offensive military actions against the South and the border regions.  To ignore these basic facts, to ignore the fundamental asymmetry in the respective positions of Khartoum and Juba, is to distort in highly consequential fashion the challenges at hand.  Certainly “moral equivalence” of the sort de Waal and others are trying to force into the negotiating context is a victory for the National Islamic Front/National Congress Party regime, and is perceived as such, both in Khartoum and Juba.
To those who doubt that Khartoum is as cynical as this analysis suggests, that the regime is as given to mendacity as I argue, I would point to two recent statements by the regime’s ambassador to the UN, Daffa-Alla Elhag Ali Osman.  In the first, the ambassador declared that the humanitarian situation in the Nuba and South Kordofan is “normal,” an assessment that flies in the face of every single humanitarian indicator the international community has received, including the forecast by the Famine Early Warning System Network (FEWSNet) of near-famine conditions by March.  To risk hundreds of thousands of lives in an effort to deflect international pressure gives us a perfect picture of how the Khartoum regime regards the African peoples of these regions, as well as its willingness to lie in the most brazen fashion imaginable.  In an earlier statement, Khartoum’s UN ambassador declared of the November 10 bombing of Yida refugee camp that it was a fabrication and never occurred, this despite the fact that the attack had by that point been confirmed by journalists present during the attack, humanitarian personnel on the ground in Yida, as well as a UN investigation.
This is the negotiating face of the National Islamic Front/National Congress Party, and de Waal seems unwilling to confront it squarely.  And this in turn augurs very poorly for the success of the AU-mediated negotiations in Addis Ababa, which have been extended beyond January 24, but without any indication of progress.
Further context for the present dispute over oil transit fees
Despite the basic clarity of moral and political equities in the stand-off over oil revenues, there is a good deal that makes this discussion difficult and complicated.  We have only partially relevant precedents for such fees, although Khartoum’s proposal of $36 per barrel is indeed preposterously out of line with those we do have.  For example, Ukraine receives from Russia $7.80 to $9.50 per ton of oil transported through its territory by means of the immense Druzhba pipeline (there are approximately seven barrels in a ton of oil, so the price per barrel in transit fees would be $1.10 – $1.36). In 2009 Cameroon was negotiating an increase in the transit fee for oil from Chad passing through its territory from $0.41 to $1.00 per barrel.
Construction recovery costs for the partners of the Greater Nile Operating Company (Unity State) and Petrodar (Upper Nile) have either been recovered or very soon will be; Khartoum’s Sudapet is only a five percent partner in these two consortia. Indeed, since the 1990s Khartoum has been the beneficiary of major foreign technical expertise and capital investment; negotiations over the value of the infrastructure that remain in the south should certainly be part of broader negotiations about oil revenues.  But these costs should be separated from those for the continuing costs of transit fees and fees for the use of Port Sudan.  What Khartoum has attempted to do by sequestering large quantities of oil unilaterally, on the basis of a $32 per barrel transit fee, is not to calculate what a fair charge is for infrastructure, port fees, and transit fees; rather, it has estimated the size of its deficit and calculated the transit fee accordingly.  No matter that 75 percent of oil production comes from the South (which also has 80 percent of known reserves).  The regime is, in effect, charging South Sudan for its own gross economic mismanagement of the northern economy.
There are other important issues bearing on negotiations over oil revenues.  The north/south border is still undefined in key oil producing regions, including Abyei.  Losing the Bamboo and Heglig sites in the “final and binding” delineation of Abyei by the Permanent Court of Arbitration (July 2009) was a bitter disappointment to Southerners.  They abided by its terms, however, even as Khartoum has conspicuously not done so; and the military seizure of Abyei ensures that no resolution of this crisis is possible in the foreseeable future–certainly not for the more than 100,000 Dinka Ngok who remain displaced following the May 21 military occupation.
We should also recall that transparency in accounting, both for production and revenues figures, never figured in Khartoum’s sense of what it was obliged to provide the South, even after the signing of the Comprehensive Peace Agreement (2005).  Given the complexity of the royalties contracts with China National Petroleum Corp., Malaysia’s Petronas, and Canada’s Talisman Energy (later replaced by India’s ONG), as well as the opaque rendering of costs for infrastructure and equipment, it is very difficult to know where a fair starting point might be in calculating what Khartoum has actually paid for and what it has received from these foreign nationals—and what it has already received from South Sudan since the signing of the Comprehensive Peace Agreement.  The International Monetary Fund did a disastrously bad job monitoring oil revenues and military expenditures in the period 2000 – 2002, and has done little better subsequently; all we may be sure of is that huge amounts of these revenues went to profligate military spending and to lining the pockets of the regime and its cronies.
During the entire interim period (January 9, 2005 – July 9, 2011), Khartoum never made a good faith effort to provide transparent and plausible production or revenue figures to the Government of South Sudan (GOSS).  Of the roughly 50 percent of oil revenues from production in the South that were to have gone to the GOSS, hundreds of millions of dollars were diverted or disappeared by means of bookkeeping legerdemain.  Under the current regime, we are unlikely ever to know how many hundreds of millions of dollars the desperately needy South was denied during this six and a half year interim period.  It is not a figure that de Waal contends with in his account of oil revenue negotiations or how this reneging and withholding has affected Southern attitudes towards Khartoum.
Yet other relevant issues go back to Khartoum’s conduct of war later in 1990s through 2002, and the brutally destructive population clearances in the oil concession areas of what are now Unity State and Upper Nile State.  Ruthless displacement, deliberate attacks on civilians, stoking of ethnic tensions, and the use of foreign commercial actors as cover for these activities—all this defined early activities by Khartoum and the Greater Nile Petroleum Operating Company (GNPOC), and somewhat later Petrodar in Upper Nile.  The largest partners in both consortia are the national oil companies of the People’s Republic of China, and they were as ruthless in their extraction efforts as Khartoum was energetic in creating a cordon sanitaire for what was at the time known as Western Upper Nile.  Amnesty International reported at the time a chilling observation about Chinese workers: they were armed and appeared ready to use their weapons (May 3, 2000).
The oil concession areas throughout Sudan were considered by Khartoum to be their mineral wealth fiefdom: the designation and sale of concession blocks, their security, and the complex royalty agreements that were signed at the time involved no consultations with the people of the South.  And as Khartoum was generating greater and greater external debt, even during this period of new oil wealth, no thought was given to development needs in the South—or indeed in any other marginalized region of Sudan.  Indeed, there are reports that Khartoum’s engineers were directed after January 9, 2005 to extract oil horizontally from the South through well sites just north of the border; oil so extracted then became “northern” oil production, with 100 percent of the revenues going to Khartoum.  Oil fields in South Sudan were also pumped more rapidly during the interim period than is consistent with maximum long-term production.
The regime’s present suggestion that South Sudan should absorb some of this enormous Khartoum-generated debt—expended disproportionately on military acquisitions that continue to be directed against the people of the South—is simply grotesque.  Even so, there can be little doubt that Khartoum’s present obstructionism is part of a larger strategy, whether it be one of continuing, widespread economic warfare against the South—or deliberate provocation of the Republic of South Sudan, with an aim to creating a military response from the SPLA and thus a casus belli that will justify a military seizure of Southern oil regions.
The Breaking Point for Peace
There is considerable skepticism about the Southern leadership’s optimistic estimate (roughly a year) for the time necessary to construct an alternate pipeline to the Kenyan coast.  Clearly Khartoum has assumed an insurmountably lengthy time-frame in judging that the South would never go so far as to shut down oil transport to north Sudan.  And indeed, most estimates average around two to three years for construction, although the Chinese built the pipeline from Heglig to Port Sudan in approximately a year, and Beijing has put in a bid to build the pipeline southward.  Juba would obviously push hard for construction to be as rapid as possible, and would also begin to build domestic refineries that could be supplied by Southern crude.  In short, Juba is clearly prepared to call Khartoum’s bluff—and this creates an extremely dangerous situation.
But without a fundamental shift in the negotiating posture of Khartoum, one that the AU is extremely unlikely to push for, to judge by de Waal’s skewed assessment of the two parties, the talks in Addis will break down on Friday (January 27) when Presidents Salva Kiir and Omar al-Bashir are scheduled to meet.  But we should keep in mind the clear possibility that a collapse of these talks is in fact deliberate on Khartoum’s part: since an already highly distressed northern economy would implode with the precipitous loss of all oil revenues from the South, economic woes of all sorts could be collectively blamed on a hostile and “belligerent” South.  The regime would blame this implosion not on its own gross mismanagement of the economy, its vastly excessive military and security expenditures, or its accrual of an unsustainable external debt of more than $38 billion—but rather on the South.  The generals in Khartoum who now make decisions about war and peace will have their pretext for war—a war that will be justified, in a grim irony, as punishing the South for its “economic warfare” against the north.
If war comes—and it almost daily appears more likely—it will be a war emerging from the indifference, foolishness, and cowardice of an international community that refuses to see the Khartoum regime for what it is, or even to speak honestly about what it has done and continues to do to the marginalized peoples of Darfur, Eastern Sudan, Abyei, Blue Nile, South Kordofan, and increasingly the border regions inside South Sudan.  We have reached the “brink of war” that de Waal speaks of not because of what South Sudan has done, but because of what the international community has not done.
January 24, 2012
Eric Reeves
Smith College
Northampton, MA 01063
Skype: ReevesSudan

Ultimate Media

The Chairperson of EAC Council of Ministers Musa Cherutich has confirmed that the EAC is considering a proposal tabled by South Sudan to join the community.

Cherutich who is Kenya’s Minister of the East African Community told journalists in Kampala that South Sudan is welcome to join the East Africa Community block, so long as it satisfies a few requirements.

He said the EAC ministers will visit South Sudan and study whether it fulfill all requirements to join the community.

Cherutich says South Sudan will first as be invited as an observer before becoming a full member to join Uganda, Rwanda, Kenya Tanzania and Burundi.

UBA, South Sudan, Jan. 24 (UPI) — The government in South Sudan is called on to bring justice to those responsible for ethnic violence in the troubled state of Jonglei, a U.N. envoy said.

Hilde Johnson, U.N. special envoy to South Sudan and head of the U.N. Mission in South Sudan, said peacekeepers are sending in more troops to conflict-stricken areas of Jonglei and conducting aerial surveillance missions over at-risk areas.

Peacekeepers in the region had said they were outnumbered by fighters from the Lou Nuer ethnic militia recently but were able to prevent the conflict from escalating.

The government in South Sudan was praised for committing extra troops to the area. Johnson said, however, that local leaders had a significant role to play in settling community differences.

“The instigators of these terrible attacks and counterattacks must be held to account,” she said in a statement.

Ethnic conflict in Jonglei claimed at least 1,000 lives in recent months. The conflict was triggered by cattle raids and high bridal dowries. Most of the victims are women and children.

South Sudan gained independence in July as part of a comprehensive peace agreement reached with Sudan in 2005. That deal ended one of the bloodiest civil wars in history though ethnic disputes and border conflicts threaten to unravel the peace.

Read more:

Posted Tuesday, January 24  2012

South Sudan dissidents formerly loyal to the slain rebel chief George Athor Deng are currently in power-sharing talks that could see them join government, officials said on Tuesday.

The talks are being held in Ayod County in the troubled Jonglei state between the rebel forces and the civil administration, army spokesman Colonel Philip Aguer Panyang said.

“The civil administration of Ayod County has been in contact with them for some time. So they are negotiating now inside Ayod with late George Athor’s officers,” Aguer said.

Dr George Athor Deng, who based his rebellion in Jonglei state, was killed last December in Morobo County, Central Equatoria State, while recruiting youths into the rebel group.

Despite his death, ethnic fighting has continued to ravage Jonglei state, with officials saying that the arms the rebels provided to the civilians have hiked the level of hostilities.


Ethnic rivalries

Jonglei state Local Government minister Duop Lam said close to 80 officers and soldiers formerly loyal to Athor Deng have already returned from the bush, ready to lay down arms through a reintegration process.

“They are returning and we are receiving them with open arms in respect to the amnesty offered by our president,” said Mr Duop, referring to a pardon President Salva Kiir offered at Independence Day last July to all who picked up arms against the then regional government.

“We are committed to ensure that there is peace in Jonglei state. We are talking with them and we hope we will all agree,” he said.

Militia fighting and ethnic rivalries have claimed thousands of lives in South Sudan’s Jonglei state since independence.

A peace deal with the rebels could lower the prospects of more instability, observers say. The rebels could not be reached for comments

A secret agreement that the government said was reached last year with late Athor Deng indicates that the rebels would fill slots of an advisor, four senior civil servants and two ambassadors at the national level.

In the states, the agreement said, the group would fill slots of an advisor and five civil servants in Upper Nile and an advisor and seven senior civil servants in Jonglei State.

On military integration, the parties agreed that 5,000 of Athor Deng’s forces would be integrated into the SPLA within 30 days.

The agreement also confirmed that the amnesty granted for the second or third time to the rebels by President Kiir was to be respected.

* United Nations says 14 missing from bombing of camp

* Rebels say Khartoum launched second attack north of border

* Incident deepens arguments over oil revenues (Adds South Sudan comment, background)

By Tom Miles and Hereward Holland

GENEVA/JUBA, Jan 24 (Reuters) – An air strike on a refugee camp near South Sudan’s border with Sudan wounded one boy and left 14 people missing on Monday, the U.N. refugee agency said.

South Sudan blamed the attack on Khartoum, which has repeatedly denied carrying out such strikes on its neighbour.

South Sudan seceded from Sudan in July under a 2005 peace deal that ended decades of civil war, but the two countries have remained at loggerheads over issues including oil, debt and fighting along the poorly drawn border.

Several bombs were dropped on Elfoj, a camp of about 5,000 refugees used as a transit site, less than 10 km from the border on Monday morning, a spokeswoman for the U.N. High Commissioner for Refugees (UNHCR) said in a statement on Tuesday.

“Definitely it is Khartoum forces … there is no one else who can bombard South Sudan’s territory,” a South Sudan military spokesman said of the attack on Elfoj. “This is not the first time.”

Rebels fighting Khartoum’s forces said Sudanese government helicopters and ground forces launched separate attacks on the Sudan side of the border on the same day, although the report was impossible to verify independently.

Sudan’s military was not immediately available to comment on either incident, but Khartoum has always denied carrying out such attacks, including one on the Yida refugee camp in November, which the United Nations blamed on Khartoum.

Fighting between Khartoum’s forces and rebels from the Sudan People’s Liberation Army/Movement-North (SPLA/M-N) began in June, before South Sudan became independent in July, and have forced around 417,000 people to flee their homes and 80,000 to cross the border into South Sudan, and into camps such as Elfoj.

The SPLM is now the ruling party in South Sudan but it denies supporting SPLM-N rebels across the border.

The insurgency against Khartoum is a remnant of a two-decade civil war in which many in Blue Nile and South Kordofan states fought with those now ruling South Sudan but ended up falling under Khartoum’s control.

However, fighting around the border also feeds into wider animosity over issues including the division of revenues from oil from South Sudanese fields which is exported through Sudan.

UNCHR did not apportion blame. It moved 1,140 people from the site, around 70 km (45 miles) to the south after the air strike.

Details about what the South Sudanese spokesman described as the attack on rebels in the south of Sudan were sketchy but a U.N. source confirmed it had received reports of two helicopters attacking the Ullu area near the border.

An SPLM-N spokesman told Reuters the settlement of Danfona, just across the border from Elfoj, had been bombed.

“There is a big movement of Sudan Armed Forces from (Blue Nile state capital) al-Damazin towards the Bau mountains. They are coming with heavy weapons and air cover from helicopter gunships,” the spokesman told Reuters by telephone.

Tension between Sudan and South Sudan further escalated on Monday when South Sudan began shutting down oil production, accusing Sudan of stealing $815 million worth of crude that it piped to its northern neighbour for shipment.

(Writing and additional reporting by Alexander Dziadosz and Ulf Laessing; Editing by Stephanie Nebehay and Ben Harding)

South Sudan: UN condemns refugee camp air raid


The UN has denounced the bombing of a camp housing some 5,000 refugees in South Sudan near the border with Sudan.

A boy was injured and 14 other people went missing during the air raid in El Foj in Upper Nile state on Monday, the UN refugee agency said.

A Sudan army spokesman told the BBC that Sudanese forces had not carried out any bombing raids in the area.

South Sudan split from Sudan last July and since then their relationship has deteriorated.

Both countries accuse the other of backing rebels operating in their territories and it is not the first time South Sudan has been bombed – there were attacks in Upper Nile state and Unity state last year.

Refugees fled

The UNHCR says a plane dropped several bombs on Monday morning which landed on the transit site for those who have fled the conflict in Blue Nile over the border in Sudan.

“Bombing of civilian areas must be condemned in the strongest terms,” Mireille Girard, UNHCR’s representative in South Sudan, said in a statement.

The BBC’s James Copnall in Sudan’s capital, Khartoum, says the UN did not say who was responsible, but the refugees will almost certainly suspect the Sudanese Armed Forces.

Blue Nile is one of three border areas – along with South Kordofan and Abyei – where fighting has broken out since South Sudan’s independence.

Many rebels in these regions fought alongside southerners during the decades-long civil war that ended with Khartoum agreeing to the south’s independence.

Relations between Khartoum and Juba are clearly at breaking point. Since South Sudan won independence last July, there has been no end of trouble along their border. At times their armed forces have clashed, using tanks and aircraft, but no all-out conflict.

But the dispute over oil could push relations over the edge. South Sudan has decided to close its oil production after Sudan seized crude oil piped through its territory to reach international markets. Both countries depend almost entirely on oil for their revenues. They have few alternatives to fall back on.

For South Sudan there is the option of finding a route to the sea via Kenya. There are reports that the authorities in Juba will announce the building of a pipeline through Kenya next week. Another possibility is taking the oil in tankers by road. Both are hugely ambitious, but South Sudan argues that it survived years of war and could survive whatever comes its way.

For Sudan, the reduction in oil revenues has already caused difficulties, with people complaining of rising prices.

Both Sudan and South Sudan have much to lose by continued confrontation, but at the moment there seems little appetite in either capital to find a compromise.

Sudan’s army spokesman Khalid Sawarmi said Sudanese forces had been recently involved in fighting against rebels in Blue Nile in the village of Aroum.

“We attacked them and drove them out of this place. [We] did not use any planes or Antonovs there,” he told the BBC.

Following the strike on El Foj, most people have now fled the area or have been helped to relocate by the UN, the agency says.

The authorities in Upper Nile state say they do not have first-hand confirmation of an incident at El Foj.

However Upper Nile’s Information Minister Peter Lam Both did accuse Sudan of carrying out another air raid in the state on Sunday.

He told the BBC that three people were killed and four wounded in Khor Yabous, near the border with Sudan.

He also said South Sudan’s army had fought off an attack by militias around this time.

The UN says more than 78,000 people have fled Sudan since last August because of fighting in Southern Kordofan and Blue Nile.

Our correspondent says the latest incident highlights the bad relationship between the two countries as well as the difficult situation many refugees face.

Recently the focus has been on oil resources, with South Sudan deciding last week to shut down its production rather than, as it sees it, have some of its oil stolen by the north, he says.

The two sides are currently discussing how to share their oil resources at talks in Ethiopia.

But whatever the full truth of the matter, the greatest concern to many is security not oil, our reporter says.

UPDATE 1-South Sudan blames Khartoum for bombing refugee camp
United Nations says 14 missing from bombing of camp * Rebels say Khartoum launched second attack north of border * Incident deepens arguments over oil revenues (Adds South Sudan comment, background) By Tom Miles and Hereward Holland GENEVA/JUBA, 

South Sudan: UN Envoy Urges Sending More Government Forces to Troubled State
The top United Nations envoy in South Sudan stressed today that the best way to protect civilians in the strife-torn state of Jonglei is through military deterrence and urged the Government to deploy more troops and police in the area to patrol buffer 

EAC considering application of South Sudan
The Chairperson of EAC Council of Ministers Musa Cherutich has confirmed that the EAC is considering a proposal tabled by South Sudan to join the community. Cherutich who is Kenya’s Minister of the East African Community told journalists in Kampala 

South Sudan conflict haunts UN
JUBA, South Sudan, Jan. 24 (UPI) — The government in South Sudan is called on to bring justice to those responsible for ethnic violence in the troubled state of Jonglei, a UN envoy said. Hilde Johnson, UN special envoy to South Sudan and head of the 

South Sudan’s Doomsday Machine
New York Times
South Sudan was born as an independent nation on July 9, 2011, with good will and a bounty. Three hundred and fifty thousand barrels of oil per day provided the government with $1000 per year for each of its 8 million citizens.

Medvedev orders Russian troops out of South Sudan
Sudan Tribune
January 24, 2012 (KHARTOUM) – The Russian president Dmitry Medvedev issued a decree on Tuesday ordering his country’s troops to withdraw from the newly established nation of South Sudanwho were serving with the United Nations Mission in South Sudan 

Sudan Rift Prompts South to Curb Oil
Wall Street Journal
By SARAH KENT LONDON—South Sudan has started the process of shutting down its oil production, a government spokesman said on Monday, signaling a further escalation of a longstanding dispute with the North over oil-transit fees. The government 

South Sudan rebels in talks to join government
Africa Review
South Sudan Vice President Riek Machar (centre), flanked by Information minister Marial Benjamin (left) and army spokesman Philip Aguer (back in military uniform) announces rebel leader George Athor Deng’s death at a press conference on December 20, 

Aid group: S.Sudan clashes show “extreme violence”
The Associated Press
JUBA, South Sudan (AP) — Thousands of South Sudanese civilians fled a wave of ethnic clashes and face the danger of being attacked in hiding in what an international medical group on Tuesday called a pattern of “extreme violence.

South Sudan: UN condemns refugee camp air raid
BBC News
The UN has denounced the bombing of a camp housing some 5000 refugees in South Sudan near the border with Sudan. A boy was injured and 14 other people went missing during the air raid in El Foj in Upper Nile state on Monday, the UN refugee agency said.
South Sudan: Latest attacks perpetuate violence
MSF UK (press release)
In Jonglei state, South Sudan, civilians continue to bear the brunt of inter-communal fighting. Wounded patients are still arriving at the Médecins Sans Frontières/ Doctors Without Borders (MSF) hospital in Pibor, three weeks after the violent attack 

Juba, South Sudan:

The Republic of Sudan has suddenly blocked the transportation of South Sudan’s crude oil to the international market. On Christmas Eve all loaded cargo was prevented from leaving, while other cargo was not allowed to load.

Speaking to the press on Tuesday, Minister of Petroleum and Mining Stephen Dhieu Dau said two ships carrying 1.6 million barrels of Dar Blend originating from South Sudan were stopped from leaving the port, and an additional 0.6 million Barrels of Dar Blend were prevented from loading. Yet another two more other ships were prevented from landing at Port Sudan to take possession of 1.2 million barrels of Nile Blend purchased from South Sudan. He strongly condemned the act of preventing loaded ships from leaving the port. “This is unlawful and a violation of international laws and norms.”

The Under Secretary of the Ministry of Information Garang says the blockage has caused the Government of South Sudan to lose a huge sum of money. “At the cost of $118 per barrel, the 1.6 million barrels of Nile Blend would have fetched a huge amount, while each barrel of Dar Blend would secure us $165 million,” he said.

Minister Stephen Dhieu Dau further accused the Government of Sudan of trying to steal the oil resources of South Sudan. The government in Khartoum ordered the foreign oil companies to divert all of South Sudan’s Nile Blend crude oil entitlements for December to the Khartoum and El Obeid refineries. They also ordered 550,000 barrels of Dar Blends Crude oil entitlement for December to be delivered to a Sudan buyer.

“What right have they got to take our oil to sell it to others? Where does this happen in the world?” asked Marial Benjamin the Minister of Information and Broadcasting.

It was also reported that the Government of Sudan also intends to divert 13 percent of Dar Blend oil through its new tie-in pipeline they started constructing between the Petrodar pipeline and the Khartoum refinery.

“Any diversion of South Sudan’s oil without our consent is theft”, said Stephen Stephen Dhieu Dau. “And what right do they have to divert our oil to their refineries”? Marial Benjamin questioned.

To this day, it is not yet clear as to what dishonest plans the Government of Sudan had for the oil it had ordered for diversion to its domestic refineries. There are speculations that Sudan planned to sell South Sudan’s oil to a third party or attempted to “launder” the stolen oil by redirecting it to its own refinery and instead selling its own crude on the world market.

The Government of South Sudan vows to take legal actions against anyone who purchases Sudan’s crude while South Sudan’s oil is being stolen at the same time. “Such illegal acquisitions will find no refuge from South Sudan’s legal authorities and will enjoy no future business with South Sudan,” Stephen Dhieu Dau said.

“We are two different states and each state has got sovereignty over its own resources,” said Marial Benjamin the official spokesman of the government of South Sudan. “There is nowhere in the whole world where a country can interfere and decide on the resources of another country. [For example,] Iraq tried to invade Kuwait and take its oil. The resultant effect of which was clearly seen. If our brothers in Khartoum are thinking that they have another Kuwait which is South Sudan, then they have missed the point.”

By. Yobu Annet

Copyright 2006-2010 The Diplomatic Courier™. All rights reserved.

Khartoum, Sudan – The African Union (AU) on Monday urged Sudan and South Sudan to end what it calls their current unilateral action, saying it threatens to bring the two countries to confrontation.

In a statement issued in Addis Ababa, Ethiopia, African Union Commission Chairperson Jean Ping said he is ‘gravely concerned’ by developments in both countries.

He said the unilateral steps taken by the two governments had brought their relationship to a point of breakdown, ‘with the immediate danger of destroying the possibility of achieving the agreed goal of two viable states, friendly and mutually supportive”.

Representatives of the two countries are currently in Addis for talks to resolve outstanding issues after the implementation of the 2005 Comprehensive Peace Agreement (CPA),

Mr. Ping warned that the spirit that led to a peaceful referendum one year ago and the amicable separation of South Sudan was “fast vanishing. “

He noted that against the backdrop of the absence of an agreement between the two states, the Government of Sudan recently began diverting oil originating from South Sudan for domestic refining and for international sale.

In the last few days, the Government of the Republic of South Sudan has initiated the shutdown of all oil production, in an accelerated manner that risks serious damage to the oil pipeline to the north.

He explained that those ‘reciprocal unilateral measures threaten grave damage to the economic prospects of both countries and relations between them.”

The statement said the actions had also taken place at a time when the AU High‐Level Implementation Panel  (AUHIP) on Sudan is convening negotiations on the question of oil and transitional financial arrangements.

It noted that the Panel presented a draft proposal to the two parties two days ago, and is revising and finalizing this proposal in line with the detailed responses provided by the two negotiating teams.

“The AU is confident that the differences between the parties can be bridged. Neighboring African states and the international community, including the United Nations, the United States and China, have expressed support for the AUHIP proposal. These negotiations are continuing in Addis Ababa.” the statement said.

In view of the urgency of the issues involved, the AU Commission chief revealed that the Inter-Governmental Authority on Development (IGAD), under the chairmanship of Ethiopian Prime Minister Meles Zenawi, is convening an Extraordinary Summit to support the work of the AUHIP

Pana 23/01/2012

By Hereward Holland

JUBA | Mon Jan 23, 2012 11:47am EST

(Reuters) – South Sudan said Monday it started shutting down oil production and accused Sudan of seizing $815 million worth of crude, escalating an increasingly bitter row over oil revenues between the former civil war foes.

South Sudan seceded last July under a 2005 peace deal that ended decades of civil war between north and south, but the two have remained locked in a dispute over how to untangle their oil industries.

The new landlocked nation needs to use a northern pipeline and the port of Port Sudan to export its crude but has failed to reach an agreement with Khartoum over a transit fee, prompting Sudan to start seizing oil as compensation.

South Sudan started shutting down oil output Sunday and expected to finish the process within two weeks, government spokesman Barnaba Marial Benjamin told Reuters by phone.

“The task force has been formed for the shutdown and they are already in the fields carrying out the instructions,” he said, listing the Thar Jath field in Unity state as one field where the shutdown had begun.

Officials said in November South Sudan was producing about 350,000 barrels of oil per day.

China is the biggest buyer of oil from the two countries, some 12.99 million barrels last year. That amounted to five percent of last year’s crude imports by China, which is also the top investor in South Sudan’s oilfields.

South Sudan’s President Salva Kiir accused Khartoum of having “looted” revenues amounting to roughly $815 million and building a tie-in pipeline to divert 120,000 barrels per day of southern production flowing through the north.

“Given our history with the administration of (Sudan’s) President Bashir, we realize that, unfortunately, we must prepare for a disruption of revenue that could last many months,” Kiir told parliament in Juba.

The justice ministry in South Sudan’s capital Juba published a list of three vessels it said had been forced to load southern oil at Port Sudan on orders from Khartoum.

The MT Sea Sky loaded 605,784 barrels on January 13/14, the MT Al Nouf around 750,000 barrels on January 16/17 and the MT Ratna Shradha another 600,000 barrels on Jan 19/20, the ministry said.

Officials in Khartoum could not immediately be reached for comment. Foreign Minister Ali Ahmed Karti told Reuters last week that Khartoum was entitled to seize oil to compensate for transit fees.

South Sudanese officials have said they are planning to build a new pipeline to export oil through East Africa, but analysts have expressed skepticism because of the difficulty of carrying out such a project.

“The financial, technical, and political obstacles to the construction of an alternative pipeline are enormous,” Jean-Baptiste Gallopin, an analyst at Control Risks, said.

“I have no doubt both Sudanese governments are under a lot of international pressure to reach an agreement, because the risks of conflict are real at this stage,” Gallopin said.


The two countries are expected to resume oil talks soon, sponsored by the African Union in Addis Ababa, after negotiations were suspended last week.

Sudan’s President Omar Hassan al-Bashir said this month Khartoum would impose a fee since Juba had not paid anything for using northern export facilities since independence.

Khartoum is demanding $1 billion for fees since July and $36 a barrel as a transit fee, officials have said.

South Sudan’s Kiir said his government was planning to reduce its dependence on oil revenues, which make up 98 percent of state income.

“We will need to find other sources of funding. In doing so I have instructed the ministry of financeto initiate contingency plans for revenue collection and allocation,” he said.

Sudan’s civil war devastated much of the south, leaving the new nation one of the least developed in the world.

The row with Sudan has stirred anger among some in South Sudan, where independence is often framed as the culmination of a long struggle against political and economic marginalization.

Underscoring those sentiments, around one thousand people marched to parliament Monday to support the government’s decision to shut down oil production.

The crowd, mostly university students, cheered, waved their fists in the air and carried placards reading: “Looting our oil is a crime” and “We call on the international community to help the infant country.”

(Reporting by Hereward Holland and Alexander Dziadosz; Writing by Ulf Laessing and Alexander Dziadosz, editing by Jane Baird and Jason Neely)

Sudan seized oil worth $815 million, South Sudan says
By Hereward Holland | JUBA (Reuters) – South Sudan said Monday it started shutting down oil production and accused Sudan of seizing $815 million worth of crude, escalating an increasingly bitter row over oil revenues between the former civil war foes.

South Sudan: UN envoy urges sending more Government forces to troubled state
UN News Centre
Special Representative Hilde Johnson (centre) on a visit to Pibor in Jonglei State,South Sudan. Photo: UNMISS/Isaac Gideon The top United Nations envoy in South Sudan stressed today that the best way to protect civilians in the strife-torn state of 

Sudan-South Sudan: AU urges to stop ‘unilateral actions’
Afrique en Ligue
Khartoum, Sudan – The African Union (AU) on Monday urged Sudan and South Sudan to end what it calls their current unilateral action, saying it threatens to bring the two countries to confrontation. In a statement issued in Addis Ababa, Ethiopia, 

Stopping Sudanese genocides
Jerusalem Post
South Africa has long been a mediator in Sudan and its leadership is needed now more than ever. Sudanese officials are engaged in an escalating and violent triangular assault on two states that border South Sudan – South Kordofan and Blue Nile – as 

Abdulrahman Al-Sadiq Calls on Sweden to Advice South Sudan to Adopt Dialogue 
Sudan Vision
Abdulrahman Al-Sadiq Al-Mahdi, Monday called on the visiting Swedish delegation to advice South Sudan leadership to adopt dialogue as a means to address outstanding issues to defuse tensions. Col. Al Mahdi, in press statements after his meeting with 

Khartoum Breaks International Laws by Blocking South Sudan’s Crude Oil
By Diplomatic Courier | Mon, 23 January 2012 23:33 | 0 The Republic of Sudan has suddenly blocked the transportation of South Sudan’s crude oil to the international market. On Christmas Eve all loaded cargo was prevented from leaving, while other cargo 

South Sudan starts shutting down oil production
Click here South Sudan starts shutting down oil production Originally published: January 23, 2012 8:49 AM Updated: January 23, 2012 9:57 AM By The Associated Press MICHAEL ONYIEGO (Associated Press) (AP) — South Sudan has ordered oil companies to shut 

South Sudan

The Massachusetts Daily Collegian
On July 9, after 21 years of civil war, South Sudan claimed its independence. Although this is great news for the Southern Sudanese, it comes with the problems of having to re-start the development of what is now a separate and new country.

South Sudan Plans to Shut Down Oil Output Over Sudan Fee Demand
20 (Bloomberg) — South Sudan plans to shut down its oil production after Sudan demanded it pay a transit fee of $36 per barrel to ship the crude via a pipeline that runs through the neighboring country, Deputy Oil Minister Elizabeth James Bol said.

South Sudan to shut oil production over thefts
The Seattle Times
South Sudan official says the country is shutting down its oil production because Sudan is stealing its oil. The Associated Press No comments have been posted to this article. A South Sudan official says the country is shutting down its oil