Dr. Lam Akol: Comments on the Cooperation Agreement Between Sudan and South Sudan

POSITION OF SPLM-DC on: “The Cooperation Agreement between The Republic of the Sudan and The Republic of South Sudan”, Addis Ababa, 27 September 2012.

 A-  General

1.      The two parties specifically state that “the people of South Sudan and Sudan share a long and rich common heritage and are bound by immutable facts of geography to remain interdependent neighbours” and affirm their “determination to work in close partnership, to finalise all outstanding details remaining in relation to the Agreements they have reached, relevant to the implementation of the Agreements thus finalized”. Here eight agreements are listed and published.

2.      The outstanding issues are listed as follows:

(i)– The Issue of the disputed and claimed border areas, and this shall be negotiated by the Parties (the two countries)

(ii)– The Final Status of Abyei Area, will be handled by the AUHIP through engagement with “The AU Peace and Security Council, as well as the Parties”.

 

Stemming from the above facts, it is clear that the Parties have agreed on the

following: 

           (1)– The only outstanding issue to be negotiated by the parties is the disputed

                   and  claimed border areas.

           (2)– The issue of the Abyei Area is now left in the hands of the AUHIP.

           (3)– All the other issues have been resolved save for some details that will be  

                  finalized through joint ministerial and technical committees to be formed by 

                  the two countries. All these committees shall be formed within varying

                 number of days from signing the Agreement (for oil and security

                 arrangements) or its coming into effect after ratification by the Parliaments

                 of the two countries (for the others).

B-   Agreement on Oil and Related Economic Issues

1.      This is an elaborate agreement but most of the aspects that came in it are of technical nature and should have been agreed upon in the National Petroleum Commission before secession.  It is mind-boggling how during the entire interim period there was no formalized participation of the Government of Southern Sudan (GoSS) in the upstream and downstream oil operations (e.g. quality procedures, metering, cross border reservoirs, etc.).

2.      The financial arrangements for the transportation, transit and processing fees of South Sudan oil in the Sudan shall be as follows: US $ 9.10 per barrel for the oil produced by Petrodar, US $11.00 per barrel for the oil produced by GNPOC and a transitional financial arrangement sum of US $ 3.028 billion to be paid at a rate of US $15.00 per barrel. This means that, the Government of South Sudan shall pay per barrel: US $ 24.10 and 26.00, respectively, for the Petrodar and GNPOC oil productions; an average of about US $ 25.00 per barrel.

3.      Each Party agrees ‘to unconditionally and irrevocably cancel and forgive any claims of oil related arrears and other oil related financial claims outstanding to the other Party up to the date of this Agreement, including the claims of arrears and other financial claims filed by each Party with the African Union High Level Implementation Panel on Sudan in February 2012.’

4.      The issue of SUDAPET is postponed to be discussed within a period of two (2) months from the signature of this Agreement.

5.      The Government of South Sudan ‘shall take the necessary measures to resume the oil production from all fields in the territory of RSS, and shall within fourteen (14) days of the signature of this Agreement issue an instruction to the oil companies operating in the RSS to re-establish the oil production…’. The Government of Sudan shall within the same period issue instructions to the oil companies to re-establish processing and transportation facilities for oil produced in South Sudan.

6.      A joint ‘Petroleum Monitoring Committee shall be established within twenty-one (21) days of the signing of this Agreement’ to oversee its implementation.

7.      The agreement shall remain in force for a period of three (3) years and six (6) months as of the date when the first South Sudan oil is delivered at the marine terminal and a bill of lading issued.

 From the foregoing, it is clear that:

 (1)– This agreement admits that the Government of Southern Sudan has

        failed its duty during the whole interim period to monitor the oil

        production, exploitation and transport arrangements. This is a right

        granted to it by the CPA. 

(2)– the final figure agreed upon as fees for the exportation of South Sudan

       oil through Sudan and using its facilities (US $ 25/bbl) is not much

       further from that the Government of Sudan had asked for (US $ 36/bbl)

      during the negotiations.

 (3)–  The cancellation of all ‘claims of oil related arrears and other oil related

         financial claims outstanding to the other Party’ makes nonsense of the

         much publicized Government claim that oil of South Sudan has been

         stolen by Khartoum.

 

   (4)–  The issue of SUDAPET is an intricate matter and not just a ‘detail’ to be 

          left to the joint committee.

 

C-  Agreement on the Status of Nationals of the other State and Related Matters

    This is essentially an agreement on the Four Freedoms (residence, movement,

 

undertaking economic activity and ownership of property) and a standing Joint High

Level Committee shall be established to “oversee the adoption and implementation of  

joint measures relating to the status and treatment of the nationals of each State in the

territory of the other State”. The committee shall hold its first meeting within two (2)

weeks of the entry into force of this Agreement. There is no further elaboration on the

matter.

 D-  Agreement on Border Issues

1.      The Parties shall establish a Joint Border Commission within two weeks of the ratification of this agreement to “oversee the management and demarcation of the border”.

2.      There will also be established within the same period a Joint Demarcation Committee under the Joint Border Commission to “manage and supervise the demarcation and the maintenance of the boundary pillars and beacons”. This committee will in turn establish joint technical teams composed of forty (40) persons from each State.

3.      The two States shall confirm the completion of the demarcation process through a written formal agreement a copy of which shall be deposited with the African Union Commission.

4.      The provision of protection for the demarcation teams, as well as the movement of members of border communities across the international boundary is outlined.

 This is a framework agreement short of details and there is little or nothing to be said about it.

 E-   Agreement for Cooperation on Central Banking Issues

 The Parties shall establish a Joint Central Banks Committee within thirty (30) days of the ratification of this agreement with “the principal purpose of supporting financial stability and sound banking policies in the two States in order to enhance cooperation and to promote trade and the mutual economic viability of the two States.”

  The terms of reference of the joint committee as well as the other matters related to commercial banks are technicalities which only time will tell whether or not they will be adhered to.

F-    Agreement on Trade and Trade Related Issues

 1.      The Parties agreed to establish a Joint Ministerial Committee on Trade Relations within thirty (30) days from the ratification of this Agreement which “shall have the primary responsibility for all policy on trade and trade-related matters between the two States and shall oversee and approve the programme of the work of the Joint Technical Committee on Trade Relations.”

2.      The Joint Technical Committee on Trade Relations shall be established within thirty (30) days of the establishment of the Joint Ministerial Committee on Trade Relations, to “coordinate and promote technical cooperation and the implementation of trade and trade-related issues.”

 Again, this is a framework agreement and the details of what it can achieve for the benefit of the two countries are left to the two committees.

 G-  Agreement on Certain Economic Matters

 1.      The issues dealt with are: the assets and liabilities, including external debt and balance of payments support; state archives; cultural heritage property; non-oil arrears and other claims.

2.      The Parties agreed that Sudan shall retain all external debt liabilities and external assets of the Republic of Sudan. At the same time the two Parties shall work together to “secure from international creditors a firm commitment to provide comprehensive relief of the external debt of the Republic of Sudan”.

3.      If the international creditors do not give a firm commitment as in point 2 above, the two Parties shall enter into negotiations on the apportionment of the external debt of the Republic of Sudan and its assets.

4.      Each Party agrees ‘to unconditionally and irrevocably cancel and forgive any claims of non-oil related arrears and other non-oil related financial claims outstanding to the other Party up to the date of this Agreement, including the claims of arrears and other financial claims filed by each Party with the African Union High Level Implementation Panel on Sudan in February 2012.’

5.      The Parties and the AUHIP shall seek international assistance from the international community with respect to:

(a)    contributions of monies to provide for the one third of the aggregate amount required to fill the financial gap to the Sudan resulting from the loss of oil revenue from South Sudan (amounting to US $3.028 billion);

(b)   funding to support South Sudan in carrying out programmes and projects to meet its urgent developmental challenges;

(c)    direct debt relief of Sudan’s external debt within two years; and

(d)   assistance in the lifting of all economic sanctions imposed on Sudan.

 

From the foregoing, it is to be observed that:

 (i)– The Sudan retained external debt liabilities in exchange of South Sudan

       forgoing external assets. It is obvious that external assets, including   

       embassies buildings, have monetary value far more than all the external

       debt of Sudan which was estimated at the end of December 2010 at US            

       $37.7 billion.

(ii)– Even after this concession, both parties will strive to get from the creditors

       a firm commitment to cancel Sudan’s debt. Since South Sudan was going to

       be involved in working to get debt relief, why not from the outset divide both

        the external debts and assets?

(iii)– In addition, South Sudan will help get financial support to Sudan to cover

        Its oil-revenue gap and assist in securing the lifting of economic sanctions

        imposed on Sudan since 1997. In return, Sudan will ‘help’ South Sudan to

        get funding from the international community for its developmental

        programmes; which funding it was getting already without external help.

 

  (iv)– The cancellation of all ‘claims of non-oil related arrears and other non-oil 

         related financial claims outstanding to the other Party’ puts South Sudan

         at a disadvantage since it has more claims to the non-oil arrears than the

          Sudan.

 

H-  Agreement to Facilitate Payment of Post-Service Benefits

 1.      The Republic of Sudan, as the continuing state, has acknowledged its duty and agreed to pay all post-service benefits to all South Sudanese who were working for the government of the Sudan.

2.      A Joint Ministerial Committee on Pensions shall be established within thirty (30) days of the signing of this Agreement with “primary responsibility for discussing and reaching agreement on all issues related to pensions administration of relevance to the two States.”

3.      Another Joint Technical Committee on Pensions shall be established within the same period.

 

The resolution of the vital matter of post-service benefits is overdue.  This is a

        framework agreement which, it is hoped, will solve the problems of the many

        South Sudanese who have not got their post-service benefits up to now. Like

        the other agreements, the details of the actual solution of the problem are left

        to committees.

 I-      Agreement on Security Arrangements

 1.      The Parties renewed “their commitment to the cessation of harbouring of, or support to rebel groups against the other State.”

2.      The Parties renewed “their commitment to immediately cease all hostile propaganda and inflammatory statements in the media”.

3.      The Parties reiterated that they “shall immediately issue instructions to their forces to withdraw unconditionally to their side of the border.”

4.      The ’14 mile’ area shall be completely demilitarized and “the status quo of the joint tribal mechanisms for the resolution of disputes” maintained.

5.      The ‘Safe Demilitarized Border Zone’ is agreed and shall be immediately operationalized.

6.      The Parties agree to immediately open the 10 agreed border-crossing corridors. The modalities of this process shall be agreed by the Joint Political Security Mechanism.

 It is clear from this Agreement that:

 (i)-  The SPLA is to withdraw from ’14 mile’ area. As is well known, Sudan has

       insisted on rejecting the map for the demilitarized zone that puts ’14 mile’ on

       the side of South Sudan. It has now got its way.  This seems to be the move

       that opened the way for the agreement on the ‘Safe Demilitarized Border

       Zone’.

(ii)- The government of South Sudan has consistently denied harbouring and

        supporting rebels of the Sudan in its territory. Now, not only has it admitted

        that, but has agreed to cease harbouring of and support to these rebels.

(iii)- The insistence of the government of the Sudan for a security agreement before

        signing other agreements has now paid off.

 Conclusion

 The analysis of the agreements signed in Addis Ababa on the 27^th of September 2012, between the governments of Sudan and South Sudan has shown that for the first time the issues have been dealt with one-by-one on their merits rather than sticking to the condition always imposed by the SPLM side that no agreement would be signed without the conclusion of all the outstanding issues, especially the one relating to Abyei area. Now this agreement has been signed without agreement on the disputed and claimed border areas; conclusion of the status of Abyei area; and finalizing the other matters on which agreement has been reached. The remaining points in these agreements, or what the Parties call ’details’, were left to be settled by joint committees to be formed at a later date.  These agreements were made possible by concessions made by the delegation of South Sudan on oil fees, non-oil arrears, cessation of support to Sudan’s rebels, and demilitarization of ’14 mile’ area.

 The big concessions were in the areas of oil fees and security arrangements. The correct reading of this situation is that the South Sudanese side was desperate to get the oil flowing again and this was exploited by the Sudanese side to push for concessions in the security area the conclusion of which has always been its condition for signing any agreement with South Sudan. The celebrations in Khartoum for the signing of these agreements attest to that conclusion.

 The SPLM-DC pointed out in January this year, when the oil production was shut down, that the decision to do so was a hurried one that did not study the consequences of the shut-down, nor put forward alternative sources of revenue to replace the 98% dependence of the national budget on oil. Exactly, as the World Bank predicted, the economic crunch which followed that shut-down is now biting the government in Juba. Hence, their hurry to get the oil on stream again. Therefore, the agreements in Addis Ababa were meant to serve the short-term interest of the SPLM and its stalwarts who are running out of money as a result of closing down oil production facilities. What goes round comes round.

South Sudan has little to gain from these agreements, except may be in improved security if the two governments of Sudan and South Sudan will live up to their commitments to live as two good independent and sovereign neighbouring states in peace and economic interdependence.

 

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