Posts Tagged ‘trade embargo’

By Ulf Laessing and Alexander Dziadosz

KHARTOUM | Wed Jan 18, 2012 11:17am EST

(Reuters) – Sudan will continue to take a share of oil from South Sudan to compensate for what it calls unpaid transit fees and said an oil deal was unlikely without an agreement on border and security issues, its foreign minister said on Wednesday.

South Sudan became Africa’s newest nation in July under a 2005 peace deal that ended decades of civil war between north and south, but many issues remain unresolved, including oil, debt and violence on both sides of the poorly-defined border.

Tensions escalated last week when Khartoum said it had started confiscating oil from landlocked South Sudan, which exports its crude through Sudan’s pipelines to a port on the Red Sea.

Sudan’s economy has been badly hit by the loss of two-thirds of oil production to the South, and the country is under pressure to ease the hardships of people already exhausted by years of conflict, inflation and a U.S. trade embargo.

The two sides were meant to conclude an oil agreement that would see them sharing revenues, with the south paying fees to export its oil through the north.

The African Union is sponsoring talks between the two countries this week, but Sudanese Foreign Minister Ali Ahmed Karti dampened hopes of a quick deal, rejecting the south’s criticism of its move as “childish.”

“If they are not ready to sit down and conclude an agreement, we will take our right. We will take our entitlements,” he told Reuters in an interview.

“Nobody can hamper us from taking our right. This is our entitlement,” Karti said.

He said South Sudan’s support for rebels in the border states of South Kordofan and Blue Nile was hindering the talks. Juba denies giving support to the insurgents, who fought as part of the southern army during the civil war.

“If you are hosting rebels, preparing them against me, supporting them by munitions, by salaries, by everything, by training, by giving them all facilities. What shall I wait for? What shall I wait for you to do? I’m waiting for war,” he said.

“So if you are preparing to instigate war against me, what kind of any other agreement will be useful?”

He said Sudan had monitored conversations that proved Juba was supporting the rebels – known as the Sudan People’s Liberation Movement Army (SPLA-N) – by continuing to pay their old salaries.

“We listen to them. They know that we listen to them. What kind of stupidity? You know I’m listening to what you say every day, and you go on talking about salaries, ammunition, supporting us, and bringing more tanks near the borders, and the rest,” he said.

Any oil agreement would likely depend on a broader deal that addressed the fighting and other security issues, such as marking the border, Karti said.

“To me, it could be a holistic approach. A piecemeal way of doing things is not enough, and it proved not to be working. It’s better to begin with the top issues – the security issue to me is very important – and then the rest will be easy,” he said.


Sudan and South Sudan have been discussing a transit fee for southern oil exports since Juba’s independence, but their positions have remained wide apart. Khartoum wants $1 billion in rear payments plus $36 a barrel to use the export pipeline, roughly a third of the South’s export value.

South Sudan has offered to sell oil to Khartoum at discounted prices and give financial aid, but Karti said some southern officials had taken a “sarcastic” approach.

“Even some of them, sarcastically, they tell us that they are donors and they will give us some tens of millions, and they will be spending those millions on humanitarian issues, and trying to solve problems in the needy areas,” he said.

“They talked to us like donors, whereas we are calling for them to sit down at a table to talk seriously,” Karti said.

“(Saying we are) taking their oil, stealing their oil – this is childish,” he said. “This is our right. If this does not (suit) them, let them block the oil. It is their oil. We will not at all fight for the oil to come through our pipeline.”

He said a debt pile of almost $40 billion for which Juba refuses to share responsibility was weighing on the economy but rejected some analysts’ forecasts that Sudan’s economy is headed for a severe crisis.

“It is not bad. I will not accept this word,” he said. “We are trying our best to emerge as a country that has good resources, and as a country that should be supported.”

Most Western firms have shunned Sudan since the United States put a trade embargo in place in 1997 for the country’s role in hosting prominent militants like Osama bin Laden.

Karti said Gulf Arab states were increasing their investments but Sudan would not ask for any outside help to overcome economic difficulties.

“We are not begging from anybody, we have our resources,” he said.

(Additional reporting by Khalid Abdelaziz; Editing by Peter Graff)

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KHARTOUM Aug 8 (Reuters) – Sudan said on Monday it would pour more dollars into its economy and warned dealers not to exploit a rise in demand for foreign currency after the secession of the country’s oil-rich south.

Sudan has been hit by a scarcity of dollars that analysts say could get worse after South Sudan took away 75 percent of the 500,000 barrel of oil production when it became independent on July 9.

South Sudan relies on northern oil facilities and refineries to sell the oil but analysts say Khartoum will probably get less for usage fees from the South than the equal split of oil revenues agreed under a 2005 peace deal.

Falling oil revenues would make it more difficult for the north — where 80 percent of 40 million Sudanese live — to get foreign currency needed for imports in a country weighed down by years of conflict, high inflation and a U.S. trade embargo.

The central bank in Khartoum said it was able to meet a rising demand for dollars due to “speculators” and southerners who get their final paychecks in hard currency before returning home.

In July, the central bank poured more than $500 million into banks to stabilise the currency on the key black market at a rate of a dollar buying around 3.4 Sudanese pounds. This week some black market traders cited rates of 3.45 or 3.5, well below the official rate of around 3.

“Speculators of foreign currency through illegal and unlicensed channels will be imprisoned and face confiscation,” the central bank said in a statement.

Annual inflation was 15 percent in June after 9.8 percent in November when the central bank effectively devalued the pound to erase the need of a black market, a measure that has had little success.

Both Sudans are currently launching new currencies after the South became independent, moves that carry risks for both sides without coordination.

There is also no sign of progress how to share oil revenues in the future between the two countries. The North held last week a southern oil cargo in its Port Sudan terminal until Juba paid custom fees.

The South has rejected a northern proposal to charge a usage fee for its oil facilities of more than a third of the South’s current export value, based on Reuters calculations. (Reporting by Ulf Laessing)