IRIN Webspecial on the Sudan Peace Process

Concern with the process of sharing Sudan's wealth between contesting groups has been an integral part of the peace process sponsored by the regional Inter-Governmental Authority on Development (IGAD), but analysts contacted by IRIN note that there are no principled differences of opinion to confront on the matter, in contrast with areas like self-determination and state and religion.

Wealth-sharing and other issues

Wealth-sharing is closely linked to concerns with power-sharing or the division of powers between the central and southern administrations, and is also linked to economic rehabilitation and reconstruction for the entire country, but in particular for the south. In the negotiating sessions to date, there has been broad agreement between the government of Sudan and the Sudan People's Liberation Movement/Army (SPLM/A) on the need for rehabilitation, and the debate has focused on the appropriate proportions in which to share resources, says John Young, an expert on the Sudanese peace process.

Focus on oil

However, the emergence of Sudan as an oil producer has complicated the issue, not only in terms of reaching a formula for the distribution of the country's oil revenues, but also because it has raised expectations among people in the north and south alike. In fact, the Khartoum government and SPLM/A established a sub-committee on wealth-sharing as a product of the IGAD talks at Lake Bogoria, Kenya, in October 2000, and reached a high level of agreement on all concerns except sub-surface resources, among which oil figures prominently, according to Young, who was present at the talks.

Although the calculations are difficult, experts like Endre Stiansen of the University of Oslo estimate that Khartoum netted approximately US $500 million from oil revenues in 2001. This radically altered Sudan's foreign trade balance, which for decades has been negative but is now positive.

However, remittances from abroad by the large number of Sudanese expatriates are probably still more important to the economy than oil. Stiansen points out that oil revenues in 2000 were only a little more than the annual increase in the interest due on Sudan�s foreign debt, which currently stands at more than US $20 billion.

He further notes that, under the formula agreed between oil companies and the Sudanese government, the latter only receives about 20 percent of the oil revenues. That agreement with the oil companies continues until 2005 and is designed to ensure that they recover their investment costs.

In other words, while oil is an important additional source of revenue to Sudan - and it can be expected that peace will open up new opportunities for exploration and development - it may not be the bonanza that many Sudanese, particularly southerners, expect.

Wealth-sharing versus burden-sharing

Rather than 'wealth-sharing', an Inter-Africa Group (IAG) report prepared for the Sudan IGAD Secretariat spoke of 'burden-sharing' and held that the economic disparity between Khartoum and the regions underpins the political crisis of the country. It noted that the Addis Ababa Agreement which ended Sudan�s first civil war in 1972 looked closely at north-south disparities, and that this focus also figured prominently in IGAD negotiations in Machakos.

Yet, many areas in the north - particularly outside the country�s Nile riverine core - suffer extremes of under-development, sometimes even greater than those of the south, which complicates the issue.

The IAG report also drew attention to the significance of wealth disparities in Sudan, particularly in Khartoum and a handful of other northern towns. A minority of extremely wealthy people share these towns with large numbers of people living in abject poverty. The poor include a considerable number of internally displaced persons (IDPs) from the south, the west and the Nuba Mountains of Southern Kordofan, in south-central Sudan. The IAG study bemoans the fact that the IGAD peace process has not, to date, taken up broader concerns of economic and political under-development in Sudan, because its focus is restricted to the south.

Even with respect to the south, the study contends that a major reason for the failure of the Addis Ababa Agreement of 1972 was its weak economic provisions and the southern regional government's dependence on Khartoum for financing. During the interim of peace between 1972 and 1983, southern Sudan never established an internal revenue base but relied almost exclusively on grants from Khartoum and was virtually bankrupt through this period. The same weakness was seen after the 1997 Khartoum Agreement between the government of Sudan and Riek Machar�s South Sudan Independence Movement (SSIM).

Thus, almost as important as the amount of revenues allocated to the central and southern regional governments is the problem of which level of government will organise and undertake revenue collection.

Revenue formulas

In the absence of agreement, various alternative proposals have been made, all of which involve the establishment of some type of internationally guaranteed trust fund that would disburse the monies. Such a model is currently being tested in Chad, which is also an unequal society with rapidly rising oil revenues.

In the Khartoum Agreement of 1997 and at the Lake Bogoria talks in 2000, the Sudanese government argued that oil and mineral revenues should accrue to central government, which would then allocate an agreed share to a southern regional administration, says John Young. However, in both the NDA�s 1995 Asmara Declaration and successive rounds of IGAD negotiations, the SPLM/A has argued that oil and mineral revenues should be received by the southern administration, which would then allocate an agreed proportion to Khartoum, Young adds.

Though the SPLM/A's approach is different to that of the Sudanese government on this issue, it is thought by some analysts that the movement would have little problem agreeing to the allocation provisions of Annex 3 of the 1997 Khartoum Agreement, which had the south retaining 75 percent of the oil revenues. Though the government may not be so generous this time around, some observers consider that it may be willing to relinquish some revenues to the south on the grounds that any peace agreement would have to provide major funding for reconstruction of the war-effected areas, most of which are in the south, and that providing the south with oil revenues could serve to meet this need.

Other outstanding issues

Other issues related to wealth-sharing and post-war reconstruction have also been considered but not resolved.

According to John Young, in negotiations both parties have supported the notion of establishing a rehabilitation trust fund but Khartoum would like to see it administered by a board comprising representatives from central government and a southern administration, while the SPLM/A has proposed a trust fund wholly controlled by representatives of the south. Curiously, given Sudan�s enormous debt load, negotiations to date have not taken up the issue of the responsibility of the south to contribute to debt servicing and repayment.

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