08.06.2014 12:07 PM views: 3403 POLITICS Gusterin
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Pavel Gusterin

Center for Asia and the Middle East of the Russian Institute for Strategic Studies

  Russia, which had an impact on the largest by territory African state, which was Sudan before the secession of South Sudan in 2011, lost its positions in the important, from economic perspective, region of Africa, which became an independent state - The Republic of South Sudan. In this direction Russia faces stiff competition, as the interest in the presence and impact on South Sudan is shown by many influential states.
  Implemented with active lobbying and financial participation of the U.S. separation of South Sudan contributed to resolving of challenging economic problem of Washington: the conditions and opportunities to change the impact in Sudanese oil market to the detriment of the ruling here earlier China were created. However, taking in account political, financial and economic activity, which has been recently demonstrated by PRC, there is no complete confidence whether Washington will be be able to exploit the situation.
  In the past decade, China has made significant efforts to develop new oil production regions in Africa, including Sudan: in the last decade this state became the second most important African oil importer to China. This process was especially facilitated by the fact that Sudanese foreign investors began leaving the country. Currently, the oil industry of Sudan is driven by India, China and Malaysia. But, first of all, with the help of China Sudan from an oil importer became a state which exports oil and has its own oil industry. At the beginning of 2013 90 thousands barrels of oil were extracted daily. Khartoum plans to raise this indexes to about 180 thousands barrels per day in 2014.
Events of the last three years in Sudan (armed conflicts, disruption of oil transportation, etc.) had a negative impact on the activities of both national and foreign oil companies, especially because most of the fields, giving about 75% of Sudanese oil production became the property of South Sudan, while the pipelines and oil refineries remained on the territory of the Republic of Sudan.
  The government of South Sudan is engaged in state-building, which requires material resources. According to assessments of the World Bank (WB), foreign exchange reserves of South Sudan are coming to the end. Sharp impoverishment is forecast to begin despite any options of their redistribution. In 2012 amount of citizens of South Sudan living below the poverty line was about 50%. In 2013 this number, according to WB, increased to 83% with the total population of 3.6 million people. According to the same estimations the infant mortality rate doubled in the period from 2012 to 2013. Humanitarian projects, even if they are actively supported by the World Bank and donors are unlikely to significantly improve the situation.
  The international community reacted to the necessity to support the South Sudanese economy and defuse the financial crisis caused by the aggravation of oil confrontation with Khartoum: besides a number of some western countries, Beijing showed its willingness to contribute stabilization funds.
  In April 2012, the President of South Sudan Salva Kiir Mayardit was on a visit to China. As a result of the visit Beijing pledged Juba a loan of $ 8 billion dollars.
  South Sudan hopes for China’s assistance in the construction of a pipeline that would allow to export oil bypassing Sudan. This project, in particular, presumes the construction of oil port, equipped with 32 berths, railway, pipeline (estimated capacity 350-450 thousand barrels per day) and the modern oil refinery on the Kenyan coast. Estimated cost of the project is $ 25 billion.
  It is obvious that China is trying to strengthen the influence not only in Sudan but also in South Sudan. It is important that both Sudans are currently engaged in a dispute over the Abyei region, in the northern part of which are the most perspective Sudan’s oil fields. This area is likely to be a subject to intense competition between Washington and Beijing.
  Sudan until recently remained the world’s only major oil-producing country exporting it to China, India and Malaysia but not to Europe, the U.S. or Japan. The priority of the U.S. now is to weaken the Republic of Sudan, the authorities of which are seen as supporters of the Islamists. The U.S. goal is to facilitate the access to the energy resources of the continents.
  Due to a number of conflict situations on the transit fees of South Sudan oil through Sudan, Juba began looking for alternative ways of transportation. The government of South Sudan has agreed with the leadership of Rwanda, Kenya and Uganda the construction of pipeline bypassing Sudan. The pipeline will be laid to the town of Lamy (Kenya), located on the island. As a part of this project the pipeline from Rwanda to the port city of Mombasa (Kenya) will be built.
  Also one of the causes of the Sudanese exacerbation can be found in the March 2012 oil in neighboring Kenya. Open field returned relevance to the construction of trans-African pipeline from Kenya to Cameroon. This pipeline will not go through the territory of Sudan and will deprive it of revenues from the transit of oil from South Sudan, which is transferred using “Cameroonian route”. According to assessments of the European Center for the Study of crisis situation published in February 2013, the U.S. is hatching plans to open the largest military base in Africa in South Sudan to protect the new pipeline.
  In Sudan and South Sudan the interests of Israel and Iran also face. Sudan has an active anti-American and anti-Israel stance. Israel, in turn, was one of the first to recognize the independence of South Sudan. The government of South Sudan has announced the establishment of diplomatic relations with Israel in its entirety in 2011, two weeks after the declaration of independence. Israel seeks to derive maximum benefits from the relationship with South Sudan and this relates to different spheres of life of the Israel state. So, with very limited natural resources, Israel is interested in getting the South Sudanese oil, so in January 2013 several Israel companies signed an agreement with South Sudan on oil supplies.
  With regard to the Republic of Sudan, here as the basis of future promising cooperation Russia can use the previous developments, in particular, established in December 2010 in Moscow Russian-Sudanese Working Committee, the goal of which is development of economic, humanitarian and business contacts between these two countries, including implementation of joint projects in the field of agriculture, power-generation, oil and gas industry, satellite communication and navigation, transport and developments of mineral resources.
  Business contacts with Sudanese partners are carried out mainly through the Russian-Sudanese Business Council (RSBC) established in June 2010. RSBC consists of more than 30 companies involved in energetics, metallurgy, agriculture, oil and gas industry, telecommunication, communications, banking industry, including VTB Bank, Ltd. “Stel - Computer Systems”, JSC “Geotechnologii”, JSC “GC “Navigator”, etc.
  Particular attention is paid by RSBC to implementation of major joint projects (promotion of the Global Navigation Satellite System (GLONASS) in Sudan, construction of trans-African railway Dakar - Port-Sudan, supplies of Russian grain, developing of hydrocarbon deposits in Sudan by domestics experts), expansion of ties at the regional level, thematic meetings and business missions concerning promising areas of cooperation, organization of Russian participation in trade fairs in Sudan to promote Russian products and services with high added value.
  Russia is ready to cooperate with both Sudanese states, what is confirmed by the visit of Russian delegation to South Sudan in May 2013, which resulted in signing of Memorandum of Cooperation between the Chamber of Commerce of the Russian Federation and the Chamber of Commerce of the Republic of South Sudan.
  The Minister of Foreign Affairs of the RF Sergei Lavrov held talks with Minister of Foreign Affairs and International Cooperation of the Republic of South Sudan B. Barnaba, who was in Moscow on a working visit on the 26th of May 2014. According to the Ministry of Foreign Affairs, the representative of South Sudan delivered a message of president S.-K. Mayardit to the president V.V. Putin. The ministers held a substantive review of the status and prospects of Russian-South Sudanese mutually beneficial partnership, particularly in such areas as mining and refining of hydrocarbons, construction, developing of transport infrastructure, energy and human resources training. Moreover, it was agreed to establish an international bilateral intergovernmental commission on trade and economic cooperation.
  Undoubtedly, the initiative of South Sudan was caused by the growth of Russia’s prestige in the international arena after the annexation of the Crimea and the signing of a gas contract with China. Earlier plans to intensify the cooperation largely remained on paper rather than had specific forms. Considering the importance of this area, the contacts with both Sudans have the potential that can be used.

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