Cash, Oil and Blood

From GlobalPost.com

Massacres, ethnic anger, and rumours of civil war: the latest news from the world’s newest country. But South Sudan is not Rwanda. The latest cycle of conflict in the East African state is not about race or religion. It is about money.

by Richard Walker

South Sudan became an independent country following a referendum in 2011. Hopes were unusually high that after several decades of civil war, one of Africa’s troubled children was set to achieve some of its enormous potential. For South Sudan not only had fabulously fertile lands, the likelihood of great mineral wealth, and proven reserves of oil, it also had the goodwill of most of the world.

Today, South Sudan is in chaos. The vice-president, removed from office last year, is leading a rebellion that that has taken control of much of the oil-producing region and threatens a civil war. The fighting has pitted tribe against tribe, particularly the two largest ethnic groups, the Nuer and the Dinka. There have been well-documented massacres, and organised ethnic assassinations.

Here are horrible overtones of Rwanda and Burundi. But this is different. This is not about tribe – it is about dollars. South Sudan is not yet a country, but a territory, fought over by a loose-knit group of former freedom fighters turned gangsters that happens to call itself a government. They are not driven by tribal hatred – they are driven by the desire for cash.

Last July the president of South Sudan Salva Kiir sacked his deputy, the vice-president Riek Machar. The president’s move was designed to cut the vice-president and his allies off from oil cash, and thus sap their power as elections approach. In response, Riek Machar and his supporters marched on the oil producing fields to the north of the capital Juba, and captured them. This counter-stroke reversed the picture, and cut off the president from the oil fields.

The fact that the president is a Dinka (the largest tribe), and his rival is a Nuer (the second largest), is almost irrelevant. Oil is the arbiter in South Sudan, and oil doesn’t care what language you speak. There is an inevitability about the outcome when oil wealth meets entrenched poverty: I predicted the result in The Economist at the time of the independence referendum.

Remember that crude oil is a generator of vast amounts of cash, and there is no temptation to dishonesty greater than cold cash. Stripped of oil South Sudan is one of the poorest countries in the world (its non-oil per capita GDP is probably around $250), and thanks to oil it has rapidly followed its northern neighbour Sudan into hyper-corruption.

Transparency International rates Sudan as one South-Sudan-banner-00706.jpgof the most corrupt countries in the world, and when Transparency gets around to rating South Sudan it is a certainty that it will match or even exceed that rating. Oil revenues (when the oilfields are working full tilt) are worth around $5 billion a year to the South Sudan government, and virtually every cent of that money is stolen by government officials, and removed to Kenya, Uganda or Europe.

And who are those government officials? A quick search on Google will turn up a leaked US government list of the biggest crooks in South Sudan, their names and rough estimates of how many millions they have stolen. Most of the leading members of government are there.

The Sudanese are not born crooked. But after half a century of almost continuous conflict, South Sudan has very little human or infrastructural capital. It is not capable of absorbing wealth, because there is no economy in which to invest. Education and health, roads and bridges, telephones and streetlights – they are all absent. Pouring money into South Sudan is like pouring water into a colander – there is nothing to hold it, and it flows away.

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What will happen next? There will be more fighting, and then there will be a settlement, based on a new carve-up of oil loot. Longer-term outlook? Very, very poor. Zero human capital makes for zero development prospects. South Sudan will remain a robber state for the foreseeable future, increasingly like its neighbour DRC. The only business beneficiaries will be robber corporations prepared to play impossibly high-risk games, as in DRC. And the world’s last wilderness will be a land of cash, oil and blood.

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