The Logic of War: Khartoum’s Economy After Southern Secession… a précis

By Eric Reeves

July 3, 2011 (SSNA) — What is the logic of Khartoum’s military actions in Abyei and South Kordofan? Why has it engaged in such deeply threatening actions in the weeks leading up to independence for the Republic of South Sudan? What are the politics within the regime that animate this immensely dangerous course of action, including not only seizing Abyei militarily, conducting an immense military operation in South Kordofan, with unambiguous ethnic targeting of the Nuba people, repeated bombing of locations inside South Sudan, but also engaging in a large and ominous military buildup near southern Blue Nile? Why has Khartoum created a situation so volatile and threatening that Kyung-whaKang, the UN Deputy High Commissioner for Human Rights, declared following a recent assessment mission to Sudan: "If this renewed fighting in border areas doesn’t stop and it further spreads to other areas of South Kordofan and Blue Nile, then obviously it’s war again."

There is no simple answer, but these actions suggest that the very worst elements in the National Islamic Front/National Congress Party regime are fully in charge, and that the security threats South Sudan will face in the coming months and years are many and acute. But to understand fully the obstacles the nascent nation of South Sudan will confront, it is critical that we understand the intense economic distress in North Sudan that follows more than two decades of gross mismanagement, rampant cronyism, profligate military expenditures, and exorbitant self-enrichment by the National Islamic Front/National Congress Party regime. Khartoum’s recent, highly threatening military actions in and along the border regions cannot be understood outside the context of what has already occurred, and what is impending, in the economy of the North.

It is insufficiently appreciated just how badly this economy is performing, even before enduring what Finance Ministry officials acknowledge will be a 37 percent decline in oil revenues ($2-3 billion annually) once the South secedes. The IMF has sounded the alarm, warning of a "permanent shock" to the economy. This comes even as inflation is 15 percent and rising; foreign exchange reserves are extremely low, hindering international trade; subsidies for petrol and sugar have been cut, prompting a number of protests; and more painful cuts are coming—at the very time the regime acknowledges the need for much higher taxes. In a desperate short-term measure, Khartoum has engaged in selling large tracts of Sudanese farmland to Arab and Asian investors, a terrible decision from the standpoint of both national economic development and food security. Unsurprisingly, the Sudanese Pound has experienced a de facto devaluation of about25 percent. Growth in the economy has shrunk dramatically (to about 3 percent) and gives signs of shrinking further. Gone are the days of double-digit growth rates, huge oil riches, and foreign journalists marveling at the cafébars that were gently misted in various spots in upscale Khartoum and Omdurman.

But lurking behind this disastrous news is an even bigger overhang on the economy: more than $38 billion in external debt (some $30 billion in the form of arrears, accrued largely under the NIF/NCP). Even in its best years, the oil-dependent economy of the North could not begin to service, let alone repay this gigantic debt. It will continue to drag the economy downwards unless the IMF and World Bank structure some form of debt relief, which Khartoum disingenuously claims is "90 percent" achieved on the "technical side." But this is where the regime’s military behavior along the border regions intersects with its economic prospects.

So far the U.S. and the Europeans have offered only tepid criticism of Khartoum for its military seizure of the contested Abyei region and its increasingly genocidal military campaign in South Kordofan, particularly the Nuba Mountains (predictably, the African Union and Arab League have entirely been unwilling to speak honestly about these realities). But politically it will be impossible for the Obama administration to remove Khartoum from the State Department list of terrorism-sponsoring nations while ethnically targeted violence escalates in South Kordofan; and the U.S. must oppose on "principle" any application for debt relief by a terrorism-supporting state. It was, of course, foolish of the Obama administration to make this issue one for negotiation: Khartoum either does or does not support terrorism, and in fact there is considerable evidence that it still does, chiefly by funneling Iranian weapons to Hamas.

The terms of the "deal" the Obama administration struck with Khartoum also do not include countenancing what has occurred in Abyei, South Kordofan, other contested border areas—and the relentless suffering and destruction in Darfur, which seems to have been accorded "parenthetical status" in the Obama administration’s discussions of Sudan’s crises. The U.S. openly promised to assist Khartoum with debt relief if it fulfills its obligations under the Comprehensive Peace Agreement (2005). But Khartoum is very far from fulfilling a range of obligations, leaving even an expedient Obama administration with little wiggle-room, given the seriousness with which Sudan is regarded by a substantial part of his key political constituency.

But without debt relief, economic problems that are already deeply threatening become insoluble. Some in the regime surely understand this, and so the decision to adopt the present militaristic and threatening posture towards South Sudan—now less than a week away from independence—represents a triumph of the worst impulses within the regime: nationalism, Arabism, Islamism, embarrassment over "losing the South," contempt for the international community, and a belief that more of the lucrative Southern oilfields can be brought by force into the North (some 75 percent of Sudan’s oil production and proven oil reserves lie in the South). Only such conviction about enhancing oil revenues can make war seem "affordable."

This calculation is disastrous, and indeed in the short-run can only diminish oil revenues further: the South will fight with tremendous determination to preserve its territorial integrity, however resolutely it has resisted Khartoum’s military provocations so far. Oil infrastructure in the South will become a prime target for the Sudan People’s Liberation Army (SPLA) in all-out war. Khartoum has only one rational economic decision to make under the circumstances, even from a purely survivalist perspective. But though always capable of vicious and ruthless calculations, Khartoum’s serial génocidaires have never been considered men of reason. The consequences of their world-view are now conspicuously on display, and nowhere more so than in the disaster toward which the Northern economy is moving.

Eric Reeves has published extensively on Sudan, nationally and internationally, for more than a decade. He is author of A Long Day’s Dying: Critical Moments in the Darfur Genocide.

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