A deal that is only half done

Aug 9th 2012, 15:16 by The Economist online | NAIROBI

THE Sudans may never fully agree to the terms of divorce. And it is unclear whether a provisional settlement to share oil resources will be enough, at least for a while, to stop the rowing parties from trying to murder each other. The pair went to the brink of war earlier this year after a quarrel over how much the new state of South Sudan should pay to export its oil via the north’s pipelines ended with production being shut down altogether.

The result led to inflation and austerity north of the border and near-bankruptcy in the south. Under intense foreign pressure, talks brokered by the African Union (AU) have brought about a compromise which, it is claimed, will see the oil flowing again “in a matter of weeks”.

Splitting what was Africa’s largest country in half left most of the oil in the landlocked south and all of the means to get it to market in the hands of the north. The north’s government in Khartoum demanded compensation for letting the south, with its oil, secede. So it imposed inflated transit fees for the use of its ports and pipelines. Its counterpart in Juba, the new state’s capital, thereupon preferred to beggar itself than be held to ransom. In January it unexpectedly turned off the spigot.

Under a deal struck in Addis Ababa, Ethiopia’s capital and headquarters of the AU, the south is to pay the north a lump sum of $3 billion over three years, while transit fees during that period will be waived. The Sudans’ biggest customer, China, will sweeten the deal by telling its oil companies to pay over the odds to the north. If the south sticks to its side of the bargain, the American administration will bail it out for the time being and encourage its Gulf allies, such as Saudi Arabia and Kuwait, to help bankroll the government in Sudan’s Arab north. Hillary Clinton, the American secretary of state, was recently in Juba, pressing the southerners to accept a compromise.

Both sides are posing as victims to their foreign backers, while assuring their home audiences that they have won the day. The southerners say they will pay the equivalent of an extra $10 a barrel for transit costs, while the northerners say they are getting an extra $26 a shot.

The conflicting versions show how vulnerable the leaders of both Sudans have become. President Omar al-Bashir in Khartoum has reassured factions in his army and ruling party that the deal still depends on getting what they want over the disputed north-south border. But that issue has been put off until another summit next month. If a border deal is not reached, the oil deal could still fall through. And some hardliners in both north and south still want to up the ante in the hope of forcing regime change on their opponents. The haggling may have only just begun.

http://www.economist.com/blogs/graphicdetail/2012/07/global-food-security

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