[Dehai-WN] (Reuters): ANALYSIS-Inflation, challenges mount in newborn South Sudan

From: Berhane Habtemariam <Berhane.Habtemariam_at_gmx.de_at_dehai.org>
Date: Thu, 22 Dec 2011 22:45:53 +0100

ANALYSIS-Inflation, challenges mount in newborn South Sudan

Thu Dec 22, 2011 2:26pm GMT

* Sudan, South Sudan troops have already clashed

* Corruption a "big problem" - editor

* A third of population will need food aid in 2012

By Ulf Laessing

JUBA, Dec 22 (Reuters) - Just six months after South Sudan gained
independence, severe inflation, rebellions and escalating tensions with
Sudan are dampening the euphoria that followed secession and undermining
efforts to build badly-needed state institutions.

South Sudanese celebrated the birth of Africa's newest nation on July 9 as
they split away from Sudan at the climax of a 2005 peace deal that ended
decades of civil war.

But hard realities have since set in. Disputes with Sudan's government in
Khartoum have raged over issues from oil revenues to ending border violence.
The countries' armed forces clashed in a rare direct confrontation in a
disputed border region this month.

Even if peace with Khartoum holds, analysts say South Sudan - a war-torn and
severely underdeveloped country bordering six states - could become a
quagmire with several lawless regions and rising poverty.

About 2.7 million South Sudanese, roughly a third of the population, will
need food aid from next year because of crop failures and widespread
violence that killed more than 3,000 people in 2011, the United Nations

Violence on the border with Sudan has disrupted trade, pushing annual
inflation to almost 80 percent, up from 57 percent in August. Inflation is
100 percent in some regions, analysts say, adding to the hardships of people
already exhausted by decades of civil war.

The government has sold oil worth around $3 billion since July but there are
few signs it is channeling the money to development projects or shifting
resources from the dominant armed forces.

"South Sudan's leaders now have the choice to either continue to direct a
huge percentage to the army and spend at a rate which will see the country
to a budget deficit as early as 2020, or focus on specific and efficient
development projects," Dana Wilkins at campaign group Global Witness said.

Nhial Bol, editor of South Sudan's independent daily newspaper "The
Citizen", said President Salva Kiir's cabinet and parliament have been slow
to issue laws, while many guerilla fighters-turned-officials have been
unwilling to open accounts to public scrutiny.

"The government is not delivering," Bol said. "Corruption is a big problem.
I have no idea where the oil revenues are going. It is not published," he
said. The government had found the money to buy expensive cars for ministry
officials, he added.


Ravaged by civil war and neglect dating back to the British colonial era,
South Sudan is one of the world's least developed nations. It has less than
100 km (62 miles) of paved roads and its budget depends almost entirely on
oil revenues.

There is hardly any infrastructure outside the capital Juba, which buzzes
with hundreds of consultants and aid workers. Aid groups provide basic
services such as clean water in many regions of the country, roughly the
size of France.

Adding to social pressures, more than 350,000 southerners have returned from
Sudan and more than one million might follow once their legal status ends in
Khartoum in April. They will need jobs and housing.

The country also needs to lessen its reliance on oil because its output of
about 300,000 barrels per day will halve within a decade unless new finds
are made, according to the International Monetary Fund (IMF).

"There are some pockets of development, but overall not much is happening.
The government does not have the resources to process projects and is not
working efficiently," a coordinator at a large aid group said.

Diplomats say it was always clear that kickstarting development would be an
uphill struggle, but rampant corruption and a lack of laws for almost every
aspect of society are hindering progress.

At a U.S. investment conference this month, Kiir promised transparency but
analysts say he is unlikely to do much because he needs to avoid upsetting
the power balance of former commanders, tribes and veterans of his dominant
Sudan People's Liberation Movement (SPLM).

"Any sudden move against senior figures within the cabinet or the army would
expose Kiir to accusations of tribal favouritism," Jean-Baptiste Gallopin,
Sudan analyst at political risk consultancy Control Risks, said.

"It could also trigger attempts to remove him from office. So we could see
some improvement at the lower echelons of the bureaucracy, but high-level
figures are likely to be spared from corruption investigations," he said.

The government has made some progress fighting rebel groups. Prominent
insurgent leader George Athor was killed this month, and others have been
convinced to accept an amnesty offer.

But John Prendergast, a former State Department official and co-founder of
the Enough Project, said military solutions would not be enough.

"Reducing intercommunal conflict in South Sudan will require security,
economic and political measures. Further efforts need to be expended in
enhancing opportunities for minority ethnic groups in state and national
government," he said.


Though a return to full-scale war with Khartoum seems unlikely, diplomats
say tensions will get worse as both governments need revenues from South
Sudan's oil.

Landlocked South Sudan relies on Sudan's export facilities to sell its
crude. Analysts say plans to build an alternative pipeline to Kenya will not
be viable for the foreseeable future.

The two old civil war foes have failed to agree on a transit fee Juba will
have to pay to send its oil through Sudan, prompting Khartoum to halt
exports temporarily last month.

"There is no breakthrough at all in sight. Both are worlds apart," one
diplomatic source said.

By regularly closing the poorly marked joint border, Khartoum is hurting
South Sudanese regions which depend on food imports from the north and are
awash with refugees escaping fighting in Sudan's South Kordofan and Blue
Nile states.

Aid workers visiting border areas say the southern army is reinforcing
checkpoints and other military bases.

"As long as these border conflicts continue, South Sudan will not cut down
on its army and military budget, which is a drain on resources needed for
development," the diplomat said. (Reporting by Ulf Laessing; Editing by
Andrew Heavens)

C Thomson Reuters 2011 All rights reserved


Sudan police fire tear gas at protesters-witnesses

Thu Dec 22, 2011 6:17pm GMT

KHARTOUM Dec 22 (Reuters) - Police fired tear gas and used batons on
Thursday to break up a student demonstration in Sudan's capital Khartoum
over a government dam project, witnesses said.

The protest was the latest in a series staged in recent months over rising
food prices and other issues in the African country, which is facing a
severe economic crisis and multiple armed insurgencies.

About 200 students gathered outside the University of Khartoum to support
villagers displaced by the Merowe dam on the Nile river who had protested in
the capital a day earlier, the witnesses said.

"A strong message, oh Bashir, it's our rights or change," they chanted,
referring to Sudan's President Omar al-Bashir.

Dozens of police wearing helmets and bearing plastic shields and batons
clashed with the protesters, the witnesses said. Sudan's police spokesman
was not immediately available to comment.

Police broke up a demonstration staged on Wednesday by about 100 villagers
displaced by the dam, witnesses said. The police denied using violence to
disperse them.

Sudanese students staged demonstrations in January and February in an
attempt to emulate popular uprisings in Egypt and Tunisia, but the protests
were quickly broken up and the movement failed to gain broader momentum.

Sudan's economic outlook worsened after South Sudan seceded in July, taking
with it about three quarters of the formerly united country's roughly
500,000 barrels of oil output - the lifeblood of both economies.

The $2-billion, Chinese-built Merowe dam was completed in 2009 with the aim
of doubling Sudan's electricity supply. The 1,250-megawatt project displaced
tens of thousands of people and has long been a source of controversy.

Villagers have clashed with authorities over the dam in the past, though
most have now accepted government compensation and moved. (Reporting by
Khalid Abdelaziz; Writing by Alexander Dziadosz; Editing by Andrew Heavens)

C Thomson Reuters 2011 All rights reserved



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