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[Dehai-WN] Africanarguments.org: Kenya: Country-Sudanese Relations - Heading for a Collision

From: Berhane Habtemariam <Berhane.Habtemariam_at_gmx.de_at_dehai.org>
Date: Thu, 9 Feb 2012 13:26:59 +0100

Kenya: Country-Sudanese Relations - Heading for a Collision

By By Peter Howes,

9 February 2012


Kenya has, over the past few years, enjoyed cordial relations with Sudan:
taking in countless refugees both from what is now South Sudan and from
Darfur, including tens of thousands of Sudanese migrants in the vast Kakuma
Refugee camp in its north west.

Now, however, it finds itself in a quandary, struggling to balance the
opportunity to profit from South Sudan's independence (and oil, more
specifically) whilst its own high court demands the arrest of Sudanese
President President Omar al-Bashir, but finding itself unwilling to risk a
complete diplomatic impasse in its relations with Khartoum.

Nairobi may find that it is forced to choose between prioritising its
relationship with Khartoum, and prioritising its relationship with Salva
Kiir Mayradit's South Sudan. Satisfactory regional trilateralism may prove
impossible, whilst Kenya's rapid expansion of diplomatic and trade ties with
the South post-independence, and its apparent pre-secession supply of arms
to Juba, are a seeming indication of where its loyalty might lie. As
oil-related tensions between Sudan and its southern neighbour heighten -
with the latter ceasing all production and export, and the former briefly
seizing South Sudanese tankers amid demands for transit fees of up to thirty
times the international norm - decisions, if not interventions, by
neighbouring states will have to be made. International fears of a descent
into instability were not calmed by the deaths of 37 in a shoot-out between
security forces in Rumbek North County on Friday (3rd February).

Kenya appears to want it both ways: recognising the potential of South Sudan
as a key partner and agreeing to various infrastructural investments with
the country, including the recent pipeline agreement between the south and
the Kenyan port of Lamu, which hypothetically bypasses the need for a
Sudanese role in the production of South Sudan's oil reserves, whilst
seemingly placating Khartoum by ignoring its own High Court's ruling
demanding the arrest of the ICC-charged Bashir. Regarding the Sudanese
President, Nairobi finds itself in a unique geopolitical predicament -
facing the choice of either alienating itself from Khartoum and rejecting
the African Union's call for member states to disregard the ICC decision, or
ignoring its own judiciary. Thus far it has chosen the latter. The
judiciary's response has been to issue a fresh arrest warrant - this time
with a direct threat to Internal Security Minister George Saitoti if the
order is disregarded and the Sudanese president is not apprehended on his
next entry into Kenya. Bashir last visited the country during the unveiling
of its new constitution in 2010. Despite the brief expulsion of a Kenyan
diplomat late last year, Khartoum has shown itself to be unwilling to
provoke a diplomatic conflict with Nairobi. Another factor could be that
Kenya is unwilling to appear to hold a disregard for the ICC given the
on-going appeal against the charges levelled by that same body against Ruto,
Kenyatta et al.

Another sign of Kenya's seemingly preferential treatment of South Sudan over
Sudan is its current major regional infrastructural investment - the Lamu
Port and Lamu-Southern Sudan-Ethiopia Transport Corridor (LAPSSET). LAPSSET
involves airports, railways, roads and importantly, an oil pipeline between
Lamu (where a new refinery will be built) and South Sudan. Transport links
will connect cities in Kenya, Ethiopia and South Sudan. The existing rift
valley transport corridor connects Mombasa and Uganda, leaving Sudan a
notable absentee from Kenya's infrastructural investment aimed at promoting
regional trade.

The pipeline in particular could lead to a changing dynamic in the East
African extractives industry; emerging oil players Uganda (with its large
confirmed reserves in the Lake Albert basin bordering DRC) and Kenya could
feasibly export through the same pipeline, leaving Sudan, with all of its
oil processing infrastructure, out in the cold.

It remains to be seen whether the pipeline sums add up: observers cannot
fathom why the project is not being considered as a public-private
partnership in the same manner of the proposed (but cancelled as a
consequence of the Libyan conflict) Kenya-Uganda pipeline or the
Chad-Cameroon Development Project. Given South Sudan's GNI per capita of
around $984, the suspected pipeline cost of USD$ 1.5bn (plus hefty insurance
charges) would be an exceptionally large investment, even without
considering other factors such as the pipeline's partial location in
bandit-ridden Western Kenya. Crucially, China - reliant on South Sudan for
more than 5% of its vast oil needs - advocates negotiation between Sudan and
the South, indicating that it views the current status quo of South Sudanese
extraction and Sudanese processing and export as the best mid-term solution.

As a brief aside, South Sudan's GDP per capita is estimated at around USD$
1546 (remarkably, roughly twice that of Kenya) - the discrepancy between
this and GNI being due to Sudan's take of oil revenue - so the macroeconomic
argument for arriving at a new means for exploiting Sudan's oil reserves is
clear. Khartoum's demands are seen in Juba as being sufficiently
unreasonable that South Sudan responded to the claim for $32 per barrel
export fee by proposing a $1 a barrel levy. With talk of an offshoot
pipeline illicitly supplying the north, however, Juba sees a new arrangement
for maximising its oil profits as a priority, and that a temporary halt in
production is a worthwhile risk for long-term revenue gain. The absence of
any revenue sharing agreement after South Sudan's independence was always
likely to be a cause of regional instability, but the temporal pressure
caused by an almost total freeze on South Sudanese government revenue due to
its total cessation of oil production heightens the risk.

To return to the diplomatic angle, both Kenya and South Sudan appear to be
playing a dangerous game with Khartoum, but to impartial observers the
apparent bipartite nature of the Kenyan government's relationship with Sudan
is an enduring frustration. At least, they say, the judiciary's view is
clear, as opposed to the government's mix of reticence and appeasement. The
backdrop to the current dispute is Sudanese criticism of former South
African President Thabo Mbeki's role as Chairman of the African Union (AU)
High-Level Panel on Sudan.

Regional stability thus depends greatly on the governmental response to
Kenya's High Court - particularly regarding any activity on al-Bashir's next
visit to Nairobi, and Khartoum's reaction to South Sudan's apparent
subversion (with the aid of Kenya) of the original secession agreement.
Despite having a more diversified economy than the South (where oil is worth
98% of government revenue and 71% of GDP), Khartoum will understandably be
extremely reluctant to lose its stake in South Sudanese oil, revenues from
which were split 50-50 pre-independence. As for South Sudan, its viability
as an independent state depends not only on getting oil flowing again with
reasonable transit fees but also on economic diversification beyond the
exploitation of its natural resources. With the US accusing Sudan of bombing
its own South Kordofan region, Kenya might not be alone in choosing Juba
over Khartoum. The geopolitical cliché of pipelines as regional arteries is
uniquely applicable in the world's newest state.

Peter Howes is an analyst at Risk Resolution Group


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