By Tim Daiss

Two weeks ago China gave a humanitarian grant to Sudan that included agricultural machines, water pumps and flourmills. Sudan’s Humanitarian Aid Commissioner Suleiman Abdul Rahman said that the grant will assist in addressing humanitarian situations in the three affected areas, including Darfur. He said this was the third such grant from China.

 

Rahman added that “relations between the two countries resulted in several development projects in the country, particularly oil.”

The grant came just two days after the Sudan Tribune ran a story that a Chinese diplomat had denied that China ever promised South Sudan $8 billion in development funds after South Sudanese President Salva Kiir visited Beijing last April.

According to the report, South Sudan announced the figure following Kiir’s trip, but until now Beijing has neither confirmed nor denied that claim.

Not that this is anything new, world powers, China included; often give aid to developing countries. However the difference this time is that Sudan and South Sudan, a country that gained independence from Sudan just over one-and-a-half years ago, have a long and bloody history and China is playing a delicate balancing act trying to placate both countries in efforts to secure and protect its oil investments there.

This played out earlier this month when news broke that South Sudan ordered its oil companies to resume production. Some analysts claim that Beijing was in the background brokering the deal. Disagreements over oil charges and transmission fees forced an oil production shutdown in January 2012, with both Sudans suffering economic fall out, and ensuing saber rattling.

Though South Sudan holds the bulk of the oil reserves between the two (nearly 75 percent), it is a land-locked country and has to export its oil through Sudan using Sudanese pipelines, refineries and its port.

The two sides also reached an agreement last September allowing the South to resume oil export but disagreement over border security issues delayed implementation of the deal.

Before the shutdown, South Sudan produced 350,000 barrels a day (bbl/d), which provided 98 percent of the government’s revenue. Sudan for its part lost around 75 percent of its oil production when South Sudan seceded in 2011.

In addition to resuming oil exports (which could begin by early April), the new deal reached earlier this month includes security agreements, the demarcation of borders, the status of people living across borders, as well as trade and economic issues.

On Sunday, March 10 Sudanese troops began withdrawing from the border zone and the next day South Sudan ordered its troops to withdraw as well.

Though the agreement is being hailed as a significant breakthrough, many experts disagree, claiming that the deal will never be honored.

“In 24 years of controlling virtually all military and economic power in Sudan, the National Islamic Front (now National Congress Party) regime has never abided by a single agreement it has made with another Sudanese party. Not one, not ever,” Eric Reeves, a professor at Smith College and author of a new book “Compromising With Evil: An archival history of greater Sudan, 2007–2012” told Energy Tribune.

He said that Khartoum [Sudan] gets a lift just by signing the agreement and that some of the pressure has been taken off the Sudanese pound in the black market.

“If any oil flows it will be a major boon to a rapidly declining economy that has been run in the ground by mismanagement and self-enrichment and is desperate for Forex,” Reeves said.

Reeves added that from a strategic-military point of view, the only interest Khartoum has in the South are the oil regions and that whatever Sudan could seize militarily would add hugely to the regime’s portion of total reserves.

Geo-political tight rope

This brings us back to China. China’s interest in Sudan can be traced back to the 1990s. As the West imposed sanctions against Sudan for atrocities committed in Darfur during the Sudanese civil war, China moved in. Eager for the country’s oil reserves, Chinese oil major CNPC led the development. China is now Africa’s largest trading partner, bypassing the US in 2009 and is the largest investor in Sudan, importing 70 percent of Sudan’s oil exports.

Since China is a major supporter of Sudan’s president Omar al-Bashir (who was charged by the International Criminal Court with genocide and other crimes during the conflict in Darfur) as well as South Sudan’s largest oil customer, Beijing is walking a geopolitical tightrope.

“This is new territory for China and it’s impossible to apply its ‘non-interference affairs of other countries’ policy’ in any straight forward way,” Reeves said.

He said that China is trying to steer a middle course, largely out of necessity and if Beijing angers Juba [South Sudan] too much, “there are others who can perform the various roles the Chinese are ramping up to do.”

“It’s conceivable that if Juba feels strong enough, it could make things very very difficult for the Chinese in the two producing consortia (Petrodar and GNPOC),” Reeves said.

Many analysts see the eventual demise of Sudan’s current ruling power. In fact, several Sudanese newspapers reported on March 20 that President Omar al-Bashir announced he will step down in 2015 after nearly a quarter-of-a-century in power. If so, it will mark the end of a bloody and destructive dictatorship.

Reeves said that China likely also sees that the regime in Khartoum is slowly dying, even as the South moves closer to a dangerous chaos.

“This makes calculations of where to put investment and influence more difficult [for China],” he said.

Where Sudan and South Sudan will go from here is anybody’s guess, though it will likely be continued turmoil and broken agreements. What is certain is that whatever develops along the way, Beijing will be there offering assistance, quietly asserting its power and trying to secure as much oil as it possibly can.