GRI 23 MAR 2020
South Sudan’s contemporary history suggests that conflict could erupt anytime due to the tense and uptight military balance in the capital. Hence, despite the new peace agreement, the country will not be experiencing stability anytime soon.
Since its declaration as a new sovereign state in 2011, South Sudan has undergone multiple phases of upheaval. In 2013, its leaders plunged the country into another civil war. Since then, President Salva Kiir and his former deputy, Riek Machar, had struck twelve peace agreements. Although none of these peace agreements had brought-about lasting peace to South Sudan, they have recently struck another one.
Many are hopeful about the prospect of unity and peace that this peace deal could finally bring-about, and the impact it will have on businesses, including on the country’s oil sector, which accounts for almost the entirety of the nation’s revenue. Even if the aforesaid peace deal is somewhat successful, the businesses and investors should be wary.
Post-independence civil war
Conflict erupted in South Sudan after a brief period following the country’s independence. It began when President Salva Kiir, a member of the Dinka, accused his deputy Riek Machar, a Nuer, of attempting a coup d’état.
Both belonged to the Sudan People’s Liberation Movement (SPLM), the political arm of the rebel army that fought for independence. Machar denied attempting a coup and fled to the Sudan People’s Liberation Movement in Opposition (SPLM-IO), a rival which ignited the civil war.
In 2015, when a peace deal was signed, Mr Machar returned to Juba, the capital of South Sudan, to take the post of vice-president in a coalition government which was still led by Salva Kiir. Fighting erupted yet again in 2016, compelling Machar to flee once again.
It is estimated that around 400,000 people have been killed since the conflict began. Many more fled to the neighbouring countries as refugees.
The civil war has resulted in rape, torture and harsh living conditions, including starvation. The UN Commission on Human Rights in South Sudan revealed that at least 60% of the country experiences significant food insecurity.
Some of this violence from the previous years subsided after another peace deal was signed in September 2018. Since then, international aid has been reaching most parts of the country. The rebel generals were able to visit government-held areas, hinting to the prospects of reconciliation. However, ensuring stability still remains a far-cry.
New Peace Agreement: Hopes and Hiccups
The contents of the new peace deal are more substantial and wide-reaching than what had previously been proposed. This has brought widespread hope about the deal.
For instance, President Kiir announced in February that he was cutting the number of states from thirty-two to only ten. This is an important concession given to the SPLM-IO. After all, the SPLM-IO has long criticized the Dinka’s division of the country into these thirty-two states as ‘ethnic gerrymandering’.
Furthermore, President Kiir is attempting to integrate the rebel forces into the military. The military, which is therefore expected to include both the rebel and government forces, will be having 83,000 personnel. This will perhaps help neutralize the tentative balance of power in terms of military-politics within the country.
However, this new deal is not without problems. The military re-organisation will be a difficult task, given that both sides have been at war for seven years. Moreover, the proposal of decreasing the number of states has a string attached to it: there will be three new ‘administrative areas.’
The SPLM-IO would expect that the new peace deal would pave the way for Riek Machar’s permanent stay in the capital.
However, Machar has to be sure he can safely stay there. After all, he had to flee the capital twice in the past and, in both circumstances, after peace deals had been struck.
That is why Machar wants a three-thousand strong military force this time to guarantee his safety. Although the government has agreed to this, it refuses to withdraw its own soldiers. This could lead to a tentative balance of power within the capital.
Any alteration in the balance of power could cause the conflict to re-ignite.
What does this mean for business?
The country used to produce 350,000 BPD of oil when it was comparatively stable before the civil war started. Since the start of the civil war in 2013, the conflict adversely affected the security and stability of the country, leading to a dramatic decline in oil production. The country’s production of oil has now shrunk to around 166,000 BPD.
In the aforesaid context, ending the conflict and ensuring security and stability will attract huge foreign investments in the oil sector. If this happens, South Sudan’s economy will experience exponential growth.
Already the government is pressing ahead with plans to boost sales by increasing buyers and encouraging international investments. The government has announced its plan to offer fourteen oil exploration blocks during the first quarter of 2020. The offering is certainly tempting. Indeed, the country’s oil output is expected to fall below 100,000 bpd by 2021 if new investments are not poured-in into this sector.
Since the oil output is forecasted to fall by 2021, Kiir and Machar do not have much time to solve South Sudan’s problems. They need to end the instability very quickly, though the existing challenges discussed above suggest that the country will not be experiencing stability anytime soon.
Moreover, even if President Kiir becomes successful in reorganizing the military, it will take years to reach the level where investors and businesses would be convinced that the risk of flaring-up of conflict is minimized. After all, both sides have been at war with each other for seven years.
What’s worse, South Sudan’s contemporary history suggests that conflict could erupt anytime due to the tense and uptight military balance in the capital, despite the new peace agreement. Hence, the risk associated with South Sudan still remains high.
The new government will need to attempt reconciliation among the general population alongside its attempt of military reconciliation. Moreover, it will need to take the necessary steps to end the endemic corruption within the country.
More importantly, when dealing with the country’s challenges and making policies to address those challenges, the new government should think from a long-term strategic lens.