South Sudan is surviving without oil — barely

About a month ago, President Salva Kiir said South Sudan’s oil production would restart in a week. Famous last words, it turns out – not a drop of crude has come through the pipeline since.

It’s not that there’s no urgency: at the time of the shut-down in January, the government relied on oil for 98% of its revenues. But the delayed restart is a symptom of a complex matrix of social, political and economic tensions the government is struggling to deal with, foremost of which are its fraught relations with the Sudanese government in Khartoum.

I popped up to Juba from Kampala last week for a conference and I was curious to see how a country can survive when its government is deprived of nearly all its revenue. I found that this country’s situation can’t be analyzed like that of any other. To an outsider like me, it’s bewildering. Other countries’ politics are colored by tribal and ethnic issues of course, and relations between neighbors are often tense. But South Sudan combines each of these in their extreme with an institutional incapacity and a society so conditioned by war that, measured on these terms, it’s frustrating but hardly surprising that the oil has yet to flow.

Without oil the government’s hands are tied, but from what I saw most people don’t rely on the government for much anyway, and probably didn’t count on it before oil production was shut down.

Juba is booming – it’s probably the fastest-growing city in the world, with new hotels regularly sprouting up next to vast slums that are also growing – because the new airport and nearly all the other construction work in Juba is coming from international aid through the private sector. The United States alone pours $500 million into South Sudan annually and the bulk of it is going to private partners who can guarantee service delivery; not the government.

In terms of service delivery many South Sudanese seem not to expect much from the government anyway. During a visit to the University of Juba I asked a room of twenty students how many of them had homes with electricity and running water. Four hands went up. But there was little sense of outrage or desperation; this is what they are used to, and these are university students, the country’s homegrown elite. There is so little faith that if production restarted today, some said they would expect no more from the government than they receive now.

If oil flowed today it would probably rake in more like 85% of the government’s revenue rather than 98%. Filling the gap is income gleaned from customs fees levied on imported products, mainly, along with international aid. (An aside on imports – South Sudan has the most cattle per capita in the world but, since cows are currency, it imports most of its food from outside: hence the customs revenue. But protein deficiency is common and food insecurity is rising with less than 5% of arable land being used to grow food.)

Perhaps the biggest potential risk of the oil shutdown – other than non-delivery of services and over-reliance on international aid – is the government’s bloated salary roll and resentment among employees who are not being paid by their cash-strapped employer.

The government allocates a huge portion of its expenditures (by some estimates over 50%) to security – fighters from the Sudan Peoples’ Liberation Army (SPLA) who made their name and gained hero status fighting the war against Sudan, which officially ended in 2005. After 2005, apart from occasional bouts in disputed border areas, these fighters didn’t actually fight much but were still getting paid. Now oil has shut down and the government is broke and can’t pay them. It seems to want to galvanize some of this workforce into productive labor, and has offered some of them menial but useful jobs building things like roads. But as a friend of mine living in Juba pointed out, a South Sudanese soldier’s identity is as a fighter – and he is unlikely to acquiesce to backbreaking work on a road when he’s used to getting paid for doing not much of anything with a Kalashnikov rifle.

So the government risks alienating a cadre of trained soldiers who are already itching for a fight. An American official I spoke with said there were whispers within the government of a possible coup. Maybe that’s gossip but it’s true that there are plenty of armed, angry and unemployed young men who could pose a threat if equally angry and unemployed but better-armed military defects join their ranks. The Dinka president’s ruling coalition is powerful but not invulnerable. There are many other ethnic groups who resent the Dinkas’ grip on power.

There are psychological barriers, too. At the conference there was a local government official talking with some new media types from across Africa, Europe and the US who want to apply open source technologies to help the government become less secretive and more accountable. The official was sold on the ‘open government’ principle; he wants to publish budgets and development plans and was saying all the right things. But the others insisted on talking about the technology needed to get things done until the official threw his hands up and said “Look, I want open government. I don’t know anything about new fancy technology; this is for you people to talk about.” There were two parallel conversations that never quite intersected – both sides wanted the same thing but came from opposite ends and seemed unable to meet halfway.

This is as symptomatic with international visitors flying in to offer their well-meaning notions of development as it is among different sectors within South Sudanese society: government and citizens, Dinka and Nuer, urban and rural. And perhaps between Sudan and South Sudan themselves. It’s a brand-new country, and many people have never been governed or forced to work together in a functional sense. So there are enough domestic contradictions to keep the government in Juba preoccupied while its border disputes with Khartoum fester.

The two governments began another meeting in Addis Ababa this weekend to try to get oil flowing again. Both countries need it. When production restarts, South Sudan will be greeted by a range of competing development needs to tackle – and it will have one less excuse not to begin addressing them.

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