South Sudan slashes spending after halting oil output

[hellheaven1987]

South Sudan has halved spending on everything but salaries to compensate for the loss of revenue following an oil shutdown due to a row with Sudan.

Oil makes up 98% of its budget, after it split from the north last year.

There will be no job losses and government wages will still be paid, the finance ministry stressed.

President Salva Kiir said his nation would rather struggle for a bit than continue to hand over its oil revenues to the old enemies in Khartoum.

The pipelines run from South Sudan through its northern neighbour, with which it fought a bitter civil war for decades, leading to the deaths of some 1.5 million people.

But the two countries have never reached an agreement over how much the south must pay.

In January, South Sudan shut down its entire oil production of 350,000 barrels a day after Sudan started seizing southern oil to compensate for what it called unpaid transit fees.

After the new country shut down its oil production, Sudan's President Omar al-Bashir responded by saying war was now closer than peace.

Each country accuses the other of backing rebel groups and there have been clashes along the new border.

Source

Is Sudan's attempt to siege South Sudan close to an end?

[conon394]

Well the US needs to gets its butt in gear - kill two more F-35s, and fund a new pipeline through Ethiopia today...

Make two better friends in Africa, deflect Chinese economic penetration of Africa (as this seems to be a worry lately in the US) and stick it to Khartoum, and as the Sugar Daddy insist on zero tolerance for corruption so the average joe in South Sudan sees the benefit of Oil revenue not just the elites.

edit: Well I guess there a prospective line to Kenya. I just not sure why the US is not funding, pushing this full tilt - Sudan is so not our buddy and helping South Sudan could be a real feather in our cap. We look like good guys, get a chance to maybe help them be Norway, not Nigeria. Certainly given the situation in Somalia, you would think the US would be interested in helping Kenya right now. I call it money well spent and likely better than blowing up a few militants with drones.

[Exarch]

does anyone still believe that secession is more conducive to peace? at least if both north and south were still a single country, there could still be room and avenue for debate and negotiations.

Well the US needs to gets its butt in gear - kill two more F-35s, and fund a new pipeline through Ethiopia today...

Make two better friends in Africa, deflect Chinese economic penetration of Africa (as this seems to be a worry lately in the US) and stick it to Khartoum, and as the Sugar Daddy insist on zero tolerance for corruption so the average joe in South Sudan sees the benefit of Oil revenue not just the elites.

edit: Well I guess there a prospective line to Kenya. I just not sure why the US is not funding, pushing this full tilt - Sudan is so not our buddy and helping South Sudan could be a real feather in our cap. We look like good guys, get a chance to maybe help them be Norway, not Nigeria. Certainly given the situation in Somalia, you would think the US would be interested in helping Kenya right now. I call it money well spent and likely better than blowing up a few militants with drones.

trying to 'deflect Chinese economic penetration of Africa' now is about as easy as deflecting US economic penetration of south america. It doesn't matter which way the oil pipeline falls, China is going to get its oil one way or the other; for the nonce, south sudan's proposal of a new pipeline in the 6 month period it was proposing is impossible considering the terrain it has to cross in order to get that oil to market thru kenya. In any case, the oil in both Sudans may not be enough for the expenses incurred in that particular pipeline.

Also, despite what the propagandists and simplistic morons at NYT say, the Chinese and US often cooperate and work together in projects in Africa. case in point: the collaboration between the US, China, the ICRC in rescuing those captured Chinese workers by Sudanese insurgents. Let me nip this in the bud: the wet dream amongst policy thinktank analysts of strangling China's access to oil is going to be more trouble than its worth considering China's highly diversified sources of oil, and its close ties with pretty much all of Africa. The President of the regional power in Africa-South Africa-pretty much said the model he was following was the Chinese model.

[hellheaven1987]

trying to 'deflect Chinese economic penetration of Africa' now is about as easy as deflecting US economic penetration of south america. It doesn't matter which way the oil pipeline falls, China is going to get its oil one way or the other; for the nonce, south sudan's proposal of a new pipeline in the 6 month period it was proposing is impossible considering the terrain it has to cross in order to get that oil to market thru kenya. In any case, the oil in both Sudans may not be enough for the expenses incurred in that particular pipeline.

Actually I remember reading a news that China is pressing Sudan to reach an agreement soon or later so the oil can flow again. Either way, the new pipeline would still need at least one year to be complete (originally two years), so the best way is still when both Sudans reach an agreement.

[hellheaven1987]

edit: Well I guess there a prospective line to Kenya. I just not sure why the US is not funding, pushing this full tilt - Sudan is so not our buddy and helping South Sudan could be a real feather in our cap. We look like good guys, get a chance to maybe help them be Norway, not Nigeria. Certainly given the situation in Somalia, you would think the US would be interested in helping Kenya right now. I call it money well spent and likely better than blowing up a few militants with drones.

There were news that deal of both new pipeline through Kenya and Ethiopia had reached final discussion last week, although whether it would reach the final agreement is rather doubtful.

[conon394]

trying to 'deflect Chinese economic penetration of Africa' now is about as easy as deflecting US economic penetration of south america. It doesn't matter which way the oil pipeline falls, China is going to get its oil one way or the other; for the nonce, south sudan's proposal of a new pipeline in the 6 month period it was proposing is impossible considering the terrain it has to cross in order to get that oil to market thru kenya. In any case, the oil in both Sudans may not be enough for the expenses incurred in that particular pipeline.

Also, despite what the propagandists and simplistic morons at NYT say, the Chinese and US often cooperate and work together in projects in Africa. case in point: the collaboration between the US, China, the ICRC in rescuing those captured Chinese workers by Sudanese insurgents. Let me nip this in the bud: the wet dream amongst policy thinktank analysts of strangling China's access to oil is going to be more trouble than its worth considering China's highly diversified sources of oil, and its close ties with pretty much all of Africa. The President of the regional power in Africa-South Africa-pretty much said the model he was following was the Chinese model.

Look I don't think there is any great game with China in Africa, and of course oil is oil is oil and its a commodity on the world market.


From the US stand point however helping push an alternative pipeline would be in the interest of the US. Less revenue for a country we don't like - Sudan. We help a new country South Sudan, and presumably Kenya or maybe Ethiopia - who are friends and whacking Somalian militants we don't like.

I raised the China thing mostly because it might help get funding through the Congress.

I have not seen any comment on terrain issues, and since the proposed pipeline would also pass through places Kenya is doing exploratory drilling and near to where Uganda might have some oil prospects, It seems like a solid ideal - even if it will not happen as fast as South Sudan would like. The point of aggressive US involvement is not to starve china of oil but to help two countries in Africa we already close tow and build a good relationship with south sudan and bring more oil to market and thus stabilize world prices.

The President of the regional power in Africa-South Africa-pretty much said the model he was following was the Chinese model.

What? So South Africa is going to chuck their democracy?

[Exarch]

Look I don't think there is any great game with China in Africa, and of course oil is oil is oil and its a commodity on the world market.


From the US stand point however helping push an alternative pipeline would be in the interest of the US. Less revenue for a country we don't like - Sudan. We help a new country South Sudan, and presumably Kenya or maybe Ethiopia - who are friends and whacking Somalian militants we don't like.

I raised the China thing mostly because it might help get funding through the Congress.

whilst it is acknowledged that Congress is full of idiots, even idiots should be made aware that borrowing money from the Chinese in order to "contain" the Chinese is an exercise in futility. At the end of the day, neither China nor the US are going to go to war with each other and Congress is going to end up spending itself into more and more debt (despite the Republican/tea party controlled Senate stating they want to cut down on government spending) via such endeavours. And debt will impact economic growth, especially now with most of the BRICS actively diversifying their foreign exchange holdings.

I have not seen any comment on terrain issues, and since the proposed pipeline would also pass through places Kenya is doing exploratory drilling and near to where Uganda might have some oil prospects, It seems like a solid ideal - even if it will not happen as fast as South Sudan would like. The point of aggressive US involvement is not to starve china of oil but to help two countries in Africa we already close tow and build a good relationship with south sudan and bring more oil to market and thus stabilize world price

s.
the problem with that scenario is that it doesn't matter which way the cards fall, China is insured against all eventualities; it is not a zero sum game for China as much as it is for Washington, since China's economic reach in Africa means they're going to end up profiting from something sooner or later. What the presses in 'the west' don't tell you is that China has the same amount of influence and penetration in Juba as it does in Khartoum. About the proposed pipeline:

Optimists in Juba declare the pipeline to Lamu, the perceived magic bullet for South Sudanese security and economic independence, can be built in 10 months in a crash program. Experts aren't so sure, per Reuters:
Analysts said a Kenya pipeline would be difficult to build across rough terrain hit by tribal violence and also passing through bandit-stricken regions in western Kenya.

South Sudan has said it would cost around US$1.5 billion, but analysts say a hefty insurance premium would have to be added because of the security concerns.

"It would be really difficult," said Dana Wilkins at Global Witness. "We're looking at least a year or two because of the length of the pipeline, the terrain it has to cover and security concerns in the region." [5]

Source: http://www.atimes.com/atimes/China/NA28Ad02.html

if south and north sudan are desperate for war, they're still going to need to sell oil to pay for the arms and armaments (courtesy of norinco, not just halliburton)

What? So South Africa is going to chuck their democracy?

no, the emphasis on state operated enterprises to effect fiscal policy as opposed to previously allowing the 'market' to dictate business and hence electoral cycles ie the liberalised economy and deregulation that led to the GFC.
http://www.globalpost.com/dispatch/n...est-role-model

Addendum: it was widely reported last yr that since China didn't actively support the NTC, that its oil contracts would be voided: not so, as much as the very same "western" presses would love to believe.

BRUSSELS / BEIJING - Libya's National Transitional Council (NTC) said it will respect business contracts and agreements signed with China before the war, said Deputy Foreign Minister Zhai Jun.

Source: http://www.chinadaily.com.cn/china/2...t_13610218.htm

so if one of the reasons for the R2P was to deprive China of its oil, it sure is backfiring, especially with Chinese firms in the bidding for reconstruction programs. Looking at the tally, you have the countries who were pro "R2P" who're now in even more debt than they were previously from all those bombing campaigns, and China with its old oil contracts with a view to acquiring more contracts in the future.

i could go wildly off topic and allude to China's deals with saudi arabia and Qatar which Premier Wen Jiabao inked earlier this month, but that'll have to wait for another day.

[conon394]

Exarch are you being obtuse on purpose?

whilst it is acknowledged that Congress is full of idiots, even idiots should be made aware that borrowing money from the Chinese in order to "contain" the Chinese is an exercise in futility. At the end of the day, neither China nor the US are going to go to war with each other and Congress is going to end up spending itself into more and more debt (despite the Republican/tea party controlled Senate stating they want to cut down on government spending) via such endeavours. And debt will impact economic growth, especially now with most of the BRICS actively diversifying their foreign exchange holdings.

Borrowing when the US securities are going for such a low interest rate is not really a problem. Helping Kenya/South Sudan build a pipeline is hardly likely to be a blip on the US budget even if the US paid directly, in any case the US in all likelihood operate through loan guarantees anyway.

Debt may or may not impact growth - but if we are borrowing from foreigners (as you suggest) at very low rates I would argue it less likely to negatively impact growth than silly attempts to reduce the Federal budget deficit during a very weak recovery.

the problem with that scenario is that it doesn't matter which way the cards fall, China is insured against all eventualities; it is not a zero sum game for China as much as it is for Washington, since China's economic reach in Africa means they're going to end up profiting from something sooner or later. What the presses in 'the west' don't tell you is that China has the same amount of influence and penetration in Juba as it does in Khartoum. About the proposed pipeline:

To reiterate I don't care where the oil goes that is a non argument, the point is the US theoretically has a chance to build good will and influence. Second let's not forget we are talking about Africa - oh no bandits, insurance - gasp!!! that did not stop investors in the old Sudan in the first place or Nigeria or Angola etc... Pointing to unnamed analysts is not all that impressive I like to see a real cost argument that western Kenya is more dangerous than say Nigerian production right now.

In any case different papers different views...

http://www.africanglobe.net/south-su.../#.T0Nrf_nPxrl

The thing is Uganda is pushing ahead slowly and contentiously with its oil development and needs a Kenya pipeline on balance the companies involved there are UK and US as far as I can tell. Kenya is also going forward with exploratory drilling. Thus much of the pipeline infrastructure may well be built anyway - so looking at it only from the South Sudan prospective is a bit of sophism.

so if one of the reasons for the R2P was to deprive China of its oil, it sure is backfiring, especially with Chinese firms in the bidding for reconstruction programs. Looking at the tally, you have the countries who were pro "R2P" who're now in even more debt than they were previously from all those bombing campaigns, and China with its old oil contracts with a view to acquiring more contracts in the future.

Umm OK I suppose but since Libya always looked like a European play that I though France, Italy and UK should have done on there own anyway I not worried - again I don't see why you seem to thing anyone is trying to deny China oil.

My point is the US has a chance to improve its influence in the region, aid its own oil companies and maybe not that anyone cares if it underwrites the financing help discourage the kind of corruption that seems to dog all African oil producers and maybe pay better wages and provide better working conditions than Chinese contractors usually care to.

[conon394]

even idiots should be made aware that borrowing money from the Chinese in order to "contain" the Chinese is an exercise in futility.

Just how US debt do you think China buys? (and are you counting Hong Kong in that or not).

especially now with most of the BRICS actively diversifying their foreign exchange holdings.

To what the Euro? the Yen? (Yep no debt issues there - older population, less room to raise taxes, etc). The RMB - frankly that be great that means no more managed currency and all that demand for the RMB makes it more valuable vs the Dollar.

[Exarch]

Exarch are you being obtuse on purpose?

Borrowing when the US securities are going for such a low interest rate is not really a problem. Helping Kenya/South Sudan build a pipeline is hardly likely to be a blip on the US budget even if the US paid directly, in any case the US in all likelihood operate through loan guarantees anyway.

Debt may or may not impact growth - but if we are borrowing from foreigners (as you suggest) at very low rates I would argue it less likely to negatively impact growth than silly attempts to reduce the Federal budget deficit during a very weak recovery.

To reiterate I don't care where the oil goes that is a non argument, the point is the US theoretically has a chance to build good will and influence. Second let's not forget we are talking about Africa - oh no bandits, insurance - gasp!!! that did not stop investors in the old Sudan in the first place or Nigeria or Angola etc... Pointing to unnamed analysts is not all that impressive I like to see a real cost argument that western Kenya is more dangerous than say Nigerian production right now.

In any case different papers different views...

http://www.africanglobe.net/south-su.../#.T0Nrf_nPxrl

The thing is Uganda is pushing ahead slowly and contentiously with its oil development and needs a Kenya pipeline on balance the companies involved there are UK and US as far as I can tell. Kenya is also going forward with exploratory drilling. Thus much of the pipeline infrastructure may well be built anyway - so looking at it only from the South Sudan prospective is a bit of sophism.

Umm OK I suppose but since Libya always looked like a European play that I though France, Italy and UK should have done on there own anyway I not worried - again I don't see why you seem to thing anyone is trying to deny China oil.

My point is the US has a chance to improve its influence in the region, aid its own oil companies and maybe not that anyone cares if it underwrites the financing help discourage the kind of corruption that seems to dog all African oil producers and maybe pay better wages and provide better working conditions than Chinese contractors usually care to.

Western depictions of Chinese investment in Africa tends to be extremely skewed towards the negatives, but i think we're talking past each other. i'm not disagreeing with you about the US' role in south sudan, kenya, uganda etc, truth is, the US is rather highly regarded in much of Africa. My post was more in response to ppl who actually believe it's possible to strangle the Chinese economy via denying it access to oil as so many analysts and reporters from the BBC/AJE/CNN were practically drooling over.

About foreign subsidising of US debt, there's no point in holding so many US treasuries if the interest is so pitifully low (because the USG wants to maintain consumer spending and borrowing);
http://www.forbes.com/sites/kenrapoz...oldings-again/
chances are, China and the rest of the BRICS may continue purchasing US debt once interest rates rise, and interest rates will have to rise if the US undergoes another credit downgrade.
This isn't to say, the Chinese arne't interested in investing in the US-they are extremely interested actually, but recent events show that they're more concerned about investing in solid hard assets as opposed to treasuries.

Just how US debt do you think China buys? (and are you counting Hong Kong in that or not).

scuttlebutt has it that gold is the commodity of choice via purchases in HK.
http://www.forbes.com/sites/kitconew...tite-for-gold/
then and again, HK is starting to become China's gold exchange given the massive gold stores located close to HK international airport.

but that's beside the point, China will continue buying US debt no matter the weather or whose in office-tht is unless, Romney or xyz wants to go full trade war.

To what the Euro? the Yen? (Yep no debt issues there - older population, less room to raise taxes, etc). The RMB - frankly that be great that means no more managed currency and all that demand for the RMB makes it more valuable vs the Dollar.

a basket of currencies appears to be the aim of China and the rest of the BRICS, with a hint of oil and gold and promotion of joint trading in each others' currencies, but hard assets appears to be the flavour of the month to the Chinese, and for that matter, the rest of the BRICS as well. That's why Beijing created two new sovereign wealth funds geared towards investment in hard assets in both the US and Europe

[Condottiere 40K]

The Chinese prefer to lightly spread their economic tentacles across developing nations, including Australia, so that they cannot be boxed in by a sudden disruption in their raw material supply chain. They have no interest in the domestic politics of their suppliers or the international ramifications, beyond how it would effect their trade links (or encourage interference in Chinese domestic affairs).