GOSS OFFICIAL DISCUSSES OIL PIPELINES, WAR AND PEACE WITH

UNCLAS SECTION 01 OF 02 KHARTOUM 000262 SIPDIS DEPT FOR AF/SPG, S/CRS, AF SE WILLIAMSON DEPT PLS PASS USAID FOR AFR/SUDAN DEPARTMENT PLS PASS TREASURY FOR OFAC ADDIS ABABA FOR USAU SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV PREL ECON ENRG UNSC SU SUBJECT: GOSS OFFICIAL DISCUSSES OIL PIPELINES, WAR AND PEACE WITH THE NORTH ¶1. (SBU) (Summary) Consul General Juba met on February 20 with George Achor, Undersecretary in the Ministry of Presidential Affairs, to discuss the GoSS desire to attract American business interests to South Sudan, especially for the construction of a new oil pipeline to the south. The discussion quickly turned to issues of war and peace, in which he expressed the strong opinion that war with the North was a near certainty after 2011, if not sooner. End Summary. U.S. Investment in an Oil Pipeline Will Benefit the South - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶2. (SBU) Achor opened the discussion by expressing his strong desire to see an American oil company develop Southern oil fields and build a new oil pipeline along the Ethiopian-Kenyan border to either Mombasa or Djibouti. When told that current U.S. sanctions do not permit an American company to participate in such a venture, Achor expressed his dismay. (Note: According to the November 1, 2007 OFAC "Final Rule," sanctions regulations prohibit participation by U.S. firms in any transaction relating to Sudan's petroleum or petrochemical industries, in any part of the country. End Note.) Such a venture would only benefit the South, he said, not the national government. A prohibition on Southern economic development of this kind forces the South to remain dependant on the North and, in the end, actually works to increase oil revenues to the NCP since all new oil found in the South will have to flow through the single existing pipeline to Port Sudan, where the NCP can continue to benefit from profits made on the new development of Southern mineral resources. Developing an alternate Southern oil pipeline would deny the benefits of future oil development to the North, and it would only fully benefit the people of the South. ¶3. (SBU) Such a Southern pipeline would be expensive, and not as economical as the already existing northern route, the Congen pointed out. Achor agreed, but stated his opinion that war with the North is coming and that the existing pipeline was not viable in the long run. With American expertise, he said, they could build a new one south in a matter of two years. Congen responded that a war would mean the end of oil revenues for both sides since no business would risk working in a war zone where their facilities were sure to be bombed. "We Will Take the War to Khartoum" - - - - - - - - - - - - - - - - - ¶4. (SBU)The Congen asked Achor why he was so sure war would break out. Achor responded that the NCP would never let the South's mineral wealth go without a fight, for which, he said, the South is ready. "This time we will take the war to Khartoum so that the NCP finally suffers the consequences of its actions." When asked how that would happen, Achor expressed his confidence that other marginalized groups in the East and West of Sudan would join the fight, and that the SAF was weaker than most people realized. The South Will Secede, Whatever the Results in 2009 - - - - - - - - - - - - - - - - - - - - - - - - - - ¶5. (SBU) The Congen asked if Achor had any hope that the elections in 2009 would take place. Achor responded that if they did not, that would be the trigger for war. If they did take place, he said Kiir would run and likely win the Presidency. Asked if that didn't mean a unified Sudan, he said probably not because it was almost certain that the people of the South would vote for independence in 2011 anyway. He recounted how in a conversation with a German business delegation, Kiir was asked what he would do if elected President and the South voted for separation. Kiir, he said, responded that he would resign the Presidency to stay with the South. There was simply too much bitterness and distrust in the South to stay unified with the North. Comment - - - - ¶6. (SBU) As is obvious, Achor is a hard liner on the issue of Southern independence. However, his opinion is widely shared that long-standing Southern bitterness and distrust toward the North (exacerbated by the perceived continued NCP maneuvering to undermine the CPA) will result in a vote for independence come 2011 no matter what happens in the 2009 election. ¶7. (SBU) Comment continued: As to the oil issue, it might well be worth considering whether the current policy banning American oil interests from doing business in the South actually does work to the NCP's advantage. Allowing an American firm to at least bid on building a pipeline to Mombassa, were one to be built, would free the GoSS and any future independent Southern state from having to share new oil field revenues with a Northern government. KHARTOUM 00000262 002 OF 002 FERNANDEZ