TRANSPARENCY AND ABYEI OIL ARE TOP AEC WEALTH SHARING

UNCLAS SECTION 01 OF 02 KHARTOUM 000353

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL KSCA OTRA EAID CDC SU
SUBJECT: TRANSPARENCY AND ABYEI OIL ARE TOP AEC WEALTH SHARING
WORKING GROUP PRIORITIES FOR MID TERM EVALUATION

REF: KHARTOUM 258


1. (U) Summary: The Wealth Sharing Working Group (WSWG)
coordinated by the US Embassy met March 5 to identify concerns to be
addressed in the AEC's Mid Term Evaluation (MTE). The AEC Chairman
must present the MTE to President Al-Bashir on or before July 8
according to a "Terms of Reference" document approved by the CPA
parties. The Working Group enumerated its concerns in a draft
skeleton outline prepared to guide the drafting process. End
Summary


2. (U) The March 5 meeting was a follow-on to the WSWG meeting of
February 17 (reported reftel). The earlier meeting was aborted due
to the absence of an SPLM representative empowered to speak on
behalf of the issues.

WSWG Agrees items to address in MTE
--------------


3. (U) Acting as Chairman of the WSWG, DCM Powers requested that
the parties indicate those issues they deem to be the most important
and most critical to be addressed in the MTE. Among the topics
agreed for the MTE:

-- General Plan: The sides agreed to use as a basis for its report
the matrix that WSWG contributed to the two-year Factual Report
completed November 2007. The MTE should be in narrative form, and
should be more analytical in nature, identifying shortcomings and
solutions.

-- Accentuate the Positive: The NCP rep stressed that the report
should not merely identify shortcomings, but also should acknowledge
successes. The NCP rep pointed out that one of the purposes of the
AEC is to make unity attractive by implementing the CPA, and he
argued that this can best be done by highlighting successes.

-- Transparency in oil income distribution: This was the SPLM's
most pressing concern. The SPLM is dissatisfied with the
methodology for calculating and distributing income and suspects it
is being chronically short-changed.

-- Role of the Fiscal and Financial Allocation and Monitoring
Commission (FFAMC): The WSWG will invite the FFAMC Chairman to
brief on developments since his last presentation to the working
group in 2007. In particular, the NCP wishes to query whether the
Government of Southern Sudan (GOSS) has cooperated in supplying
requested information to the FFAMC. (Note: In his previous
appearance, the FFAMC Chairman had criticized in particular the
National Ministry of Finance for its lack of cooperation. End note.)
The NCP insisted that the FFAMC should monitor not just
distribution of revenues by the GNU to the GOSS, but by the GOSS to
Southern state and local governments as well. The SPLM responded
that the latter duty is the job of the Southern Sudan FFAMC (a body
the NCP believes is not contemplated in the CPA).

-- Evaluation of work of other GNU bodies: These include the
Finance Ministry, the National Petroleum Commission, and the Joint
Technical Commission. As appropriate, the WSWG will attempt to
schedule visits to these bodies.

-- Evaluation of work of GOSS bodies: The NCP insists the GOSS
should be evaluated as well. The SPLM did not object - its
representative volunteered that the GOSS Ministry of Finance should
be examined in particular.

-- Abyei Oil Revenues: As expected, this proved the most
contentious issue of the WSWG meeting, and will likely feature
prominently in the MTE, despite objections by the NCP. The NCP
insisted that all aspects of Abyei be addressed within the Three
Areas Working Group. Other parties (including the UK and Dutch
representatives, who coordinate the Three Areas WG) argued that
Abyei must be addressed by the WSWG since it cuts across working
group boundaries. The UK representative, in particular, urged that
the most prudent course would be to deposit Abyei's oil income into
an escrow account awaiting a final resolution of the Abyei question.
The NCP claimed the area's oil revenues are being distributed
according to Abyei's current status as part of Southern Kordofan.

-- Consultations with Communities and Environmental Impact of
Drilling Activities: The SPLM recalled that the Factual Report had
noted that more needed to be done on consultations with communities
affected by the oil industry. The UK representative argued that an
expert consultant should be hired (a step that the AEC Chairman has
asked all WG's to consider) to make both of these evaluations.
Merely having the WSWG "parachute in for a visit" was inadequate,
she said.


4. (U) The WG members approved a draft work plan for the next few
months, concentrating on preparation of the MTE. As WG Coordinator,
Embassy Khartoum will draft a "skeleton outline" incorporating the
above concerns for discussion at the WSWG's next meeting on

KHARTOUM 00000353 002 OF 002


Wednesday, March 12.


5. (U) Comment: We were pleased with the collegial and
constructive approach taken by the parties at the March 5 meeting.
The issues of oil income distribution and transparency, not to
mention income from the Abyei oil fields, will be contentious
issues. Finalization of the MTE by July 9 is an ambitious
undertaking. This is all the more so in view of the SPLM's
limitations with respect to capacity. We expect that one of the
most difficult problems in the weeks ahead will be ensuring SPLM
representation. GNU Minister Kosti Manibe is often the SPLM's
one-man show on AEC issues, but he is spread thin. In fact, we
encountered some resistance getting him to commit to the March 5
meeting if none of his other colleagues was available. The
Norwegian Government's offer to fund an SPLM cadre to devote
full-time attention to AEC issues may help resolve this problem, but
it is unclear when that step will be implemented, and will not
substitute for active engagement by the SPLM. What is clear is that
the SPLM needs to identify a capable deputy for Manibe, a point
which we will make directly with the SPLM.

FERNANDEZ