New Sudan war would cost Kenya, region

November 25, 2010 12:00 am

, KHARTOUM, Sudan, Nov 25 – A return to civil war in the event that south Sudan votes for independence would cost the country, the region and international community more than 100 billion dollars, a study published on Thursday warned.

Aegis Trust, an NGO, and three research centres including the Institute for Security Studies, based in South Africa, drew up four post-referendum scenarios, ranging from peace to a resumption of full-scale war between north and south Sudan.

In the case of a 10-year conflict of medium intensity, the losses for Sudan would amount to at least 52.1 billion dollars (39 billion euros), on top of about 29 billion dollars for neighbouring Ethiopia, Kenya and Uganda, the study estimated.

The impact on the international community would top 30 billion dollars in terms of peacekeeping missions and humanitarian aid.

"This report demonstrates the high cost of conflict. It implies that domestic, regional and international parties should be asking: \’Are we doing enough to avoid a war that might cost over 100 billion dollars and ruin countless lives?\’" said Matthew Bell of London-based Frontier Economics.

The study calculated Sudan\’s losses in case of war on the basis of an annual 2.2-percent decline in Gross Domestic Product.

It would cost Ethiopia and Kenya more than one billion dollars a year in terms of forecast growth, the researchers said, warning that war would also damage Egypt, Sudan\’s northern neighbour and the region\’s leading economy.

The impact could be even heavier in the event of full-scale war that would disrupt the oil production of Africa\’s largest country, which has reserves of more than six billion barrels.

Khartoum and the former southern rebels signed a peace deal in 2005 after more than two decades of war. A central element of that accord is an independence referendum for the south scheduled for January. Since July, the two sides have been negotiating on key post-vote issues.
Chief among those crucial to a peaceful transition in case of partition is the sharing of oil resources.

Oil revenues make up the Sudanese government\’s main source of foreign currency earnings, while southern Sudan depends on oil for as much as 98 percent of its budget.

Most of Sudan\’s reserves are concentrated in the south but can only be exported through a pipeline passing through the north on the way to Port Sudan on the Red Sea.

An oil-sharing formula would benefit both the north and south, whereas an interruption in production and exports would damage the whole country.

"Reaching some level of agreement before the referendum is important not only because both economies need uninterrupted revenue, but also to sustain the confidence of oil companies in their existing investments," the International Crisis Group said this week.

In case of peace and healthy ties between north and south Sudan as well improved security in Darfur, Sudan\’s growth would steady at an annual 6.2 percent for five years and even reach nine percent from 2016, the study said.


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