Return to conflict in Sudan could cause loss of 100bn dollars: report

By Muhammad Osman

November 25, 2010 (NAIROBI) — A loss of over 100 billion dollars in a period of ten years could be incurred by Sudan and its immediate neighbors in terms of economic output as well as the international community in terms of intervention should the east African nation reverts back to civil war after a secession vote in January 2011, a new international report has warned.

Sudan is less than two months away from holding a seminal plebiscite on whether the semi-autonomous region of south Sudan should remain in a united Sudan or gain full independence.

The vote promised under the 2005’s Comprehensive Peace Agreement (CPA) which ended decades of civil war between north and south Sudan, a war that killed more than 2 million people and crippled local economy.

As most observers expect southerners to plump for secession, concern has been rising over the specter of renewed violence in the oil-producing country.

Entitled “the cost of future conflict in Sudan”, the report cautioned that an outbreak of war between north and south Sudan may lead to significant losses for Sudan and its immediate neighbors in terms of their annual Gross Domestic Product (GDP) as well as for the international community in terms of the cost of peacekeeping operations and humanitarian assistance.

The study was undertaken by a coalition of African and European think tanks comprising the London-based Frontier Economics, the Nairob-based Institute for Security Studies, the Society of International Development and the London-based Aegis Trust.

The launch of the report, which was held on Thursday at Serena Hotel in the Kenyan capital Nairobi, was attended by a host of local and international journalists as well as representatives of NGOs.

It was addressed by a panel of experts who co-authored the report, including Matthew Bill, Associate Director of Frontier Economic.

The report sets out four possible scenarios for the post-referendum period in Sudan and goes on to extrapolate the economic losses expected to be incurred by each of the three parties under each scenarios and over a period of ten years and 25 years.

Those scenarios range from low-conflict scenario, where north and south accept the referendum result but fail to implement it, to the high-conflict scenario where both sides go to an all-out war.

According to the report, Sudan alone is expected to bear over 50 billion dollars in lost GDP if war returned.

Sudan is sub-Saharan Africa’s third-biggest oil producer and its economy is heavily dependent on oil. The great majority of Sudan’s proven oil wealth of 490,000 barrels a day is produced in the south. However, the oil is processed and exported through refineries and pipelines based in the north.

Oil revenues account for 10 to 20% of Sudan’s GDP, according to the report. A disruption of oil production as a result of renewed violence would make Sudan immediately lose 10-20% of its oil revenues.

It further noted that each of Ethiopia, Kenya and Uganda could lose over 25 billion dollars in GDP over a ten-year period if war returned to Sudan. That figure could escalate further to over 51 billion dollars if the conflict lasts for 25 years.

Even the international community, says the report, could stand to lose 30 billion US dollars if it decided to intervene in the conflict by deploying more peacekeepers and supplying humanitarian assistance.

Two peacekeeping missions are already deployed in Sudan, peacekeepers of the United Nations Mission in Sudan (UNMIS) and peacekeepers of the UN-AU Hybrid Peacekeeping Mission in Darfur region.

That figure includes the losses of foreign investors currently present in the country, including China, Matthew Bill told Sudan Tribune in a one to one interview following the press conference.

Although the report recognizes the amount of uncertainties surrounding its figures, the authors said they hoped it would persuade the main actors in Sudan and foreign stakeholders to accelerate efforts to prevent a return to conflict.

“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 US$100 billion and ruin countless lives’?” said Matthew Bell.

(ST)