WASHINGTON–(ENEWSPF)–March 19, 2012. South Sudan’s recent decision to shut down oil production has serious economic and political consequences for the world’s newest nation, according to a new Enough Project report.
The report, What Could the Oil Shutdown Mean for South Sudan?, identifies possible effects of the oil shutdown, including increased food insecurity, reductions in government-funded development projects, layoffs or salary cuts for government employees, and escalated tensions with Sudan.
“Prior to January 2012, the Government of South Sudan derived 98 percent of its budget from the sale of oil,” said Jennifer Christian, Enough policy analyst and author of the report. “While there has been speculation as to how much foreign currency South Sudan has saved, the fact remains that the shutdown has already had and will continue to have effects on the country, the severity of which will be determined, at least in part, by how long the shutdown continues.”
In February, the South Sudan Council of Ministers approved austerity measures with the aim to reduce immediately national expenditures. Approved measures include restrictions on block transfers to South Sudan’s states, an overall non-salary spending cut of 50 percent, and increased tax collection efforts.
Juba’s decision to suspend oil production resulted from an impasse between Sudan and South Sudan over the financial terms and conditions by which the South would export its oil through Sudan, and from Khartoum’s illegal confiscation of $815 million worth of South Sudan oil. Until a sustainable agreement can be reached or an alternative export mechanism is secured, the oil shutdown will continue. Neither of these outcomes is likely to happen in the near future, so South Sudan’s oil production could remain on hold for months or even years.
Read the factsheet: “What Could the Oil Shutdown Mean for South Sudan?“
Enough is a project of the Center for American Progress to end genocide and crimes against humanity. Founded in 2007, the Enough Project focuses on crises in Sudan, eastern Congo, and areas of Africa affected by the Lord’s Resistance Army. Enough’s strategy papers and briefings provide sharp field analysis and targeted policy recommendations based on a “3P” crisis response strategy: promoting durable peace, providing civilian protection, and punishing perpetrators of atrocities. Enough works with concerned citizens, advocates, and policy makers to prevent, mitigate, and resolve these crises. For more information, please visit www.enoughproject.org.