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Cablegate: Se Williamson Meeting with Norwegian Petroleum Envoy Anders

VZCZCXRO7677
OO RUEHGI RUEHMA RUEHROV
DE RUEHKH #1212/01 2241006
ZNR UUUUU ZZH
O 111006Z AUG 08
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1570
INFO RUCNFUR/DARFUR COLLECTIVE
RUCNIAD/IGAD COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS SECTION 01 OF 03 KHARTOUM 001212

DEPT FOR AF/SPG, A/S FRAZER, SE WILLIAMSON
NSC FOR BPITTMAN AND CHUDSON
ADDIS ABABA FOR USAU
DEPT PLS PASS USAID FOR AFR/SUDAN

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ASEC PGOV PREL KPKO SOCI AU UNSC SU
SUBJECT: SE WILLIAMSON MEETING WITH NORWEGIAN PETROLEUM ENVOY ANDERS
HANNEVIK

1. (SBU) SUMMARY: During Special Envoy Richard Williamson's August
9 meeting in Khartoum with Norwegian Petroleum Envoy Anders
Hannevik, Williamson advocated NCP-SPLM negotiations on sharing
petroleum revenues and on determining the North-South border in
advance of the 2011 Referendum in which Southern Sudan is widely
expected to vote for independence. Hannevik said the talks should
proceed parallel to the Abyei boundary mediation process in The
Hague. Unfortunately, both the NCP and SPLM expect to win a
decision in the mediation process, and are not actively pursuing a
wider political solution in advance of 2011. This situation could
potentially lead to a renewed war. END SUMMARY

NCP AND SPLM AWAITING POSITIVE
VERDICT FROM ABYEI MEDIATION
-------------------------------

2. (SBU) Hannevik concurred with SE Williamson that both CPA
partners, NCP and SPLM, had been surprised and alarmed at how
quickly the recent Abyei conflict had spiraled out of control, as
well as at the recent JEM attack on Omdurman. As a result, he said,
there is an element of "exhaustion" in the two sides sitting back to
await a decision from The Hague on the Abyei borders. Both sides
seem confident of a decision in their favor - an assessment with
which SE Williamson and CDA Fernandez agreed. Williamson cautioned
that it seems no more likely that the two sides will accept this
mediation decision than they had the original Abyei Boundary
Commission (ABC) decision in 2005.

3. (SBU) The Norwegian said the two sides would be making a big
mistake to sit back and wait six months for a decision to emerge
from The Hague. Instead, he argued for negotiations between the two
sides over the larger issues of sharing oil revenues, and on solving
the wider border disagreements between North and South. Hannevik
said the talks would be long, due to the number of very complex
issues involved. The talks should be supported by technical experts
from the international community since neither side has the time or
staff to carry this out. Hannevik ventured that the talks could
take six months.

4. (SBU) One key approach is to separate the issues of oil revenue
from territory, Hannevik stressed. On the issue of Abyei, the North
is far more interested in securing oil revenues from the contested
area, while the issue of territory is foremost in the mind of the
SPLM. SE Williamson agreed, noting that once the petroleum issue is
solved, the issue of territory should follow fairly easily.

TALKS SHOULD PREPARE FOR SEPARATION IN 2011
-------------------------------------------

5. (SBU) The aim of the bilateral talks should be to prepare the
way for possible separation of Southern Sudan from the rest of the
country as a result of the 2011 referendum. "We haven't even
started to solve the problems of 2011," Hannevik warned. Both
Hannevik and Williamson agreed that the issue needs to be addressed;
one complicating factor is that the two sides would criticize this
approach as proof that the international community is not committed
to pursuing national unity for Sudan, which is an ostensible aim of
the CPA process. However, both Williamson and Hannevik agreed that
this criticism could be addressed with the justification that the
prospect of war means it would be best to prepare for the
contingency of independence. The fact remains that, as far as oil
revenues in the short run, both sides need each other.

PROSPECT OF WAR SHOULD FOCUS MINDS
----------------------------------

6. (SBU) The two sides need to sort out the issue of oil revenues
before 2011 because the South has the lion's share of the oil, while
the North has the necessary infrastructure. This is the rationale
behind a revenue sharing agreement, Hannevik said. Failing an
agreement, renewed war could result. He added that the economic
arguments - the inevitable revenue losses to both sides from armed
conflict - make a very convincing case for an agreement. Williamson
agreed, noting that the North can't survive without the oil revenue,
but the South won't get the revenue if they can't get the oil to
market.

7. (SBU) Williamson also agreed on the possibility of war if a
satisfactory agreement is not worked out prior to 2011. If an
agreement on oil revenue is not achieved, he said, the North would
feel it has two choices: start a war before the referendum, or start
a war after the referendum.

8. (SBU) Hannevik said oil revenue sharing was one of the big

KHARTOUM 00001212 002 OF 003


success stories of the CPA process. The South has received $4.2
billion (USD) to date since 2005. As a result of the AEC
activities, in particular the work of the Wealth Sharing Working
Group, the SPLM is gradually becoming aware of the transparency of
the oil revenue sharing process. "The South's perception that it's
being cheated on a daily basis is disappearing," he said. He added
that frequently, in cases where the South complains of delays in
revenue transfers (as took place last December), the fault turns out
to lie with the South. In particular, the Bank of Southern Sudan
has been known to delay transfers to the GoSS for weeks, so that
some officials can earn interest on oil deposits.

SOUTH IS SUSPICIOUS OF AN AGREEMENT,
PUSHES NEW PIPELINE
-----------------------------------

9. (SBU) The South is suspicious of the utility of an agreement to
share the pipeline infrastructure, Hannevik said; Southern leaders
say they would remain vulnerable to a decision by the North to close
the pipeline. For that reason, they are keen to build a new
pipeline from Southern Sudan along an alternate southern route that
would bypass the north in getting oil to market. Hannevik's GoSS
interlocutors have told him a new pipeline could be constructed in
18 months, but in his view that is far too ambitious. "It would
take years," he said. "It is simply not feasible to have a new
pipeline in place by 2011." Given the prospect of war between the
two sides, only extreme risk-takers would be willing to invest in a
new pipeline now - and they would demand a hefty premium for their
investment, he added. A pipeline could be constructed much more
cheaply after the referendum.

10. (SBU) Hannevik and SE Williamson agreed the two sides need to
be encouraged to begin negotiations. Left to their own devices, the
two sides would just put off meaningful discussions. "We need to
push them" to negotiate, he said. Hannevik said the two sides have
shown increased interest of late in dealing with these issues. In
addition, the atmosphere between the two is better now that it has
been in some time.

POSSIBLE INTERLOCUTORS
----------------------

11. (SBU) Hannevik, SE Williamson and CDA Fernandez discussed those
who need to be involved in the discussions. Hannevik said one key
person from the South is GoSS Vice President Riak Machar. He is an
experienced negotiator, he's pragmatic, and he wants results. The
CDA agreed that Machar is a good choice, but cautioned that he is
corrupt and not trusted by the rest of the SPLM. The delegation
would have to be balanced with other figures. On the NCP side,
Hannevik said the Norwegian Government had found it most useful
dealing with Yahia Hussein Bebiker (of the Joint National Transition
Team) and presidential adviser Sayed al Khateeb; both were very
pragmatic, he said.

12. (SBU) On the issue of a venue for the negotiations, SE
Williamson cautioned that, particularly on the SPLM side, "they're
not going to trust anyone to be gone for two months." Also, some
individuals might not want to be outside the country for so long,
fearing that they might not have a position to return to.

FIRST THINGS FIRST: ROLE FOR USG
--------------------------------

13. (SBU) The immediate task to getting the talks started is "to
convince the two sides that there are good reasons to have parallel
talks along with (The Hague) mediations," said Hannevik. He
believes this is where the USG has a vital role to play in
encouraging the two sides to sit down together.

PLAYING THE CHINA CARD
----------------------

14. (SBU) SE Williamson asked Hannevik his opinion as to whether
there was a role for China to play in the proposed negotiations.
Hannevik replied that the Chinese could pressure the NCP, and it's
in their interest to find a peaceful solution to these dilemmas, "so
their involvement would help the case."

15. (SBU) COMMENT: Hannevik is extremely well versed on the role
of oil in the dynamics between the NCP and the SPLM, and is an
astute observer of Sudanese politics. He is correct in calling for
early negotiations between the two sides to iron out the contentious
and related issues of territory and petroleum revenues in advance of
the 2011 referendum. Hannevik's comments reflect an emerging

KHARTOUM 00001212 003 OF 003


consensus among ourselves and other key embassies in Khartoum: the
issue of oil revenue must be separated from that of territory. It
would be well worth our while to work together with our partners in
pushing the two sides to the negotiating table, and then
facilitating the talks by making experts available. But both the NCP
and SPLM seem focused on more pressing matters, while Sudan's
current oil bounty flows unabated.

16. (U) SE Williamson cleared this cable prior to transmission.

FERNANDEZ

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