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Cablegate: Splm Thinking On Oil and Sanctions

VZCZCXRO2817
PP RUEHROV
DE RUEHKH #2006 3500436
ZNR UUUUU ZZH
P 160436Z DEC 07
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 9572
INFO RUCNIAD/IGAD COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS KHARTOUM 002006

SIPDIS

DEPT FOR AF/SPG, S/CRS, AF SE NATSIOS
ADDIS ABABA FOR USAU
DEPT PLS PASS USAID FOR AFR/SUDAN

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL KPKO SOCI AU UNSC SU
SUBJECT: SPLM THINKING ON OIL AND SANCTIONS


1. (SBU) During the course of their meetings in Juba December 9 to
discuss the Lord's Resistance Army (LRA), future GNU Foreign
Minister and SPLM member Deng Alor spoke with Senior Advisor on
Conflict Resolution Timothy Shortley about SPLM oil interests after
2011 and the effect of sanctions on Sudan.

2. (SBU) Deng said that although President Bashir had successfully
sidelined the Abyei issue from six-man committee discussions, GNU
First Vice President and GOSS President Kiir planned to begin a
discussion with Bashir on how the GOSS could continue to share oil
beyond 2011 should the South opt for separation during the 2011
referendum. (Note: Currently, Juba does not possess extraction
capabilities. However, we understand from other sources that the
GOSS has recently entered into discussions with an American business
for potential development of an oil refinery to be located in the
South. End note.)

3. (SBU) Deng said that during Salva Kiir's visit to Addis Ababa,
Kiir intended to suggest to Ethiopian Prime Minister Meles Zenawi
that President Bashir should begin to think about how to divide oil
from the South beyond 2011 if it secedes. Alor said the South is
ready to accept a new formula for the division of oil beyond 2011 if
the South secedes and that Ethiopia is being helpful on this
endeavor.

4. (SBU) Regarding sanctions, Deng claimed there is growing support
in the North for SPLM demands due to growing unhappiness in the
Khartoum business community linked to U.S. sanctions. Deng said the
Governor of the Central Bank recently told him that financial
sanctions are "biting hard," and asked Deng to use the GoSS
relationship with Washington to help him fix it. The Governor
reportedly said that the business community is angry with the NCP
over the fact they are losing millions in exchange rate costs and
can no longer operate in dollars. The Governor told Deng that
Sudan's bank in Bahrain had dropped it as a client within the last
month.

5. (SBU) Comment: It is positive that the SPLM is thinking about
methods of sharing oil revenue after 2011, as continued oil revenues
will be critical to the stability of both the North and South.
Moreover, guarantees of oil revenue sharing could help solve the
Abyei impasse. SPLM expectations of their talks in Addis Ababa may
be unrealistic, however, since the Ethiopians reportedly are not
fully supportive of Southern secession. The comments on U.S.
sanctions track with complaints that we hear from many northern
businessmen (although some claim corruption has more to do with the
problems than sanctions). If the SPLM can help "deliver" some sort
of sanctions relief for the North, perhaps in targeted industries,
this would vastly improve SPLM standing in the North.

FERNANDEZ

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