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«Human Rights Watch Brussels London New York Washington, D.C. Copyright © 2003 by Human Rights Watch. All rights reserved. Printed in the United ...»

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992 On January 2, 2000, unknown forces intercepted a CARE relief team in a CARE vehicle going from Bentiu to open a health clinic in Mayom. A U.N. security team considered Mayom unsafe in November 1999, but health conditions in Mayom were of concern because it had been cut off for months. Ibrahim Ishag Abaker and Mekki El Ekheir Mekki (whose names suggest Arab origin) were killed. Kwaq Makwaq and Santino Deng, a consultant (names southern), were captured. The group reportedly was last seen alive thirty miles from Bentiu. A search and rescue team located the truck and the body of Mekki on January 5, 2000, along the road to Mayom, and the body of Ibrahim a few miles away. After negotiations, Cmdr. Peter Gatdet released the two surviving CARE workers on March 9. In exchange negotiators promised Cmdr. Peter Gatdet educational material (reportedly not supplied in the quantities requested). Cmdr. Peter Gatdet denied that his troops were responsible for the killing or capture of the CARE team. He said in January 2000 that other SPLA forces moving south from the Nuba mountains through Toy (Bul Nuer) in Western Upper Nile had encountered the CARE truck and turned the two captives over to him. WFP, “Sudan Bulletin No. 112: 7-13 November 1999,” Rome, November 13, 1999; WFP, “WFP Sudan Monthly Overview—January 2000,” Rome, January 31, 2000; CARE press release, “CARE Reports Release of Two Staff Abducted in Sudan,” Atlanta, March 9, 2000; anonymous relief source, Human Rights Watch telephone interview, East Africa, April 12, 2000; “Sudanese Rebels Secure Release of Two Detained CARE Workers,” AFP, Nairobi, March 9, 2000; U.N. security official, Human Rights Watch interviews, July 27 and August 5, 2000.

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relocation of WFP staff, hindering relief efforts. But families and villages, however, continued to arrive in Bentiu and Rubkona from nearby locations where fighting was more “intense.”993 The undersubscription of contributions needed to keep the relief effort afloat had sometimes lethal results on the ground. Budget-cutting relief officials allocated smaller amounts to each needy person, but in Equatoria that exacerbated relations between civilians and the SPLM/A, which was accustomed to take its “taxes” directly from relief food.994 The result was that in a period of a year and a half every relief food distribution in Eastern Equatoria was looted or disrupted in disputes between SPLA soldiers and the local population; some civilians were reportedly killed when the SPLA forces opened fire.995 This was compounding one SPLA abuse with another: shooting civilians on top of diverting or “taxing” their relief food.

Undersubscription by donors remained chronic. To add insult to injury, the Sudanese government donated 3,000 tons of foodstuffs to Ethiopia in January 2003 in connection with an Ethiopian agreement to import petroleum from Sudan. The donation was in response to the drought in Ethiopia;996 the bordering areas of southern Sudan suffered from the same drought.

993 WFP, “Sudan Monthly Overview—March 2000,” Rome, March 31, 2000.

994 This “taxation” occurred despite the rebel’s agreement after the 1998 famine that the SRRA or SPLM/A would not tax relief food.

995 Diane deGuzman, briefing, May 8, 2001.

996 “Ethiopia to import Sudanese oil from 15 January 2003 – Ethiopian envoy,” SUNA, Khartoum, in English, January 13, 2003, from BBC Monitoring Middle East, January 13, 2002.

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GOVERNMENT OIL REVENUE, MILITARY SPENDING, AND BOMBINGS, 1999-2001 Overview Government oil revenue, which did not exist in 1998, by 2002 was a substantial source of government revenue—almost 45 percent of total revenue. In 2002, the Sudanese government earned more than U.S.

$ 800 million in oil revenues. 997 But by 2001 military expenses consumed a whopping 60 percent of this windfall oil revenue. By 2001, military expenditures had risen four times as fast as total expenditures.

In fact, from 1999 to 2001, annual military expenditures—which did not include domestic security expenditures—almost doubled: they rose 43 percent.This was reflected in increasing use of aerial bombardment in the south through the purchase of additional helicopter gunships and other heavy weapons systems. In 2001 Russia exported to Sudan twenty-two armored combat vehicles and twelve attack helicopters.998 In 2002, Russia sold eight amored combat vehicles and four attack helicopters to Sudan, and Belarus sold Sudan fourteen large-caliber artillery systems.999 The impact on the war of the acquisition of just twelve attack helicopters in 2001 was substantial: Sudan owned at most nine attack helicopters in 2000,1000 of which only six were believed to be operational. The oil revenue was used to triple the size of Sudan’s attack helicopter fleet in 2001 alone; in 2002, four more 997 Table 1, below. The official exchange rates of Sudanese dinars to U.S. dollars were as follows: 1999, 256.9; 2000, 257.4; 2001, 261.4; 2002, 261.7. IMF, “Sudan: Final Review Under the 2002 Staff-Monitored Program and the 2003 Program,” IMF Staff Country Report No. 03/273, Washington, D.C., September 2003, Table 3, p. 24.

998 "U.N. Register of Conventional Arms, 2001, Addendum 1," (New York: U.N., September 24, 2002), UN document number A/57/221/Add1.

999 “U. N. Register of Conventional Arms, 2002,” Russia submission, June 23, 2003, http://disarmament.un.org/un_register.nsf.;





Belarus submission, June 3, 2003, http://disarmament.un.org/un_register.nsf (accessed August 6, 2003).

1000 According to Military Balance 1999-2000 (Oxford, U.K.: International Institute for Strategic Studies, 1999), p. 276, Sudan then had four Mi-24Bs and five Mi-35s (export version).

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attack helicopters were purchased, increasing Sudan’s attack helicopters from six to twenty-two in two years.

The government also used oil revenue to buy friends in the region and to create a domestic arms industry aspiring to manufacture heavy weapons. Unfortunately, the Sudanese government adopted a position of non-transparency with regard to military expenditures in 2002.

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Oil Revenues Soar From no oil revenue in 1998, by 2002 government oil revenue jumped to almost 45 percent of its total income. 1001 The government oil revenues for 2000, the first full year of GNPOC production, exceeded the government’s projections by almost 122 percent. Oil revenues were projected to be 63.6 billion dinars,

but turned out to be 140.9 billion dinars (U.S. $ 546.1 million) for the year. There were two reasons:

increased oil production and increased world prices of crude oil. Oil output reached 185,000 barrels per day (b/d) in Sudan in the third quarter of 2000, compared to 126,000 b/d only nine months before.

International oil prices were up more than expected:1002 from U.S. $ 19.8 per barrel in 1999, the price increased to U.S. $ 27.9 per barrel in 2000, a winfall hike of 40 percent.1003 1001 Sources: IMF Staff Country Report No. 03/273, September 2003; IMF, “Sudan: Final Review Under the Medium-Term StaffMonitored Program and the 2002 Progarm—Staff Report,” IMF Staff Country Report No. 02/245, November 5, 2002. Military expenditures for 2001 were calculated based on ibid., p. 30; IMF, Middle Eastern and Policy Development and Review Departments, “Subject: ‘Sudan—Third Review of the Second Annual Program Under the Medium-Term Staff-Monitored Program and Annual Program for 2001,’” Washington, D.C., January 26, 2001 (confidential); IMF, “Sudan: Staff Report for the 2000 Article IV Consultation and Fourth Review of the First annual Program Under the Medium-Term Staff-Monitored Program,” IMF Staff Country Report No. 00/70, Washington, D.C., June 2000; Talisman Energy, Corporate Social Responsibility Report 2001, p. 26.

No numbers were presented for actual or projected Sudanese military expenditures in 2002 or 2003 from the IMF. This lack of Sudanese government transparency is lamentable. The calculated military expenditures for 2002 are based on the IMF statement that “military spending reached 2.3 percent of GDP [gross domestic product], below the program projection of 2.5 percent.” IMF Staff Country Report No. 03/273, September 2003, p. 6.

The GDP for 2002 was 3,559 b Sudanese dinars. Ibid., Table 3, p. 24. At 2.3 percent of GDP, the military spending for 2002 was

81.85 b Sudanese dinars (U.S. $ 31.27 m).

1002 IMF Staff Country Report No. 00/70, staff memorandum, January 2001, p. 5; IMF Staff Country Report No. 02/245, November 2002.

1003 Oil prices per barrel for the years 1999-2003 according to the IMF were: 1999, U.S. $ 19.80; 2000, U.S. $ 27.80; 2001, U.S.

$21.50; 2002, U.S. $23.20; 2003 (projected), $ 24.50. IMF Staff Country Report No. 03/273, September 2003, Table 3, p. 24.

346Human Rights Consequences of Oil Development

There were other benefits: self-sufficiency in oil and the savings that went with it. In May 2000, the ministry of energy and mining declared that Sudan would stop the costly importation of crude oil for the first time in its history, and would become self-sufficient in crude products because the new refinery in Al Jaili north of Khartoum had started producing fuel from Sudanese crude oil. (The energy minister also said Sudan had begun producing aviation fuel.)1004 The energy minister optimistically estimated Sudan would save no less than U.S. $ 400 to $ 500 million annually in oil import costs.1005 The finance minister more conservatively estimated yearly savings would be in the region of U.S. $ 300 million.1006 The oil business was the main motor behind the growth of the economy, which was attributed to higher oil output, an increase in government spending, and domestic refining of oil.1007 The Economist Intelligence Unit noted, “Sudan’s external accounts showed a remarkable improvement in 2000, as the first full year of oil revenue came on stream. The outlook for the forecast period is also positive.”1008 As to 2001, it predicted, “Sudan’s real GDP [gross domestic product] growth will remain strong, driven largely by developments in the oil sector.”1009 The 2001 oil revenue projection of 153.2 billion dinars (U.S. $ 593.8 million) was not met, however.

Actual 2001 oil revenues were only 140.9 billion dinars (U.S. $ 547.4 million), less than projected but still higher than 2000 oil income.1010 Judging from IMF staff comments in the report, the government made 1004 “Sudan Stops Petroleum Imports,” Khartoum, May 10, 2000, http://www.sudanshop.co.uk (accessed May 10, 2000).

1005 Ibid.

1006 “Interview-Sudan Sees Fruits of Painful Economic Reform,” Reuters, Khartoum, May 12, 2000.

1007 IMF Staff Country Report, No. 00/70, staff memorandum, January 2001, p. 15.

1008 “Country Outlook: Sudan,” Economist Intelligence Unit, London, April 2001.

1009 Ibid.

1010 IMF Staff Country Report No. 02/245, November 2002.

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the mistake of assuming that the 2000 high price of crude oil would continue: instead, it dropped in 2001 to U.S. $ 21.5 from the 2000 price of U.S. $ 27.8 per barrel.1011 The reasons oil revenue was less than expected in 2001 were not only that international oil prices declined, but also delays in transfers from the state oil company to the government and the closure of the El Obeid refinery for maintenance in December 2001.1012 Declining oil prices also meant that Sudan’s share of oil production—compared to that of its foreign investors—fell when oil prices declined. The growth of Sudan’s economy meant that demand for petroleum increased, and the government had to import oil to meet this demand, contrary to its rosy predictions of 2000.1013 Nevertheless, oil revenue did increase in 2001 over 2000.

The government’s calculations supplied to the IMF projected a production increase from 209,000 barrels per day to 230,000 for 2002. In order to protect the government from roller-coaster changes in world oil prices, the IMF suggested and the government agreed to a mechanism whereby government expenditures in 2002 would be based on an assumed price of U.S. $ 20 per barrel. Any oil revenue arising from higher prices would be deposited in the Bank of Sudan to prevent sharp expenditure cuts and to smooth out adjustment when oil prices fell.1014 Projections for 2002 did not look good. Oil revenue was expected to decline because the increase in production would be more than offset by decline of oil prices and by various agreements with the foreign companies producing oil. In addition, production of 230,000 b/d would reach the current 1011 Ibid.; IMF Staff Country Report No. 03/273, September 2003, Table 3, p. 24.

1012 IMF Staff Country Report No. 02/245, November 2002, p. 16.

1013 “Sudan: Memorandum of Economic and Financial Policies,” Attachment 1 to letter from the Sudanese Minister of Finance and National Economy and the Governor of the Bank of Sudan, which is an attachment to IMF Staff Country Report No. 02/245, p. 63.

1014 IMF Staff Country Report No. 02/245, November 2002, p. 32, n. 15, and box 4, p. 34.

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capacity constraint on the GNPOC pipeline.1015 This meant more investment would be necessary before that pipeline could carry more oil to the sea for export.

But the Sudanese government was fortunate in 2002. Instead of declining, the international price of oil increased from U.S. $ 21.5 per barrel in 2001 to U.S. $ 23.2 per barrel in 2002. The price per barrel was expected to increase in 2003 to U.S. $ 24.5. 1016 Government oil revenue was higher than ever in 2002: 210.7 Sudanese dinars or U.S. $ 805.1 million.

Government Ability to Stem Post-2005 GNPOC Production Decline Hinges on Block 5A and Other New Production The government’s 2001 projections assumed that GNPOC oil output would reach 230,000 b/d by 2002.1017 This target was met, and slightly surpassed. GNPOC produced 240,436 b/d in 2002, according to Talisman.1018 If Block 5A were to come in to production, that revenue would rise even more. The government was counting on that. In January 2001, the secretary general of the Ministry of Energy and Mining, Eng.



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