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