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