New Sudan war would cost Ethiopia, region

New Sudan war would cost Kenya, region
Source: AFP / www.capitalfm.co.ke
Date: Thursday, 25 November 2010

(Khartoum, Sudan, Nov 25) - A return to civil war in the event that south Sudan votes for independence would cost the country, the region and international community more than 100 billion dollars, a study published on Thursday warned.

Aegis Trust, an NGO, and three research centres including the Institute for Security Studies, based in South Africa, drew up four post-referendum scenarios, ranging from peace to a resumption of full-scale war between north and south Sudan.

In the case of a 10-year conflict of medium intensity, the losses for Sudan would amount to at least 52.1 billion dollars (39 billion euros), on top of about 29 billion dollars for neighbouring Ethiopia, Kenya and Uganda, the study estimated.

The impact on the international community would top 30 billion dollars in terms of peacekeeping missions and humanitarian aid.

"This report demonstrates the high cost of conflict. It implies that domestic, regional and international parties should be asking: 'Are we doing enough to avoid a war that might cost over 100 billion dollars and ruin countless lives?'" said Matthew Bell of London-based Frontier Economics.

The study calculated Sudan's losses in case of war on the basis of an annual 2.2-percent decline in Gross Domestic Product.

It would cost Ethiopia and Kenya more than one billion dollars a year in terms of forecast growth, the researchers said, warning that war would also damage Egypt, Sudan's northern neighbour and the region's leading economy.

The impact could be even heavier in the event of full-scale war that would disrupt the oil production of Africa's largest country, which has reserves of more than six billion barrels.

Khartoum and the former southern rebels signed a peace deal in 2005 after more than two decades of war. A central element of that accord is an independence referendum for the south scheduled for January. Since July, the two sides have been negotiating on key post-vote issues.

Chief among those crucial to a peaceful transition in case of partition is the sharing of oil resources.

Oil revenues make up the Sudanese government's main source of foreign currency earnings, while southern Sudan depends on oil for as much as 98 percent of its budget.

Most of Sudan's reserves are concentrated in the south but can only be exported through a pipeline passing through the north on the way to Port Sudan on the Red Sea.

An oil-sharing formula would benefit both the north and south, whereas an interruption in production and exports would damage the whole country.

"Reaching some level of agreement before the referendum is important not only because both economies need uninterrupted revenue, but also to sustain the confidence of oil companies in their existing investments," the International Crisis Group said this week.

In case of peace and healthy ties between north and south Sudan as well improved security in Darfur, Sudan's growth would steady at an annual 6.2 percent for five years and even reach nine percent from 2016, the study said.

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Report On The Cost Of A Possible Return To War In Sudan
Source: SRS (Sudan Radio Service) - www.sudanradio.org
Date: Thursday, 25 November 2010

(Nairobi, Kenya) – A report published by a coalition of European and African economic and political think-tanks on Thursday says a return to war in Sudan would cost Sudan, the region and the international community about 100 billion US dollars.

The report which comes amid fears that the referendum could trigger an escalation of violence attempts to analyze the economic cost of war to the region.

Mathew Bell an Associate Director of the London based, Frontier Economics spoke to SRS in Nairobi during the launch of the report.

[Mathew Bell]: “The report is an attempt to do with economic analysis of what the cost of war to Sudan and the region and the international community could be. It very explicitly sets aside the very real and important human costs of death and suffering that would result in war but to take a financial perspective as a way of adding to the debate around the cost of war. The headline itself looks like it would cost in excess of about a hundred billion dollars to the combination of Sudan the region and the international community should war break out. That figure breaks down into about 50 billion dollar cost to the Sudanese economy itself. About a 25 billion dollar cost to the regional economy including Kenya, Ethiopia and Uganda. And about a 25 to 30 billion dollar cost to the international community in the form of peace keeping in the form of humanitarian intervention.”

Mathew Bell recognizes the difficulties in measuring the costs of potential future conflict in the report. He explains the different scenarios.

[Mathew Bell]: “Because of the uncertainties of what may happen because nobody can be sure about what the outcome is going to be, we have looked at different potential scenarios; we have tried to come up with a range of figures. And the 100 billion dollar that we have been quoting is towards the bottom end of that range. And the Low, medium and high conflict scenarios are different levels of conflict from a low level civil war situation, to a very serious situation to a very serious full blown civil war that might involve some of the regional players as well, or ways of how to characterize different points in the spectrum of costs. What we don’t comment on at all is what the likelihood of different scenarios would be. But we want to give a range of potential costs.”

According to the report the evidence suggests that the net impact of conflict would be significantly negative. Sudan would lose about 50 billion USD from its GDP, the neighboring countries would lose 25 billion USD of GDP and the international community would lose 30 billion USD in peacekeeping and humanitarian costs.

The report by the European and African economic and political think-tanks on the cost of war in Sudan was launched in Nairobi on Thursday.