Executive Summary
In South Sudan, efforts to broker peace are not succeeding. This is in large part because the neighboring countries most involved in the peace process have not yet utilized their unique economic leverage to press for the concessions necessary for peace. The warring parties have little interest in making such compromises in a current environment where there is no cost for not doing so. Neither the region nor the international community have held South Sudan’s leaders to commitments made at the negotiating table, including nine signed agreements to cease hostilities, all of which have been violated within days. The region has repeatedly warned that it will impose punitive measures, but willingness to take action on South Sudan has been undermined by a web of political and economic relationships linking regional elites’ interests to those of South Sudanese politicians.
While the peace process drags on, fighting on the ground continues, including targeted killings based on ethnicity, rape, the recruitment of child soldiers, and other war crimes. Continued inaction—including the decision to delay the release of the final African Union Commission of Inquiry report detailing atrocity crimes committed by both sides since the conflict began on December 15, 2013—has reinforced a culture of impunity for South Sudan’s warring elites. Limited sanctions designations made by the United States, European Union, and Canada against field commanders for their role in attacks against civilians have had little impact on battlefield calculations, given the limited financial exposure of commanders outside the region. The unanimous adoption of a globally enforceable sanctions regime by the U.N. Security Council, which regional countries would be obligated to enforce, has so far not named anyone. Furthermore, although the African Union Peace and Security Council called for “urgent steps” by the U.N. sanctions committee in May 2015, no action has been taken at the regional level, leaving the funding flows for the conflict mostly untouched and the regional power dynamics that support the conflict intact.
A mixture of effective sanctions and other forms of economic pressure, limiting the warring parties’ ability to access or move funds obtained through state corruption and other forms of illicit income, coupled with incentives for regional players to end their support to the warring parties, could fundamentally alter the calculations of the warring parties. Targeted sanctions are a priority for South Sudan, because freezing the assets of leaders of the warring factions and the networks that enable them would substantially diminish their ability to conduct the war effort on the ground and create some level of accountability for ongoing atrocities. In South Sudan, informal patronage networks established during the civil war were formalized as a kleptocracy when the interim South Sudan administration was established after the North-South peace deal, and the systemic corruption only deepened upon independence in 2011. Individual elites have used their positions in the military and government for patronage and their own personal economic benefit. By targeting the elite networks and interests that fund and fuel the conflict, the international community can ensure that the leaders of South Sudan’s government and armed opposition also have to begin to bear the cost of war.
This report describes the regional economic dynamics of the conflict in South Sudan and the opportunities for peace through regional action, aligning regional economic opportunities and interests with efforts to break the impasse in negotiations. The Intergovernmental Authority on Development (IGAD), leading the peace process, is deeply committed to regional stability and economic development. That said, in the past, IGAD member states have often pursued their own national economic interests as disconnected from and more valuable than regional cooperation. In recent years, the region has realized the benefits of economic integration and initiated a number of multi-country infrastructure development projects (discussed in further detail below). These projects rely on international support and investment, but to attract the needed foreign investment, international donors will need these regional players to comply with international banking standards and financial obligations, and this should include sanctions enforcement.
There are regional motivations to end the conflict that have not been emphasized sufficiently. The conflict in South Sudan has come at a high cost to the region in terms of lost economic opportunities in trade and investment, refugee flows, and military expenditures, particularly for Uganda. Uganda also relies on South Sudan as its most important export market. Kenyan banks form the backbone of the South Sudanese economy and facilitate the bulk of financial transactions in the region. Ethiopia is less economically entangled in the conflict, but it is diplomatically deeply invested in mediating regional tensions and maintaining its leadership role as the chair of IGAD. Finally, Sudan is invested in not only cutting off South Sudanese support to the Sudanese armed opposition but also maintaining its exclusive access to South Sudan’s oil wealth. Personal business interests are also a factor, including those of friends and family of regional heads of state.
Uganda, Kenya, Ethiopia, and Sudan also have collective development interests in regional infrastructure projects, such as the Northern Corridor network to expand Kenyan port access at Mombasa, the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor to expand Kenyan port access at Lamu, and the Ethiopian Grand Renaissance Dam, which will provide hydro-electric power across the region, including to Sudan. Without access to South Sudanese markets and the country’s natural resource wealth, these projects will fall short of the ambitious vision of regional heads of state for economic development and integration in the region.
While regional sanctions enforcement is essential to change the calculations of the warring parties, these competing economic and political interests have hamstrung regionally led negotiations. Uganda has actively lobbied against sanctions and an arms embargo at the United Nations, given its military presence in South Sudan. There are also concerns among regional leaders that sanctions could negatively impact regional investments in South Sudan, such as those made by Kenyan banks. Outside pressure must be brought to bear to resolve regional tensions that have prevented action on promised punitive measures. Sanctions enforcement should be something these governments perceive to be in their interest to prioritize.
Given the threat that protracted conflict presents for stability and foreign investments, there are opportunities to align the agendas for peace, security, and development in the region—despite the challenges outlined above. The Chinese have backed direct talks and dispatched infantry forces to a U.N. peacekeeping mission for the first time. China’s state-owned National Petroleum Corporation (CNPC) holds a 40 percent stake in South Sudan’s oil extraction facilities that remain the government’s key source of revenue. China therefore has unique economic leverage and should be intensively engaged by the United States to exert that economic leverage as a key partner in the expanded peace process, including maintaining and enforcing a moratorium on weapons shipments to the government of South Sudan.
In order to build regional support for targeted sanctions enforcement, the Enough Project recommends that the U.S. and other international partners focus on cutting off the money flows that fuel the conflict, building political will and technical capacity for regional sanctions enforcement, and working with regional players to build economic and political incentives for peace:
Enforce regional sanctions; create regional incentives
1. Backed by additional unilateral targeted sanctions designations and a push at the U.N. Security Council for multilateral designations, the United States should lead a diplomatic effort to build regional support for targeted sanctions enforcement. The United States should deploy other possible financial pressure tools in order to reduce the warring parties’ ability to pay for the conflict and to reduce the incentive to wage war.
2. The United States should work with China and with regional governments to align the region’s economic development agenda with an end to the conflict in South Sudan. To encourage steps towards sanctions enforcement and further meeting of international legal and financial obligations, the United States, China, and other relevant donors and multilateral institutions should discuss making these a necessary step towards increased donor funds and foreign investment in infrastructure development projects that would improve shared economic progress in the region.
3. The U.N. Security Council should adopt a global arms embargo to limit the flow of weapons and ammunition to the warring parties.
Build capacity for ongoing sanctions enforcement
4. The U.S. government should increase its own intelligence gathering in support of targeted sanctions, and the United States should intensify coordination with civil society, other governments, the U.N. Security Council, and the IGAD region to trace the assets of key influential elites on both sides of South Sudan’s civil war to ensure that the right people can be identified and sanctions can be effectively enforced.
5. The United States, European Union, and other donors should expand their existing capacity-building efforts in the region beyond their current focus on anti-money laundering and counter-terrorist financing to prioritize efforts to strengthen Kenya, Uganda and Ethiopia's legal, regulatory and technical capacity to enforce sanctions imposed by the U.N. Security Council.
6. International donors should prioritize funding to civil society organizations in South Sudan, Uganda, Kenya, Sudan, and Ethiopia that are dedicated to combating impunity for economic crimes, pursuing transparency agendas, and urging regional sanctions enforcement.
End the regional political tensions driving conflict
7. International partners engaged in the peace process should ensure that regional tensions and support to the warring parties do not continue to extend the conflict. Chief among these tensions is the long-standing dispute between Uganda and Sudan. Any peace deal should include specific provisions on a timeline for withdrawal of Ugandan troops and an end to Sudan’s support for the Sudan People's Liberation Army (In Opposition) (SPLA-IO).