Sudan – China’s Supply Chain Gang


George Clooney got arrested yesterday – outside the Sudanese Embassy in Washington, DC. He was freed with a $100 fine – but he (and his journalist father) have brought some attention to the awful situation in Sudan / Nuba / South Sudan.

I was in Khartoum in 2010 on behalf of Global Witness, an NGO that campaigns against natural resource funded corruption and conflict. The Sudanese had reacted badly to a report we had written on how oil resources were being corruptly handled against the interests of the South Sudanese – who have since gained independence. Around 98% of the income is from oil.

At the conference organized in Khartoum by the Sudanese Government – and aimed at rubbishing the Global Witness report – the oil companies were represented (Chinese at the forefront) along with the Government and oil ministries. The conference was aimed at whitewashing the Sudanese of corruptly taking more than their fair share of the oil under the oil sharing agreement.

Since then, Bashir’s Government has been syphoning off South Sudanese oil (which has to run through Sudanese pipelines).  Because Sudan is made up of various tribes, fighting over territory and natural resources remains continuous and high-risk. As in many countries, economic well-being is a necessity to ensure that such conflict is minimized. In a country riven by wars and dependent on one natural resource, oil, oil management and an ending of the rampant corruption in Sudan and South Sudan are critical.

19th Century Boundaries

Sudan is a nation with boundaries set up in the 19th Century by Empires that adored straight lines and cared little and understood less about the tribal affiliations or histories of those lands. Kept together by undemocratic and repressive regimes, corruption and conflict were devices developed to hold strong elites in power. Corruption is now rampant throughout the region and conflict is often seen not just as a means to take over territory but to keep populations focused on the enemy so as to distract them from internal strife and to motivate all against a common foe.

Decisions taken many years ago by foreigners have destabilized the region and insinuated a corrupt regime and continuous conflict into it. The new colonizers, though, are the Chinese. As George Clooney states, the Chinese oil companies (really the Chinese Government) have invested over $20bn in Sudan / South Sudan so that 6% of their oil needs back home can be fed. They have styled their colonialism on the back of “no involvement” in politics or in the affairs of the Sudanese. Confucian disinterest in the affairs of a nation so far away means that the west’s plans (certainly since the end of WWII) to link economic prosperity (mainly through aid) with improved governance are now foundering as the new colonialists (extracting vast quantities of natural resources) care nothing about governance.

21st Century Payback – China at the centre

Following the demise of the League of Nations after WWI (a bastion of 19th Century borders), the United Nations was created to establish peace worldwide. How will the 21st Century be reshaped to deal with the enormous economic changes taking place whereby dominant nations from the 20th Century are being progressively sidelined in those areas of greatest economic need and highest risk of conflict?

China despite its size and annual economic growth remains a poor country where 70% of its people are poor by international standards. It is determined to grow itself to a level where its people are comfortable and where the political system is salvaged. This means that its supply chain (especially its natural resource supply chain) is seen as merely that – it doesn’t matter that nations who have the natural resources so badly needed for economic growth in China are corrupt and riven by war as long as the Chinese can minimize supply disruptions. This may have been OK in the 19th Century but is not sufficient now where elites are enriched in the supplier nations on the back of corruption and conflict.

The key to the crisis in Sudan and the key to making a real change to 21st Century struggles against corruption (and its impact on poverty, hunger and disease), against conflict and against world-changing disasters like climate change is ………China.

Whether or not China is dominant in terms of its economy – and it is still much smaller than the USA – it has the power of veto and, more positively in terms of persuasion.

China can free the Supply Chain Gang

Whilst economic strength moves to China at great speed, the Chinese government has to take account of the fact that its customers and suppliers and itself are completely interdependent. China will probably over time become the most interdependent nation on this planet. Its huge population and increased momentum for economic growth will encounter limits that the current Premier, Wen Jiabao recently acknowledged. Increasing “reform and openness” are critical to further economic progress, he said recently in Beijing.

As out-going Premier he will not in the future have the power he currently possesses and Chinese power is entangled in many ways so that his words may not bear fruit. Nevertheless, there is some reason to believe that the government in China may seek to adapt as time goes on – because economic progress is vital to secure the political power base. At the same time, it is possible to see that (with the right pressure) Chinese attitudes to its customers and suppliers may be reformed to more than purely customer / supplier status. China is not a corporation and the competition for natural resources is not merely a supply chain activity – there are lives at stake within the supplier communities, not just shareholders and shareholdings.

Sudan and South Sudan are examples of so many things – countries dependent on a natural resource which is dissipating that basic wealth to a foreign country so that a core of wealthy and powerful government cadres get wealthier while thousands live in poverty, disease and in war zones. While China treats Sudan and South Sudan on a supply chain basis, no change can exist – and this same treatment is expanded wherever China works to secure supplies.

The Clooneys and Amnesty International and Enough (as well as organisations such as Global Witness) are working hard to free the Sudanese and South Sudanese from the terror of war. It is also a crucial case for expansion of China’s role in natural resource extraction and dependency. China can change the way the world works by relaxing is grip on pure supply economics and allowing its huge economic strength to persuade its suppliers that good governance is a worthwhile benefit along with the extraction of its natural resource wealth.

Holes in the ground – whether the result of mining, oil extraction or graves dug to bury the dead from conflicts – are no use, merely the result of the supply chain gang effect. It is a good time for China to take its global responsibilities more seriously. It will be around for a long time – it should be seriously acting on how it lives within the global neighbourhood. The traditional Chinese view that you should follow the local custom when you go to a new place is outmoded – especially when local customs are keeping elites in power, corrupted and financing conflicts.

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