Report

Drill Down

Energy is supposed to be Africa’s future. But when violence erupts in South Sudan and elsewhere, the pipelines can quickly run dry.

Just a few months ago, South Sudan resumed pumping oil after a lengthy and self-imposed hiatus. But now, after violence that led to the death of 16 oil workers, wells are being shut down. It's a reminder that for all of Africa's energy promise, and grandiose dreams of oil-fueled development, the continent's ability to tap those sources of wealth remains hostage to bad security and governance.

After a week of sporadic fighting around the South Sudanese capital of Juba, and some isolated, if horrific violence in oil fields close to the border with Sudan, things took a turn for the worse over the weekend with the capture by rebel troops of the capital of Unity province. That's the epicenter of South Sudan's oil fields, and the starting point for the export pipeline that snakes north through Sudan to the Red Sea.

The surge in fighting spurred U.S. forces into action, with about 150 U.S. Marines dispatched Monday to South Sudan to help protect remaining U.S. citizens and the embassy. Donald Booth, the U.S. special envoy to Sudan and South Sudan, said Monday that he had spoken with South Sudanese president Salva Kiir and impressed upon him the need to "halt the devasting violence." Kiir said he was ready to start talks with rebel leader Riek Machar, who also claims to be open to talks.

In the meantime, it's not entirely clear how much of South Sudan's oil production has actually been affected by the violence so far. Foreign oil companies, including Chinese and Indians, pulled out their workers and shut down wells in some other oil fields over the weekend. But South Sudanese diplomats said Sunday that oil was still flowing. Machar told Reuters he controls the oil fields, but wants to keep pumping oil.

Either way, the oil markets reacted nervously, with prices for Brent crude trading above $112 a barrel in London on Monday before falling back in the afternoon. South Sudan doesn't produce much oil -- about 250,000 barrels a day -- but oil revenues are absolutely essential for both the government in Juba, and for South Sudan's longtime foes in Khartoum.

What makes the threat to Sudanese oil especially painful is that oil production had just resumed after a 15-month hiatus, caused by a dispute with Sudan over how much South Sudan should pay to export its oil through the pipeline on Sudanese territory.

"What you're seeing in the moves around Unity is the question of getting the oil flowing, and keeping it flowing. Obviously both Khartoum and Juba both have an interest in that," said J. Peter Pham, the director of the Africa Center at the Atlantic Council. For now, the forces nominally fighting on behalf of the South Sudanese government in Unity are actually proxies for Khartoum, Pham said. In other words: Sudan is reasserting control over the oil-producing regions it lost when South Sudan became an independent country in 2011.

South Sudan's unrest, and the new threat to its oil production, comes in the context of a wave of production disruptions across Africa and the Middle East that has essentially erased the production gains made in the United States and elsewhere. All told, supply disruptions across the globe -- including from Iran and Iraq -- averaged about nearly 3 million barrels a day in late 2013, 50 percent more than the level of disruptions over the previous few years.

Libya, for instance, has rocketed between a near-total shutdown during its civil war, which took about 1.5 million barrels a day off the global market, to an unexpectedly quick recovery in oil production after the war was over. But that was short-lived: regional tensions left over from the Libyan civil war, including the creation of militias that operate beyond government control, have again conspired to kneecap Libya's oil output.

Nigeria, once the oil powerhouse of southern Africa, has its own set of security challenges. The long-running battle between international oil companies and the Movement for the Emancipation of the Niger Delta (MEND) has left a wake of burning refineries, exploded pipelines, and evacuated offshore oil platforms. After a respite, it seems that MEND is again on the warpath. As if that weren't enough, Nigeria also struggles with rampant oil theft. Taken together, Nigeria's security challenges have kept the country's output about 1 million barrels a day lower than it could be.

Supply outages matter for the United States, not because we are reliant on Libyan or Nigerian oil, but rather because they make oil more expensive than it should be. That, in turn, dampens economic growth in the developed world. And because major producers such as Saudi Arabia have to pump nearly full-out in order to make up that shortfall, there is less spare production capacity in the global oil market. That keeps the oil market tighter and tenser, turning relatively small events that could threaten oil supplies into price spikes.

South Sudan's latest troubles hearken back to the Sudanese civil war which began in the 1980s and which also chased away international oil companies. But it's especially important today, simply because the promise of massive oil reserves off the West Coast of Africa, as well as in countries such as Kenya and Uganda, have sparked a wave of enthusiasm for Africa's energy future that could well collide with a darker reality.

More oil and gas discoveries have been made in East Africa in the last couple of years than anywhere else, Ernst & Young recently noted. Huge oil finds off the coast of West Africa have fueled the hopes of Gulf of Guinea countries of a sudden windfall. Recent oil discoveries in Kenya have that country, and some international firms, dreaming of turning Mombasa into an oil-export hub. Uganda is bullish on its own prospects for oil production after a series of promising wells drilled by British firm Tullow Oil. Africa's oily enthusiasm extends to such unlikely outposts as Ethiopia and the Democratic Republic of the Congo.

But turning that oil promise into reality faces plenty of daunting challenges, as underscored by the violence in South Sudan over the last week. Security looms largest, because it is a precondition both to develop the oil itself and also to build the pipelines, roads, and rail lines the region needs to make energy development a reality. But cronyism, weak laws, poor governance, corruption, and domestic politics can combine to scuttle hopes of a quick energy-fired economic bonanza.

"There is a myth that many oil companies and policy makers subscribe to, which is that economic interests will trump everything else. What gets discounted, is that in some places in Africa, there is a different calculus. Tribal animosities, personal animosities, political grudges  all those weigh a lot heavier, and there are a lot of people willing to cut off their noses to spite their faces," said the Atlantic Council's Pham.

Security has always been a challenge for oil operations in Africa, as in plenty of other regions. Nigeria's battle with MEND dates back almost a decade; the terror attacks one year ago against oil and gas operations in Algeria spooked many foreign firms. Iraqi output has suffered over the last decade from terrorist attacks, and even Saudi Arabia's oil operations have faced sporadic threats from al Qaeda. But Africa's ability to tackle its security and governance challenges matters more today, because international oil companies have more options than they used to.

Most notably, the Americas have become an energy powerhouse in the last half-decade. The United States is on the verge of topping Saudi oil production. Canada is tapping massive reserves of oil sands. Mexico is finally opening its energy sector to foreign investment after more than 70 years. Brazil has a bounty of promising offshore oil resources, and Argentina has, on paper, more shale resources than the U.S.

While South Sudan is particularly problematic, other potential energy players have their own issues. The Democratic Republic of Congo doesn't offer legal security for investors. Kenya is digesting a new constitution. And Uganda faces its own set of challenges, including an aging leadership.

"I think there is a lot of nuance that could be added to the 'Africa rising' story. Overall, I'm an optimist, but it's not going to be an even ride," said Pham. "Some countries will get their acts together and speed ahead, but others who may have the exact same endowments geologically may lag considerably behind because of the political risk involved."

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Report

Obama Admin Taking It Easy on Terror Group, Congressmen Charge

The Haqqani network comprises some of Afghanistan's most lethal insurgents. Why isn't the White House doing more to stop them?

The Haqqani network has long been one of the most lethal and dangerous insurgent groups operating in Afghanistan. Now it's forcing an interagency battle of wills in Washington.

The United States has spent years battling the Haqqani organization on the ground of eastern Afghanistan and trying to cut off its flows of money from the Persian Gulf. But it hasn't come close to defeating the group. More than a year ago, Barack Obama's administration formally designated the network a foreign terrorist organization, a move meant to make it harder for the group to raise money. Critics of the White House, though, say it hasn't done enough to dismantle the most dangerous insurgent group in Afghanistan. Congress is now trying to force the administration to step up the fight.

Tucked inside the defense spending bill the U.S. Senate passed late Thursday evening is a provision that forces the administration to come up with a plan to attack the Pakistani-based Haqqani network where it lives -- by going after its cash. It's an effort the White House and the State Department have reportedly been resistant to pursue as the United States attempts to draw down its forces in Afghanistan, build momentum toward a peace settlement in the region, and mend ties with the Pakistani government -- the very government with which the Haqqanis have had ties for years. But the provision stayed in the bill.

"We need a comprehensive strategy from them about how the network operates, how they recruit and how they travel," a congressional staffer told Foreign Policy. "Shockingly, nothing like this has been done."

Although the amendment requires a range of actions, its primary function is to force the Obama administration to get serious about curtailing the network's financing. The five-page provision, "Report on Plans to Disrupt and Degrade Haqqani Network Activities and Finances," also calls for the administration -- from the departments of Defense, State, Treasury, and the director of National Intelligence -- to come up with a plan and report it to Congress within nine months. The plan should include an assessment of the network by the intelligence community, a review of the administration's current policies, and "metrics" to measure the success of the new plan.

Congressional frustration over this issue has been mounting with the administration for more than a year. Obama's team first designated the Haqqanis a foreign terrorist group in September 2012 but seemed to do little to go after the network's finances or learn much about its recruiting and other activities. Then last month, Gen. Joe Dunford, the top commander in Afghanistan, wrote a letter to Defense Secretary Chuck Hagel raising concerns about the lack of a comprehensive effort to counter the network. The letter, whose contents are classified, hinted that a whole-of-government approach would put added pressure on the Haqqanis and fully leverage its designation as a foreign terrorist organization.

Dunford and other senior military leaders have long seen the Haqqanis as one of the best-trained, and best-armed, insurgent groups in Afghanistan. They were the first to build IEDs with the powerful explosive material potassium chlorate. They were the first in Afghanistan to equip their bombs with advanced remote-triggering devices, instead of the cruder pressure-plate triggers that have been the norm in the country. Senior military officials believe the group has killed hundreds of American troops and several thousand Afghan security personnel.

On Dec. 11, House members met with Special Representative for Afghanistan and Pakistan James Dobbins to discuss the issue but came away angry that he was not taking their concerns seriously.

"The manner in which the Ambassador addressed Members' questions was not helpful to our efforts to address this important issue mutually," reads a Dec. 20 letter six members of Congress wrote to Secretary of State John Kerry obtained by Foreign Policy. "Frankly, his manner was one of the least professional engagements we have had with the Administration."

The letter noted Dunford's request. But it also reflected Congress' growing exasperation with the administration: "...we have repeatedly raised concerns that the Administration lacks a whole of government approach to dismantling the Haqqani network and the Administration does not adequately leverage your recent Foreign Terrorist Organization designation," the members wrote to Kerry.

The letter was signed by Reps. Buck McKeon, chairman of the House Armed Services Committee, Ed Royce, chairman of the House Foreign Affairs Committee, Mike Rogers, chairman of the Permanent Select Committee on Intelligence, and others. That meeting may have been the last straw and triggered the language of the amendment that passed in the legislation on the evening of Dec. 19.

The amendment to the defense bill was inserted by Sen. Richard Burr, the Republican of North Carolina. On his Facebook page Friday, Burr's statement read in part: "I am very pleased that Senate Leadership included my amendment to the National Defense Authorization Act, which calls on the Secretary of Defense to issue a report outlining the Defense Department's strategy to disrupt and degrade the Haqqani Network's activities and finances."

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The United States has been going after the Haqqanis militarily for years, hunting its fighters in the mountains of eastern Afghanistan, targeting its leaders with drones, and putting a $5 million bounty on the head of its top leader, Siraj Haqqani. But critics of the Obama administration say it hasn't used every element of American power to neutralize the group. Congress wants the White House to step up these other, non-military forms of pressure to degrade the organization.

For example, backers of the new provision want the Treasury Department and agencies like the CIA to make it harder for the group to raise money from wealthy donors in the Persian Gulf and prevent it from running what amounts to a protection racket in eastern Afghanistan and parts of neighboring Pakistan. The United States has been trying to pull that off for years with little success, but the new bill will make it an even higher priority.

Afghan and coalition forces have fought the Haqqanis for years, targeting the network with drone strikes inside of Pakistan and in Afghanistan. But critics of administration policy argue nothing has been done to go after the network more strategically, namely by cutting off its financing or even devising a plan to do so.

"They need to produce a strategy for how they're going after the network and then explain why they haven't seized any money even though they have the [foreign terrorist organization] designation for over a year," the congressional staffer said.

The Haqqanis have long been seen as a strategic threat to Afghanistan as well as U.S. national security interests in that region. They've been blamed for numerous attacks, especially the ones in and around Kabul. It was the Haqqani group, for example, that launched the deadly attack near the U.S. embassy in Kabul in September 2011 that lasted 19 hours and killed three coalition soldiers, American defense officials say.

The threat the network poses was punctuated again in November when Afghan national security forces intercepted a Haqqani-backed plot near the border with Pakistan using one of the largest truck bombs ever built -- a reflection of what some see as a concerning trend of using ever larger bombs in their attacks. The truck contained 61,500 pounds of explosives -- and would have caused an explosion thought to be ten times the size of the bomb used in the Oklahoma City bombing in 1995 -- capable of leveling whole city blocks and killing scores of people. The plan was stopped before it could be executed but pointed to the growing danger the network poses to stability in Afghanistan. The United States does not track specifically how many deaths are attributable to the organization, but some estimates put it at more than half of the nearly 2,300 American service members who have died in Afghanistan since 2001.

The network leverages its sanctuary across the border in the Waziristan region of Pakistan and is considered to be one of the country's most effective insurgent groups, with close ties to al Qaeda. But what makes the Haqqani network so nettlesome for Washington is that it is closely tied to Pakistan's security forces; therefore degrading it poses political and operational challenges.

Another complication is that the group got its start battling the Soviets with American-provided money and weaponry: Texas congressman Charlie Wilson, later made famous in a book and movie, even visited Afghanistan in the spring of 1987 to spend time with the group's founder, Jalaluddin Haqqani. The group has in the past signaled a willingness to negotiate with the United States, however, and some senior American officials believe the network could eventually sign a peace treaty of sorts with the Karzai government. The prospect of talks is the main reason that the administration seemed to oppose the provision forcing a strategic plan to degrade the network, even after it was designated as a foreign terrorist organization in September 2012.

"We have a designation, and no plan for executing it," said Sarah Chayes, a senior associate with the Carnegie Endowment for International Peace's South Asia program. Chayes believes that Special Representative for Afghanistan and Pakistan Dobbins' office "has long been fixated on negotiating with the insurgents, and a perhaps Ireland-based corollary that you have to preserve the leadership in order to negotiate with them." But, she says, the White House is ill-advised to take such an approach.

"What they don't understand is that negotiating with the leadership rewards Pakistan's deliberate use of armed militants as an instrument of foreign policy," Chayes said. But the most effective way to induce militants to negotiate independently of Pakistani influence is to begin hitting the top of the network, she argues. "Then people will start calculating their costs and benefits differently and start taking risks -- since negotiations might offer them a prospect that is better than the status quo."

State Department officials say they didn't oppose the legislation and take the threat the Haqqanis pose to U.S. security "extremely seriously." According to one State official, they have actually designed a "whole-of-government effort to combat it."

"We actively utilize military, intelligence, diplomatic, and financial channels to disrupt their activities and dismantle the organization's leadership," the State official said by e-mail, agreeing only to speak on background about a sensitive matter inside the government. "DOD, the intelligence community, State, Treasury, and [the Joint Improvised Explosive Device Defeat Organization] are critical members of that whole of government effort, and we have briefed Congress on their coordinated efforts, which have had some significant results to date, but we would agree that we have more work to do as long as they pose a threat."

But clearly, Gen. Dunford, members of Congress, and other elements inside the Defense Department believe more could be done. The Pentagon would only say that it is reviewing the legislation. "The department is reviewing the NDAA legislation for its potential impacts on DoD policies," said a defense official. "It would be premature to comment on specifics at this time."

Tony Cordesman, a senior analyst with the Center for Strategic and International Studies in Washington, said devising a plan to go after the Haqqani network alone doesn't answer bigger questions about the proper U.S. counterterrorism strategy, not only in that region but in Northern Africa, the Arabian Peninsula, and in other places.

"It is a tiny part of a much broader problem," he said. And forcing the White House to come up with a strategy doesn't mean it will do it.

"Announcing a strategy doesn't mean you are going to take action," he said. "We've mastered the ability to announce strategies without doing anything about them."

Cordesman was dubious that the measure would actually for the White House to do anything.

"Any individual in the executive branch that hasn't found a way to ignore a reporting requirement or a request for a strategy is so dumb that they deserve anything they get," he said.

Yochi Dreazen contributed to this report.

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