A/HRC/40/CRP.1 E. Political Economy and the Conflict 1. Introduction In spite of South Sudan’s abundant wealth in natural resources – the country owns the third largest estimated oil reserves in Sub-Saharan Africa942 – entrenched political instability, administrative mismanagement, and recurrent armed conflicts have fundamentally undermined its economic development. At the peak of the most recent armed conflict in 2016, the country’s Gross Domestic Product (GDP) reportedly contracted by between 11 percent943 and almost 14 percent.944 However, there are some signs that the country is slowly recovering from this severe economic crisis as the GDP is estimated to have contracted by only 3.5 percent in 2018.945 Nonetheless, poverty levels in the country remain at record levels, with the World Bank estimating that 82 percent of the population is living under the international poverty level in the first half of 2018.946 An important factor for stability and a possible economic recovery has been the progress in renewed peace negotiations, culminating in the signing of the R-ARCSS in September 2018. Around the same time, oil production – the country’s single largest source of income947 – increased as operations resumed at some of the country’s oil fields,948 although current production rates are still far below those of the pre-conflict years. In addition, a huge amount of the oil revenue – already significantly reduced by high transportation and other transactional costs – is reportedly going directly to paying off outstanding debts, for which future oil output was used as a collateral.949 South Sudan’s heavy reliance on oil production, and more importantly oil exports, has had enormous repercussions and impact on its socio-political and security situation and by extension, and as will be discussed below, it has both historically and more recently been the partial cause of large scale human rights violations. Countries that are heavily dependent on (the export of) their natural resources have been described as susceptible to the so-called ‘resource curse’, according to which they are prone to suffer from armed conflict, weak and corrupt government and endemic poverty.950 However, the presence of natural resources can also be a driver for peace951 and indeed in the context of South Sudan, it has been used on several occasions in the past as the means to “bind the […] peace together”. 952 Moreover, the Commission believes that South Sudan’s natural riches, including both oil and other natural resources, when managed in an accountable way, and in accordance with the country’s relatively strong legal instruments, prescribing equity and transparency in the distribution of revenues, could redress some of the legacy of past wrongs and lay the foundation for more inclusive political and economic processes, that can contribute towards achieving social justice. Hiba Morgan, “South Sudan seeks to revive oil production”, Al Jazeera, 22 November 2018; Mohammed Alamin, “South Sudan Begins Talks with Sudan on Oilfield Rehabilitation”, Bloomberg, 24 June 2018. 943 World Bank, “South Sudan Economic Update”, July 2018. 944 Seik, Edris H. Kebret, Haile and Abdi, Ali Issa, “The State of the Political Instability and Its Impact on Trade in South Sudan: A Critical Assessment”, Unpublished paper by the Horn Economic and Social Policy Institute (HESPI), Addis Ababa, Ethiopia, 2017, pp. 1, 2, citing IMF, 2017. 945 World Bank, “South Sudan Economic Update”, July 2018. 946 World Bank, “South Sudan Economic Update”, July 2018. 947 World Bank, “South Sudan Economic Update”, July 2018. 948 Presentation of South Sudanese Minister of Petroleum, Ezekiel Lol Gatkuoth, Africa Oil & Power Conference, Juba, November 2018. 949 UN Security Council, Interim Report of the Panel of Experts on South Sudan, UN Doc No: S/2018/, 26 November 2018, para. 73; World Bank, “South Sudan Economic Update”, July 2018; James, Laura M., “Fields of Control: Oil and (In)security in Sudan and South Sudan”, Small Arms Survey, Human Security Baseline Assessment for South Sudan and Sudan, Working Paper 40, 2015, p. 33; Patey, L. The New Kings of Crude, China, India and the Global Struggle for Oil in Sudan and South Sudan, 2014, p. 244. 950 Michael Ross, “The Natural Resource Curse: How Wealth can Make You Poor”, in: Ian Bannon and Paul Collier (Eds), Natural Resources and Violent Conflict, Options and Actions, The World Bank, 2003, pp. 17-22. 951 David K. Deng, “Oil and Sustainable Peace in South Sudan”, South Sudan Law Society, February 2015, pp. 5-9. 952 James, Laura M., “Fields of Control: Oil and (In)security in Sudan and South Sudan”, Small Arms Survey, Human Security Baseline Assessment for South Sudan and Sudan, Working Paper 40, 2015, p. 13. 942 124