South Sudan accuses Khartoum of 'currency war'

People count the old currency before receiving the new Sudanese currency at a branch of the central bank of Sudan in Khartoum
Image caption Khartoum says the old currency will be phased out

South Sudan has accused the north of declaring an "economic war" by issuing a new currency.

South Sudan government minister Pagan Amum said Khartoum had left the south holding large quantities of old currency that was now illegal tender.

Khartoum denied triggering an economic war and said people would get a chance to change the old currency.

The south, which became independent on 9 July, is also locked in dispute with the north over borders and oil revenue.

Mr Amum, who is South Sudan's minister of peace, said the north had violated an agreement by launching a new currency, the Sudanese pound.

Khartoum had agreed in talks not to issue it until six months after the south did, he said.

The south launched its currency, the South Sudan pound, about a week after independence.

'Daylight robbery'

Mr Amum said Khartoum's move would cost the southern government at least $700m (£429m).

"This is a hostile act... contrary to our emerging as two states on good terms," he is quoted by the AFP news agency as saying.

The north's central bank says the new currency has been introduced as a precautionary measure, since South Sudan has already brought in its own currency.

A spokesman for northern Sudan's ruling party, Rabie Atti, said the adoption of the new currency would be gradual.

"Our banks now are dealing with the same - the new currency and old currency," Mr Atti is quoted by the AP news agency as saying.

"I don't think this is a big problem... I think it can be resolved technically without trouble for the north or the south."

Mr Amum said Khartoum had also imposed a charge of $22 per barrel on oil transported through its pipelines.

"This is nothing but robbery in broad daylight. I would like to take this opportunity to appeal to Khartoum not to start economic wars with South Sudan," he said.

The BBC's James Copnall in Khartoum says the financial squabbles highlight the tensions which are likely to complicate life in both countries for the foreseeable future.

Both economies could face real difficulties if there is no co-ordination between them, he says.

The governments in Juba and Khartoum also have to come to an agreement over oil.

Most of it is in the South, but the infrastructures to export it are in Sudan.

The two sides cannot agree on how much South Sudan should pay to use these facilities.

There is also no agreement over the fate of the oil-producing Abyei region, which both countries claim.

Map showing position of oilfileds in Sudan, source: Drilling info international

Both Sudan and the South are reliant on their oil revenues, which account for 98% of South Sudan's budget. But the two countries cannot agree how to divide the oil wealth of the former united state. Some 75% of the oil lies in the South but all the pipelines run north. It is feared that disputes over oil could lead the two neighbours to return to war.

Satellite image showing geography of Sudan, source: Nasa

Although they were united for many years, the two Sudans were always very different. The great divide is visible even from space, as this Nasa satellite image shows. The northern states are a blanket of desert, broken only by the fertile Nile corridor. South Sudan is covered by green swathes of grassland, swamps and tropical forest.

Map showing Ethnicity of Sudan, source:

Sudan's arid north is mainly home to Arabic-speaking Muslims. But in South Sudan there is no dominant culture. The Dinkas and the Nuers are the largest of more than 200 ethnic groups, each with its own languages and traditional beliefs, alongside Christianity and Islam.

Map showing infant Mortality in Sudan, source: Sudan household health survey 2006

The health inequalities in Sudan are illustrated by infant mortality rates. In South Sudan, one in 10 children die before their first birthday. Whereas in the more developed northern states, such as Gezira and White Nile, half of those children would be expected to survive.

Map showing percentage of households using improved water and sanitation in Sudan, source: Sudan household health survey 2006

The gulf in water resources between north and south is stark. In Khartoum, River Nile, and Gezira states, two-thirds of people have access to piped drinking water and pit latrines. In the south, boreholes and unprotected wells are the main drinking sources. More than 80% of southerners have no toilet facilities whatsoever.

Map showing percentage of who complete primary school education in Sudan, source: Sudan household health survey 2006

Throughout the two Sudans, access to primary school education is strongly linked to household earnings. In the poorest parts of the south, less than 1% of children finish primary school. Whereas in the wealthier north, up to 50% of children complete primary level education.

Map showing percentage of households with poor food consumption in Sudan, source: Sudan household health survey 2006

Conflict and poverty are the main causes of food insecurity in both countries. In Sudan, many of the residents of war-affected Darfur and the border states of Blue Nile and South Kordofan, depend on food aid. The UN said about 2.8m people in South Sudan would require food aid in 2013. The northern states tend to be wealthier, more urbanised and less reliant on agriculture.

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