On 31 July, President Salva Kiir of South Sudan announced a new cabinet, following its dissolution on 23 July. The dissolution had included the dismissing of key rival Vice-President Riek Machar and suspending the Secretary-General of the ruling SPLM party, Pagan Amum Okiech.
Following the dismissals, Kiir stated he would form an inclusive government, which was demonstrated by his appointment of key leaders from groups outside the normal ruling SPLM party structure, notably representatives from the Dinka Bor and Nuer ethnic groups. These appointments demonstrated Kiir's desire to reassure the population as well as investors; for example, Petroleum Minister Stephen Dhieu Dau was reinstated to his position. In the three-month outlook, Kiir is likely to focus on overcoming divisions within the SPLM, as well as restoring the economy.
The Sudanese government meanwhile has threatened to block oil pipelines from 22 August, pending an African Union investigation into Sudan's allegation that the South is supporting anti-government rebels in the North. However, on 31 July, Sudanese presidential aide, Nafie Ali Nafie, announced that a security agreement had been reached, claiming that the South Sudanese government had agreed to halt support to three rebel leaders. Both countries are equally dependent on oil; however, security issues, namely disputes over the status of Abyei and border demarcation, present triggers for further disruptions to oil flow until they are resolved, which is unlikely in the one-year outlook.
In order to reassert control of the economy, notably the oil sector that prior to shutdown in January 2012 accounted for 98% of government revenue, Kiir is likely to launch corruption probes and contract renegotiations into firms that were seen as close to Machar and his allies. This would likely include the September 2012 division of Block B, Jonglei state, and the consequent licensing talks.
The new cabinet appointments include a number of key Nuer and Dinka Bor leaders, namely Riek Gai Kok and Abdalla Deng Nhial, respectively, which is likely an attempt to neutralise the support base of Machar and Amum, respectively. The predominantly rural population tends to vote along parochial lines, supporting well-known leaders from their ethnic groups. Kiir's preoccupation with reuniting the party is likely to cause delays to the passage of key legislation, including the budget and the Petroleum Revenue Management Bill, within the three-month outlook.
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