Cost of war 49,011<sup>j</sup> _Sources:_ World Bank, Public Expenditure Review 2007; IMF, World Economic Outlook 2007; CIA, World Factbook 2007; Economist Intelligence Unit, Country Report 2008; International Institute for Strategic Studies, _Military Balance 2007_ .

a. Net of oil revenue transfers to the GOSS (US$1362m). May include grants, unspecified in 2006 World Bank Public Expenditure Review for Sudan.

b. This figure includes US$1331m reported in the GoSS budget and US$87.6m, reported in the GNU budget as oil revenue transfers to Southern oil-producing states (i.e., Unity and Upper Nile). The two figures were summed up for comparability with GNU revenues, which include sums to be transferred to Northern states. Total contested oil revenue is twice the value of transfers from GNU to GoSS plus transfers to oil-producing states.

c.This figure probably includes donor grants.

d. This figure includes donor grants (US$63m) and GOSS tax revenue (US$2m).

e. Net of oil revenue transfers to the GOSS.

f. This figure includes the oil revenue reported in the GOSS budget (US$1266m) and the oil revenues transferred by the GNU to the oil-producing Southern states (US$88m).

g. This section of GOSS budget expenditures is called "Security". US$552m out of US$555m were allocated to the SPLA. h. For the GNU this row corresponds to the sum of amounts spent for "Defense and National Security" and for "Public order and safety". For the GoSS this row corresponds to the sum of "Security" and "Rule of Law".

i. The figure for the GNU includes 104,800 regular troops and 17,500 paramilitary troops. The figure reported for the GOSS is in the middle range of the estimated strength of the SPLA (20,000-30,000).

j. The cost of war is calculated as the net present value of forgone economic growth, which has been estimated by Collier and Hoeffler (2004) as equivalent to 105% of current GDP, assuming a war that last seven years and fourteen years of recovery. The GDP figure used for the calculation is the IMF estimate for Sudan's 2007 GDP.

The source used for all revenue and expenditure information in Table 2 is the World Bank’s Public Expenditure Review for the year 2006. The figures on military forces are from the Military Balance (2007). We use Collier and Hoeffler’s (2004) findings to estimate the overall cost of the conflict. They found that on average the discounted cost of civil war is equal to about 105 percent of GDP at the start of the conflict.<sup>30</sup> Table 2 begs the question of the sustainability of these levels of military expenditure in the event of partition. Without US$1331m in oil revenues for Khartoum, it is difficult to conceive that they would be able to continue to spend US$1175m on defense and military (34% of $3416m non-oil government revenues), though security concerns, such as the one in Darfur, may necessitate high military expenditure. Similarly, while some degree of “catch-up” military expenditure is understandable in the

> 30 Part of the cost is incurred during the conflict, because the war on average reduces growth by 2 percent of GDP. After the conflict, the cost is represented by the fact that it takes long time (on average 14 years) for the economy to recover completely from the shock; during this period, the GDP is lower than it would have otherwise been without conflict. This is a conservative measure of the costs of civil conflict because it does not account for the costs of loss of life and disability (Collier, Chauvet and Hegre, 2007). The negative externalities associated with spill-over of conflict (e.g., refugee flows, communication of diseases and terrorism) are not taken into consideration here, because we are interested in the costs of conflict that are directly borne out by Juba and Khartoum.

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