Mistrust prevails as Sudan, South Sudan head for limited deal - Reuters

With an army of advisors and experts pressuring both sides, the leaders of the neighboring nations may feel compelled to reach a limited agreement in Addis Ababa to end hostilities, for now, after coming close to war in April.

Faced with crumbling economies, Sudan's President Omar Hassan al-Bashir and his southern counterpart Salva Kiir are expected to reach an agreement to allow oil exports to resume during a summit on Sunday.

The leaders have the extra pressure of a threat of possible sanctions from the U.N. Security Council if they do not resolve their disputes this weekend.

But diplomats at the peace talks say neither side seems to have a genuine intention of putting the decades of conflict behind them and solving all remaining disputes left over from South Sudan's messy secession in July 2011.

"There is a sense of disappointment among mediators that both sides will only take one step forward. They not ready for a lasting peace deal," said a senior diplomat.

"It is more constructive than last time but I don't see a comprehensive deal," he said.

Both delegations see the talks, the latest in a series hosted by the African Union, as a way to show their people they are being tough on their neighbor and to deflect public anger over economic crises at home.

"These talks are about containing a crisis rather than solving a conflict," said a Western diplomat.

"You have a generation of people on both sides for which the conflict has become part of their lives. They don't really act as statesmen but see themselves as opponents," he said.

At the venue - the Sheraton hotel - the delegations, both about 20-strong, rarely meet directly and talk to each other only in negotiating rooms and in the presence of mediators.

Both sides tend to sit at separate tables when dining. They even often sit on different benches during breaks in talks.

STICKING POINTS

The main sticking points in negotiations have been where to mark the border and how much landlocked South Sudan, which seceded under a 2005 peace deal that ended decades of civil war, should pay to export oil through northern pipelines.

Last month, the neighbors reached an interim deal to restart southern oil exports through the north but Sudan also wants a border security deal, which both parties are trying to hammer out at this latest round of negotiations.

The new talks began on September 4 but little happened in the first 10 days as discussions focused on repeating old statements or questioning details of last month's interim oil deal.

Khartoum sent in a delegation of tribesmen from the border area, signaling its seriousness to stake a claim to a strip of disputed land. The tribesmen have not taken part in official talks, but their presence at the hotel was a message that Sudan would not budge on that issue.

While Sudanese officials mostly kept to themselves, the southern delegation spread out in the hotel, beaming with confidence while meeting diplomats in cafes or playing on their iPhones.

"You have here two sides who signal to each other, 'We are under no pressure to sign anything', so things have been slow," said another diplomat.

Western powers hope once oil flows resume, the nations will have an incentive to keep talking. However some diplomats say that once the economies stabilize, hardliners on both sides might pressure their governments into more conflict.

While Sunday's summit is expected to pave the way to resume oil exports and revive trade the much more complicated fate of five disputed border regions will be left for future talks.

"The borders will take forever. They will exchange maps with experts, visit each other, go maybe into arbitration," said one ambassador.

There is also no sign of progress to settle the fate of the Abyei border region which is highly symbolic to both sides.

(Reporting by Ulf Laessing; Editing by Pravin Char)