Fears S.Sudan conflict could infect region

"We do worry about the regionalisation of this. The Ugandans and Sudanese hate each other," the diplomat said.

- Proxy armies -

Rebels from Sudan's troubled Darfur region, who have been battling Khartoum for a decade, are also reported to be fighting alongside South Sudan in oil-rich Unity state, and ethnic militia from other parts of the south are also pitching in, further straining north-south relations.

There are real fears that Sudan could revert to old tactics of funding proxies or arming the opposition as calls for Uganda to withdraw go unheeded and oil assets are threatened.

A row in early 2012 over how much South Sudan should pay to export its oil through northern pipelines to port led to an 18-month halt in production that brought both economies to their knees.

Kiir and Bashir eventually signed deals on oil and security that included a promise to stop funding one another's enemies to ensure their co-dependent stability.

The current conflict has called this and also the future of South Sudan's oil revenues into question, with many seeing newly oil-rich Uganda's military support as a bargaining chip for oil.

A South Sudanese woman walks with wood to reinforce her house in an isolated makeshift IDP camp for  …

South Sudan's defence minister recently admitted that Ugandan troops were on the payroll, contradicting his colleagues' claims there were no foreign forces in country.

But speculation is rife over what else South Sudan's government -- still reeling from the shutdown -- has offered to secure its position.

"I heard one of the oil blocks, or so much (oil) per day", said the diplomat.

South Sudan's decision to build an alternative pipeline to Kenya or Djibouti further unnerved Khartoum and raised Uganda's hopes it might link up to an East African pipeline and build its own refinery.

With French oil giant Total owning concessions in Ethiopia, Uganda and South Sudan, "the pieces are there for big play", says Copeland.

- Risk of bankruptcy -

But for now, cash-strapped South Sudan is embroiled in a war that has displaced almost a million people, with many wondering how long the baby nation can last.

"International financial experts are suggesting that the government might be bankrupt in 2-3 months," said one analyst on condition of anonymity.

South Sudan's biggest oil-backer China has played a role in supporting the government financially with development projects and loans, and is now increasingly wading into internal politics.

But its weight is unlikely to cut through strained regional relations as paranoia over history repeating itself with regards to oil, guns and borders grows.

"A nightmare scenario is unfolding in this region", said John Prendergast in a recent report for the anti-genocide Enough project.

He has called for a proper investigation into whether Eritrea is providing arms through Sudan and for an extension of sanctions already incurred by Asmara for supplying weapons to Somali groups.

Until there is no "visible presence" of Ugandan forces in South Sudan, he doubts that peace talks in Ethiopia's capital Addis Ababa that the host and Sudan have backed will ever start in earnest.

But even without confused regional backers, half-hearted international pressure or China's economic carrot, left alone, South Sudan's war could rumble on for years, funded solely by the spoils of corruption and determination of former guerrilla leaders.

• Politics & Government
• Unrest, Conflicts & War
• South Sudan

Source http://news.yahoo.com/fears-sudan-conflict-could-infect-region-191522880.html