The escalating confrontation between Sudan and the new republic of South Sudan is not for lack of communication: days of talks last month in the Ethiopian capital, Addis Ababa, saw negotiators from the shrunken, bitter rump Sudan and its youthfully overconfident breakaway neighbor huddle under the exasperated watch of former South African President Thabo Mbeki to try to strike a deal on oil. Several days and a flurry of warring PowerPoint presentations later, the talks collapsed with the parties still billions of dollars apart. Sudan announced it would start confiscating one-quarter of South Sudan's oil as transit payment for the use of its pipeline. South Sudan decried that as "looting" and demanded international intervention. Negotiators from both sides left the opulent Sheraton Hotel and flew home. For a couple days, nothing much happened. Then, on Dec. 3 Sudan sent troops and captured a contested border area, where the two armies continue to spar.
"An act of war!" declared South Sudan's army spokesman Philip Aguer. That may be an exaggeration right now, but soon it could be a matter of fact. The two sides have, of course, been at war on and off for more than a half century. For now, they seem content to wage an intensifying proxy war by backing rebel forces in each other's territory, along with the occasional direct skirmishes here and there along the border. The one thing holding them back from full-blown hostilities is the same thing they're currently at odds over: oil. Sudan faces a budget gap of over $7 billion over the next five years after South Sudan's secession cut it off from most of its oil reserves. But South Sudan, at least for now, has no option for getting oil to market other than a pipeline that runs through its northern neighbor. The infant South Sudan's economy is almost entirely dependent on oil revenues, while Sudan's own economic peril requires that it earn whatever it can from the pipeline.
Stopping the oil flow is not an option, says Said al-Khatib, a senior member of Sudan's negotiating team, "Otherwise, the pipeline is not an asset to us." To exploit that asset and, it seems, to exact some revenge they are demanding a whopping $36-a-barrel fee for the oil transiting their territory. And with South Sudan refusing to pay that sum, Sudan says it will simply seize some of the oil instead.
No surprise, then, that tensions along the border are reaching alarming proportions. Sudan's military says the frontier area of Jau it captured a week ago is inside its own territory; South Sudan blasted the move as an "invasion." The truth, as usual, is muddled. On maps, Jau is in South Sudan, barely, but it is also where the South Sudanese army had billeted allied rebels from the Nuba Mountains across the border, drawn up under the 2005 peace deal. Those Nuba fighters are now back at war against Khartoum, and Sudan accuses South Sudan of supporting their old comrades-in-arms a charge diplomats say appears to be valid. Last January, with the South Sudan breakaway imminent, U.N. satellite photos showed Nuba rebels then still part of the South Sudan army hastily building a road back to their homeland in Sudan, along which those fighters stormed north months ago. By taking Jau, Sudan has cut off that link. The same road has also been used by fleeing refugees and appears to be the only route into the area for humanitarian aid which Sudan's President Omar al-Bashir has barred, using hunger as a weapon to supplement his forces' aerial bombardment of the area's villages. The same tactic is being employed in Blue Nile, another Sudanese border state in conflict since Sudan's divorce.
The border wars are increasingly spilling into South Sudan. Khartoum blocked trade across the border months ago, and in November Sudanese planes bombed several areas inside South Sudan, including refugee camps that Khartoum says are used for rebel recruitment. Meanwhile, South Sudanese militias with apparent links to Khartoum and Eritrea continue to wreak havoc in South Sudan.
With negotiations going nowhere, both sides may be tempted to seek regime change across the border, but there's little that either side can do to achieve that goal, and plenty of scope for self-inflicted wounds. As Norway's special envoy to the conflict, Endre Stiansen, says about South Sudanese leaders hoping to topple al-Bashir's regime through war and economic suffocation: "I don't think these people are reasonable, and I don't think they are smart."
South Sudan's independence has not changed the reality that it can't live with Khartoum but can't live without it either. The body language in Addis Ababa revealed what can't be contained in official statements. Outside of the negotiating rooms, there was no small talk, contact or acknowledgement of any sort between members of the Sudanese and South Sudanese delegations, even when standing just yards apart. It was like observing a family reunion in the middle of an ugly inheritance brawl. "We are not their dogs anymore," Pagan Amum, South Sudan's garrulous chief negotiator, told TIME during a recess in the negotiations.
With both sides holding out for a win-lose outcome, representatives of the international community keep reiterating the message that either they muddle through this together or go down together in a wave of bloodshed. It's the lose-lose scenario that's most on the minds of diplomats engaged on the issue these days. As one such frustrated official confided after the most recent talks collapsed, the problem is not simply the issues but: "The problem is how they view each other."