by Peter Martell
KHARTOUM (AFP) – Sudan has resolved an angry dispute with the south by returning the payment of crucial oil revenues to hard currency, a senior southern government official said on Thursday.
Last month, southern finance minister David Deng Athorbei accused former civil war enemies in the north of "deliberately" weakening the fledgling southern economy, by switching the south?s share of oil revenues from foreign currency to the Sudanese pound.
The central bank in Khartoum denied payments had changed.
However, southern finance ministry undersecretary Salvatore Garang Mabiordit confirmed the payment in foreign currency had returned.
"There were meetings 10 days ago at a senior level to work this issue out, and we are thankful that the payments have now returned to normal," said Mabiordit, speaking from the southern capital Juba.
"This had been a big problem and a big concern, but it has now been resolved."
Sudan is sub-Saharan Africa?s third largest oil producer, providing as much as 98 percent of the southern government?s income.
However, the grossly underdeveloped south is still recovering from decades of war with the north, during which about two million people were killed in a conflict fuelled by religion, ethnicity, ideology and resources, including oil.
Juba had said it would be unable to pay for key imports without its hard currency income from oil.
Under a 2005 peace agreement, the north and south are committed to splitting oil revenues equally, with the national unity government in Khartoum transferring the share in foreign currency.
The south is due in January to vote in a referendum on independence, set up under the peace deal, and many expect southerners to overwhelmingly back full independence.
The return of payments is seen as a positive step in the tense relationship between Khartoum and Juba, with international pressure growing on both sides to resolve post-referendum negotiations, including deals on potential oil sharing.
The central bank had previously blocked hard currency payments in 2008, a situation resolved at the time by the intervention of senior southern leaders.
The bulk of Sudan's crude reserves lie in the south, but the oil is exported on pipelines that only run north.
On Wednesday US Secretary of State Hillary Clinton called Sudanese leaders in a bid to defuse what she called the "ticking time bomb" of an "inevitable" secession of the south.
"We're trying to begin negotiations to work out some of those intractable problems. What happens to the oil revenues?" she asked.
Several key oil fields lie along the still contested north-south border, another issue of concern.
The border was meant to be defined six months after the 2005 peace deal was signed, but negotiations by the committee established to demarcate it are in "deadlock," International Crisis Group said last week.
The Brussels-based think tank warned that some border areas "remain dangerously militarized" as the oil issue raises the stakes for drawing boundaries.
"Given the location of many oil deposits, border uncertainty has also contributed to mistrust, as southerners have questioned whether Khartoum was sharing as much revenue as required," the ICG report warned.