KHARTOUM, Jan 4 (Reuters) - A Jan. 9 referendum on secession for Sudan's oil-producing south is likely to create a fragile new state that will need Western money and help, but also have far-reaching consequences for the north.
The plebiscite consummates a 2005 north-south peace deal and a follow-up vote for independence by southerners will likely take effect on July 9. Here are some of the issues facing a new north Sudan state if the south separates.
The 2005 deal provided for a roughly 50:50 sharing of revenues from wells in the south between the two sectors of Sudan. A deal is expected for some sharing to continue because the north controls the infrastructure, or for a transitional period during which Khartoum's portion could be reduced after secession. This should offset any immediate economic shock in the north's economy, already troubled by foreign currency shortages and rising rates of inflation.
In the longer term, however, the south will need more of its revenues to rebuild its war-scarred country, so the north must begin to diversify away from oil. Some 70 percent of Sudan's estimated 6 billion barrels of oil reserves are in the south.
Khartoum has signed a number of oil concessions in the north which they hope will raise crude production, but it could take five years for anything significant to come on line. The petroleum ministry says production in the north is about 100,000-110,000 barrels per day. Total output is 500,000 bpd.
WILL THERE BE ANOTHER WAR?
Africa's largest country has been embroiled in civil war on and off since 1955 and conflict continues with a low-level insurgency in the Darfur region in western Sudan.
Aggressive rhetoric has occurred between hardliners on both sides and there has been violence. But the clashes have been brought quickly under control by leadership from both sides. This shows they know that since the economic interests of the two new countries will be inextricably intertwined, neither side can afford a return to war.
Abyei - the central region claimed by both sides, is at deadlock, but is likely to be resolved as part of a larger deal on post-referendum issues. Some Western analysts surmise the north could use war to cover up its economic crisis - which could also generate revenue for Khartoum through its state-owned military industries.
But most Sudanese analysts say the north would be hard pressed to find and fund an army to fight such a war which neither side would win easily.
WHAT ABOUT INVESTMENT IN THE NORTH?
Sudan faces rising inflation levels and foreign currency shortages. A mounting and crippling external debt, which has reached almost $40 billion, is of concern as the north will have less revenue to service loans and longer term will no longer have 500,000 bpd of oil to guarantee investments.
Khartoum has announced various austerity moves including modest cost-cutting and an agricultural revival but made similar promises in the 1990s and never followed through.
Defence and security spending has also increased since the 2005 peace deal, an independent study by consultancy UNICONS showed, which will not encourage investors.
Foreign currency shortages and restrictions have already made it difficult for companies to repatriate profits and investors will want to see the northern government implement open and transparent policies in both the economic and political spheres to entice them to bring their cash.
WHAT ABOUT SOUTHERNERS IN THE NORTH?
Estimates put the number of southerners in the north at about 2 million with some 150,000 expected to move south ahead of July 9. Many who were born, educated, work or married in the north will want to stay, but comments from senior northern officials saying they will not be welcome have sparked fears they may be forced to leave.
Any expulsions would be a flashpoint for violence and would isolate the northern government internationally even further and could lose them the key African Union support they have enjoyed in recent years.
While most observers believe the harsh talk is rhetoric to create leverage ahead of end-game negotiations, the comments have encouraged hard-line Islamist minorities who might take matters into their own hands if the south secedes.
WHAT ABOUT DARFUR?
Rebels from Sudan's west realise they will be in a stronger position in a post-secession scenario, with Khartoum weakened by losing the south and the rebels' territory comprising a larger portion of the new country. They could up their demands to self-determination following the south's example.
Military clashes have resumed, although the key Chadian supply route for the rebels has been closed off. Analysts believe the south may help Darfur's insurgents if Khartoum supports militias in the south, embroiling Darfur into a proxy war. However without major supply lines the rebels will likely muster only guerrilla tactics to fight Khartoum.
In addition as the new south soaks up donor money, less aid will be available for Darfur which risks deteriorating into another humanitarian crisis. Darfur looks set to continue as a low-level conflict for years to come.
WILL THE NORTH BECOME MORE ISOLATED?
Darfur will become the north's major concern because of the International Criminal Court arrest warrant for President Omar Hassan al-Bashir accused of masterminding war crimes and genocide there.
His policy of forcing visits on reluctant neighbours who are under Western pressure not to host him could isolate the north even further and lose them allies. Bashir also indicated Islamic law -- sharia -- would be implemented more fully in the north, and Khartoum has developed stronger political and economic ties with Iran, which will worry the West.
Sudan in the 1990s was a safe haven for the internationally wanted, including figures such as Osama bin Laden and Carlos the Jackal.
Key players Washington, London and Oslo have offered incentives to the north to pursue a pluralistic, democratic government post secession, offering increased trade, to remove Sudan from the state sponsors of terror list and minimal easing of some U.S. sanctions.
But those carrots may not outweigh the internal hard-line pressures within Khartoum's ruling party not to allow any space for dissent, which they believe could encourage more secessionist tendencies and weaken their domestic power base. Many northern Sudanese fear Khartoum post secession will become a more aggressive, Islamist and isolationist government which could become a regional spoiler if left unchecked.