Sudan and South Sudan are careering closer to a full-scale war, with fighting along their ill-defined border and belligerent rhetoric coming from both sides.

The conflict threatens to cripple the fragile economies in both nations, and it could create new burdens on neighboring countries in east and central Africa, a region prone to humanitarian disaster.

In the latest developments, South Sudanese officials say that Sudan's air force bombed its territory for a second straight day on Tuesday.

South Sudan's President Salva Kiir, speaking while on a visit to China, said the attacks amounted to a declaration of war.

Sudanese President Omar al-Bashir has rejected any return to peace talks with South Sudan, saying the country's leaders only understood "the language of the gun."

The White House condemned the fighting. "Sudan must immediately halt the aerial and artillery bombardment in South Sudan," President Obama's spokesman Jay Carney told reporters on Air Force One. "Both governments must agree to an immediate, unconditional cessation of hostilities and recommit to negotiations."

Bashir, the Sudanese president, addressed his troops at the oil-producing center of Heglig, near the border, where the Sudanese Army says it has recaptured the town from South Sudanese troops.

The South Sudanese seized the area earlier this month amid an ongoing dispute over how much the land-locked south should pay Sudan to ship its oil by pipeline to the Red Sea.

The oil is critical to both impoverished states, and the fighting imperils the industry and could put it out of commission for an extended period.

An Incomplete Agreement

The escalating tensions come less than a year after South Sudan formally gained independence last July as part of an earlier agreement that was supposed to end decades of fighting between northern and southern Sudan. That 2005 agreement, the Comprehensive Peace Agreement, has never been fully implemented.

"A lot of the issues were neglected and left unresolved," says Jennifer Cooke, who heads the Africa Program at the Center for Strategic and International Studies in Washington.

Those critical issues include the exact demarcation of the border, the sharing of oil revenues, and the status of two areas — the Blue Nile and South Kordofan — which sided with South Sudan during the many years of fighting but remain as part of Sudan.

Oil revenues account for some 98 percent of income for the south, and a sizable chunk of Sudan's revenues as well. The escalating dispute has halted the flow of oil since early this year.

Sudan controls the only pipeline that can carry South Sudanese oil to market, but the two sides couldn't agree on the price that South Sudan should pay for that transport. As a result, South Sudan cut off its oil production.

"Both sides are doing things that defy rationality," Cooke says. "The two countries need each other, but right now it's like two people with their hands locked around each others' throats."

Positioned For Attacks

John Prendergast, co-founder of the Enough Project, a human rights group, cites recent satellite photos showing that Sudan has stationed warplanes at a base within striking distance of the south.

"Massive air and ground firepower has been concentrated in strategic border points that could only indicate an offensive intention," Prendergast says.

Satellite imagery also shows heavy damage to the Heglig oil facility, he adds, enough to stop any production for now.

Both countries stand to suffer.

Prendergast says the treasuries of both countries are nearly depleted, their currencies are losing value, and food and fuel are likely to be in short supply.

Burdens For Neighboring States

More fighting could precipitate a humanitarian crisis, says John Mukum Mbaku, of the Brookings Institution's Africa Growth Initiative.

"If this conflict goes on," he says, "there will be a lot of people killed."

Mbaku says the fighting is likely to displace refugees to neighboring countries that are ill-equipped to help them. It will also make it difficult and dangerous for aid organizations to provide help for internally displaced people.

A full-scale war between the Sudans would pose serious problems for the region, says Witney Schneidman, a former State Department expert on Africa who now runs an Africa-focused business consulting firm.

"Kenya, Somalia and Ethiopia are already engaged in a hot conflict," Schneidman says, "and this would just expand what some people fear — an emergence of an arc of crisis" from Sudan to the Horn of Africa.

"This is an environment where food insecurity is great, where al-Qaida has a presence, and where the gains in economic development could be quite fragile," he says.

It's time for "intensifying crisis diplomacy," says Prendergast. "The two countries with the most influence in the region are China and the United States."

China's Involvement

China has invested heavily in Sudan's oil industry, but without cooperation between the Sudans, that oil cannot flow.

China is a longtime ally of Sudan's Bashir and has been working to develop ties with South Sudan's leaders as well.

China's president, Hu Jintao, signaled the importance of South Sudan by welcoming President Kiir to Beijing at the start of his five-day visit.

China's state-run media said Hu urged both Sudans to calm down and exercise restraint.

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