By Andrew Quinn
WASHINGTON (Reuters) - The United States believes South Sudan will split smoothly from the North when it declares independence on July 9 but the two sides face tough economic and security challenges that could threaten further violence, a senior U.S. official said on Friday.
Princeton Lyman, the Obama administration's special envoy for Sudan, said South Sudan's formal secession would be a "celebratory event" despite the fact that Juba and Khartoum were unlikely to decide quickly on contentious issues, including division of oil revenues and the status of the disputed border region of Abyei.
"I do think July 9th is going to come off in the way it should, as bringing to an end decades of civil war between the north and the south," Lyman told a news briefing.
"Both sides really feel that a return to general war would be disastrous for both of them," Lyman said. "That doesn't mean that ... military clashes might not occur because they haven't either resolved an issue or emotions get carried to extreme."
As Lyman spoke, there were reminders of the potential for worsening violence.
Despite a declaration that the two sides had reached agreement in principle earlier this week on a ceasefire in the flashpoint state of Southern Kordofan, Sudan President Omar Hassan al-Bashir said on Friday the northern army would continue military operations in the state -- dealing a further blow to peace hopes.
The United Nations estimates 73,000 people have fled fighting in Southern Kordofan between the northern army and southern-aligned troops.
Lyman, who heads to Addis Ababa on Saturday for more talks with Sudanese leaders before moving on to the southern capital of Juba, urged the two sides to move quickly on several fronts to head off potential disruptions.
Lyman said the international community must step up pressure for an end to violence in Southern Kordofan and for Khartoum to allow full humanitarian access.
Both sides also need to assure the 1 million southerners living in the north that they will not be rendered stateless after the July 9 decree, and firm up a fragile deal on demilitarizing their common border, he said.
"I think this can all happen but it's going to take a lot of work," he said. "It's going to take a lot of courageous decision-making."
The United States has worked hard to smooth South Sudan's road to independence following a January referendum that saw southern voters opt to split from the north to form Africa's newest state.
Progress has been rocky, marred by clashes over Abyei and violence in Southern Kordofan that diplomats fear could spark a return to the full-scale hostilities that were formally ended by a 2005 peace agreement.
Lyman said Abyei appeared to have stabilized, with both sides agreeing to withdraw military forces and Ethiopia sending troops to reinforce a U.N. peacekeeping mission there.
He said the first battalion of Ethiopians was expected to be in place in Abyei by July 9 and two more battalions shortly thereafter.
He stressed that both sides needed to keep working on a deal to share oil revenues, although declining production meant that neither could long rely on oil as an economic mainstay.
"The point is that the oil income is going to drop off steadily over the next five years unless either technological changes are made or new discoveries are made," Lyman said.
Southern Sudan, which faces huge infrastructure challenges as it seeks to find its footing as an independent state, will need to diversify into agriculture and other mineral resources, he said.
Lyman acknowledged that Khartoum had doubts about the Obama administration's promises to improve diplomatic ties in exchange for cooperation on both Southern Sudan and Darfur, but said he would reinforce with Northern leaders that the United States was prepared to end their isolation.
(Editing by Warren Strobel and Bill Trott)