By Alexander Dziadosz and Mading Ngor
KHARTOUM/JUBA (Reuters) - Former civil war foes Sudan and South Sudan are to resume talks on Tuesday in Ethiopia that mediators hope will produce a deal to secure the volatile joint border and clear the way for the two countries to resume oil exports.
The countries have been locked in a series of disputes since South Sudan split from its northern neighbor over a year ago under a 2005 peace deal that ended decades of war.
Fighting along the 1,800-km (1,200-mile) border threatened to boil over into a full-scale war in April when South Sudan seized an oil-producing region long held by Sudan.
Tensions have eased since then but the disputes have taken a heavy economic toll on both countries. Landlocked South Sudan shut down its vital oil output in January after failing to agree with Khartoum how much it should pay to export through Sudan.
Western diplomats and African Union mediators now hope to build on progress after the two struck an interim deal on oil fees last month. Sudan says it wants a border security deal before oil flows resume.
Officials from both sides have been much brighter in their predictions than in previous rounds.
"Sudan's delegation is ready to reach an agreement by the end of this round," El-Obeid Morawah, spokesman for Sudan's Foreign Ministry, said. "I think they (South Sudan) are also open-minded and open-hearted."
Michael Makuei Lueth, chairman of the border committee for South Sudan, said he was optimistic about resolving issues such as cross-border trade, the status of citizens in one another's countries, and the disputed Abyei border region.
"If the government of Sudan is coming to negotiate in good faith, then we are likely to agree on everything except the borders that will follow at a later stage," he said.
"We're now going to put the oil agreement in its final form so that it's initialed," he said, adding any final pact would require agreement from both presidents in a summit.
Both sides badly need oil revenues to jumpstart their economies. Oil used to provide over half of state revenues in Sudan and accounted for about 98 percent of government income in South Sudan before the shutdown. Both countries are facing soaring inflation and a shortage of the foreign currency needed to pay for food imports.
The U.N. Security Council has set a September 22 deadline for the two sides to solve their issues or face sanctions.
To start, mediators want to focus on setting up a 10-km-wide demilitarized buffer border zone to help ensure neither side is supporting armed groups across the border, and to normalize travel and trade between the two countries.
The African Union and U.N. Security Council have endorsed a map of the demilitarized zone but Sudan has not agreed to it. It's objection has mostly focused on the inclusion of a 14-mile strip of land used by the Arab Misseriya tribe, diplomats say.
AU mediator Thabo Mbeki has sought to assure Sudan that the buffer zone would not affect any agreement over disputed border areas, an issue that might take a long time to settle.
Khartoum also wants assurances that Juba will stop supporting rebels operating in the border states of South Kordofan and Blue Nile, an accusation South Sudan denies but which analysts say is credible.
(Writing by Alexander Dziadosz; Editing by Janet Lawrence)