Two Sudans ready to resume oil talks A handshake between the presidents of Sudan and South Sudan signals the best hope in months that the former warring neighbours may reach a deal ahead of a UN Security Council deadline. Omar al-Bashir, indicted war criminal and president of Sudan, met Salva Kiir, South Sudan president, in the Ethiopian capital of Addis Ababa at the weekend for the first time since fierce border fighting in April derailed talks. The two oil-dependent states face strife at home as both run short of the petrodollars that comprise the bulk of their economies. The African Union, which brokered the talks, said the two will resume oil negotiations, the first time since February after the South shut down production following a row over fees for exporting southern oil via northern infrastructure. "We are ready to resume oil production if there is a fair deal, and there is a guarantee that there will be no diversion (of the oil)," Pagan Amum, chief negotiator for the South, told reporters. The UN Security Council in May endorsed an African Union proposal that stipulates the pair must reach a deal by August 2 or face an imposed solution and sanctions. Progress has been "rather slow and uneven," said a weekend African Union report. In previous meetings between the heads of state, neither has uttered a word. One western diplomat told the Financial Times last week that although a deal "should be their overwhelming top priority, they're both waiting for each other to collapse." The two countries have yet to agree on everything from the division of debt and borders to security and oil transport fees since the South seceded last year, straining both economies, raising the spectre of domestic discontent and bringing them back to the brink of war. Austerity measures in Sudan, where the currency has depreciated by half in the past year and inflation is rising, has prompted small, scattered street protests and fears of splits in the ruling National Congress party, which relies heavily on the army for support. Extensive border clashes in several regions also strain shrivelled budgets. An NCP insider said fighting over the Heglig oilfield cost the north $600m. Leaders now appear increasingly ­bent on an agreement. Defence minister Abdelrahim Mohamed Hussein, who was indicted on war crimes charges in March, is taking a more prominent role in north/south talks, which restarted last week in Bahir Dar, in northwest Ethiopia. "The minister of defence is being much more friendly in the talks than you would expect," says analyst Magdi El Gizouli. In the standard rhetoric he's the hawk, but it's these hawks who can make deals - it's the same thing as Nixon in China - and he's walking in the direction of the deal. Such top backing may prove critical to what Ramtane Lamamra, the African Union peace and security commissioner, termed a "new spirit of strategic partnership," as the NCP attempts to overcome domestic detractors. "I have no hope of reaching a settlement with the [South]," one NCP stalwart told the FT last week. If the security issue is not resolved, the north is very conscious that for every barrel of oil, half of it will go to the rebels and be used against us. The two sides are focusing first on security, redeploying armies from disputed border areas, addressing accusations of proxy wars meted out by militias and developing joint border verification. The African Union urges "unfettered access to humanitarian assistance" in South Kordofan and Blue Nile states, both in Sudan, where thousands of refugees sympathetic with the South have fled fighting.