South Sudan will vote for independence early in January. They will probably get most of the oil. But who will get the debt?
Nearly all of what was borrowed was spent in the north, so normally most of the debt would remain there. But politically and financially that’s infeasible.
In fact, even if most of the debt gets taken by the South, in expectation of debt relief, the north’s remaining debt is still unsustainable, since they’ve lost all their revenues. So they’ll need relief as well.
The good news is that debt relief is a big carrot that the creditors can hold out in return for peace. What I worry about: creditors will have to hold out debt relief anyways, and perhaps more so if there’s war.
That makes a pretty weak bargaining chip.