06/12/2012 02:48 pm ET Updated Aug 12, 2012

Rebel Without a Cause: Playing Chicken in South Sudan

The old James Dean movie Rebel without a Cause has a scene in which two drivers race stolen cars toward an abyss, with the first one to jump out being deemed a chicken. Something similar seems to be going on in East Africa, where the world's newest country, the South Sudan, is engaged in a high-stakes game of brinksmanship with Sudan, the country that it broke away from last year. Whether the two governments step back from the abyss or plunge into a destructive war neither can afford is very much up in the air, with China holding the key to a solution.

The conflict is a hangover from the twenty-year civil war that led to the breakup of the Sudan in the first place. There is no love lost between the two sides. The international community helped broker the divorce, and an international arbitration helped to delineate the border in 2009. The South was left with most of the oil, but the port is in the north. This requires the two countries to come up with a division of the revenue.

Sudan has demanded an extortionary $36 per barrel to allow the oil to transit its territory; South Sudan has countered with an offer of $1 per barrel. Earlier this year, frustrated with the north's offer, the South cut off the oil tap. The problem was that the government in Juba relied on oil for 98 percent of its revenues, and they hadn't adequately secured alternative sources of funds. The South seems to have the attitude that it is the tougher of the two sides, a view no doubt forged over twenty years of civil war. Furthermore, it may have decided that war may help distract the South Sudanese from their various internal divisions, which have erupted in inter-tribal violence.

Having successfully rebelled against the north, the government finds itself without a cause. For its part, Sudan is only too happy to ratchet up the rhetoric, with President Omar al-Bashir talking about liberating the South Sudanese from their own government. Al-Bashir has deployed his superior air power to bomb several areas near the border, threatening a humanitarian crisis.

The most important player is China, which is by far the largest market for Sudanese oil from both countries. Beijing has investments in both countries, and no interest in seeing a war escalate. It also has a good deal of leverage, having lent money to both sides. Just last month, it promised South Sudan President Salva Kiir Mayardit $8 billion in aid during a visit to Beijing. And it has been a longstanding patron of al-Bashir, standing by him during the Darfur genocide.

In some sense this conflict is a test of a rising China's ability to exercise diplomatic skill. To date, its foreign policy has been largely driven by access to resources. Reciting tired mantras of non-interference in internal affairs, Beijing has remained aloof from criticizing governments for human rights abuses. This policy of silence works fine when the only conflict is between a government and its own citizens. But as China's economic power expands, it will increasingly find itself in situations in which it has interests on both sides of a conflict. Those who are fighting will naturally look to China to help resolve the dispute. Silence is not really an option.

Deng Xiaoping once said that Chinese foreign policy should strive to "keep a low profile and never take the lead." The situation in Sudan, however, suggests that the exercise of creative leadership may be unavoidable. China will need to cajole and convince the two Sudans to resolve the conflict and head off a destructive war. Whether Beijing is up to the task remains to be seen. But it surely matters for the larger question of whether China can assume a role in world affairs commensurate with its economic power.

Tom Ginsburg is Spitz Professor of Law at the University of Chicago and a Fellow at the American Bar Foundation. He has been consulting with the International Development Law Organization (IDLO) about constitutional reform in South Sudan.