ONE YEAR AFTER the Republic of South Sudan celebrated its independence, people in the capital of Juba still speak hopefully about freedom and dignity after decades of war. But the sad reality is that the south, freshly minted as a nation, and Sudan, from which it seceded, face deepening instability. True, in the past year they did not fight a full-scale war like the one that cost 2 million lives, but that’s about the best that can be said. Both countries remain in terrible shape.

A halt in oil shipments from the south is punishing both economies. Most of the oil reserves are in the south, but the export pipelines cross through the north. In January, South Sudan cut off oil shipments to the north, complaining of onerous transit fees and theft. Sudan claimed it confiscated crude in lieu of payments. Oil provided 98 percent of South Sudan’s hard currency, and without it, the south’s economy is crumbling.

The oil standoff is also squeezing Khartoum, where the government of President Omar al-Bashir has been deprived of three-quarters of its oil revenue and is also battling hyperinflation.

Resolving the oil dispute is urgent if the south is ever to get on its feet. But just as important, the oil wealth must be invested into development — schools, roads and clinics — and until now, it has largely slipped away. Recently, South Sudan’s president, Salva Kiir Mayardit, took the unusual step of offering amnesty for those who had “stolen” wealth from the country, estimating in a letter that $4 billion was unaccounted for, having been siphoned off by current and former government officials and their cronies.

Both nations seem to be all too willing to encourage smaller proxy wars in the disputed border regions, which continue to flare. A serious humanitarian crisis is unfolding there now as an estimated 150,000 refugees flee fighting in Sudan’s Blue Nile and South Kordofan states. It may take years to resolve the border conflicts, but they fuel lingering mistrust between north and south and thus stand as an obstacle to progress in negotiations on oil and other issues.

In Khartoum, there are also signs of tumult. Mr. Bashir, wanted by the International Criminal Court on suspicion of war crimes stemming from the forced exodus in Darfur, has lately been attempting to crack down on street protests in the capital. The fragmented opposition is centered among students and some professionals and does not yet add up to a full-throated uprising. But it is another tremor in a land that has been thrust into war and suffering for too long.