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Tens of thousands of South Sudanese gathered under a sweltering sun on Monday in the capital, Juba, to celebrate the first birthday of the world's youngest nation — an event marred by dire economic hardships and a near-constant threat of war.

Dance troops gave traditional performances and South Sudan's armed forces put on a parade that featured the country's fiercest pieces of weaponry: two attack helicopters. The sun was so intense that several soldiers were carried off in stretchers.

President Salva Kiir addressed the country's number one threat: a return to war with Sudan, the country the south battled for more than two decades.

"Since our independence, Khartoum has continuously violated our sovereignty through aerial bombardments and ground incursions," he said.

South Sudan's biggest success in its first year was avoiding all-out war with Sudan. But it came close. A row over the sharing of the two countries' once-unified oil industry prompted South Sudan to shut down its oil production.

Because the south's oil travels through pipelines that run through Sudan, the decision cut off a major source of Khartoum's revenue and has led to instability in that capital. But the move cost South Sudan as well. The landlocked nation derives 98 percent of its normal government budget from oil.

Oil also sparked a dangerous military confrontation between the two sides in April, when South Sudan captured the disputed town of Heglig, which is responsible for more than half of Sudan's oil production. The move was met with international condemnation.

But several of South Sudan's woes are internal. South Sudan has been beset by ethnic clashes, primarily in Jonglei state, where the United Nations estimates nearly 900 people were killed in brutal cattle raids and reprisal attacks between late December and early February.

Because of the loss of oil revenue, inflation is skyrocketing, leaving average families with less to eat. Nearly 200,000 refugees fleeing war in the southern reaches of Sudan have moved into refugee camps in South Sudan.

"The high hopes for the world's newest nation have yet to materialize," said Gerald Magashi of the aid group Plan International.

Aid groups say that South Sudanese soldiers are torturing members of the minority Murle community in Jonglei state during an ongoing disarmament campaign. The region is a powderkeg likely to see renewed violence between warring communities.

"The jubilation of independence is now tempered by the reality of a daily struggle to survive," said Helen McElhinney, an Oxfam policy adviser. "Some people are living on one meal a day and double the number of people are in need of food aid compared to last year. Refugees are enduring dire conditions in border camps with not enough water to go around."

U.S. Secretary of State Hillary Clinton recently warned that "conflict and unresolved issues with Sudan, and internal inter-ethnic tensions have led to increased fighting and economic hardship that threaten to compromise the very foundation on which South Sudan's future will be built."

The U.N.'s top representative to South Sudan, Hilde Johnson, called the country's first year "a tough start." The country faces an inflation rate of 80 percent, Johnson said.

The economic crisis might have one bright side: talks with Sudan. Because both countries are hurting economically from the oil shutdown, Johnson said she is more hopeful that talks under way in Ethiopia could produce results.

The Enough Project, a Washington-based policy group, said the two sides still need to agree on the definition of the border, oil issues, citizenship rights and the final status of the disputed region of Abyei. The U.N. Security Council has ordered the two sides to reach agreements by Aug. 2.

"Letting the Aug. 2 deadline lapse without the conclusion of a comprehensive agreement risks the creation of greater insecurity and uncertainty along the north-south border, while leaving unresolved issues critical to the two Sudans' economic viability. Khartoum and Juba, with the support of the international community, must act immediately to ensure that this scenario does not occur," said the Enough Project's Jenn Christian.

Helen Cameron is a recent returnee to South Sudan. During the civil war that split Sudan in two, Cameron fled to Khartoum and then to Cairo. She found it difficult to adjust after her return to South Sudan.

"War mentality is so very hard," she said. "When I was in Cairo I was very happy. I didn't have any problems. I never hear any guns, shooting — that was the movies. But that is reality here."

But Cameron is determined to stay. In Juba's Hai Thoura neighborhood, she joined in the independence celebrations on Monday. Residents cheered from atop unfinished buildings. A circle of traditional dancers pulsated nearby and cars flying the flag of South Sudan honked their horns.

Cameron's face was painted red, black, green and blue like South Sudan's flag.

"We have a lot of challenges," says Cameron. "Three, four months ago we had war on the borders. In this time it was hard for us. The economy is hard, now down. We need to understand how to develop up our country."

Kiir, in his speech, tried to sound optimistic.

"We are not a people who fear the night," he said. "Because we know that no matter the night becomes long, still, morning will come. There is no reason for worry or for a hurry."

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Associated Press reporter Jason Straziuso contributed to this report from Nairobi, Kenya.