* Independence seen as prize after decades of war
* New nation struggling with economic crisis
* Border fighting with Sudan keeps tensions high
(Recasts with Kiir's independence day speech)
By Hereward Holland
JUBA, July 9 South Sudan's President Salva Kiir
vowed on Monday to confront the corruption plaguing his country
a year after it declared independence and said the new nation's
economy still had to be "liberated" from its dependence on
Wearing his signature black fedora, Kiir addressed an
assembly of dignitaries and a cheering crowd to mark the
nation's first independence day after splitting from Sudan under
a 2005 peace deal that ended decades of civil war.
Two helicopters bearing the country's red, green and black
flags flew over the crowd of thousands gathered in the scorching
sun to attend the ceremonies. Tanks, rocket launchers and
infantry paraded past.
Many South Sudanese hoped the country's emergence as the
world's newest nation would begin an era of prosperity, but the
country has remained mired in disputes with its northern
neighbour over oil, the border and a many other issues.
The landlocked South shut off its oil production in January,
instantly erasing 98 percent of state revenues, as part of a
dispute with Sudan over how much it should pay to export crude
using pipelines and other infrastructure in the north.
In his speech, Kiir sought to portray the country's economy
as part of the country's broader "liberation" struggle.
" We still depend on others. Our liberty today is incomplete.
We must be more than liberated. We have to be independent
economically," he told the crowd.
Discontent has been rising over the oil shutdown, which
piled hardships on people already weary from years of conflict.
While many South Sudanese are still basking in the pride of
their hard-won political freedom, they are starting to ask when
they will enjoy the material benefits of independence.
Prices have been soaring, forcing many people to tighten
their belts while corruption has gone largely unchecked.
"Now we are struggling for even the basic needs," one
government employee said as she sat in a traffic jam, cursing at
the luxury cars creeping along newly-tarmacked streets.
"We've given the government a lot of responsibility, allowed
them to take decisions on our behalf but they don't make any
consultations. They shut down the oil without telling us
anything and they didn't even have a plan B."
South Sudanese voted overwhelmingly to secede in a
referendum last year that was promised in a peace deal that
ended more than two decades of war over ideology, religion,
ethnicity and oil. Some 2 million people died in the conflict.
Amid pomp and flag-waving, the former guerrillas of the
Sudan People's Liberation Movement took full control of the
country on July 9, 2011.
They also took about three-quarters of Sudan's oil output,
bringing in billions of dollars that many citizens hoped would
be channelled to develop a nation where just over a quarter of
adults can read and life expectancy is under 50.
Instead, officials are now scrambling to find enough money
to keep basic services running.
Businessman Tong Albino Akot said the government's new
interest in collecting taxes was a positive step, but his
agriculture and import venture was feeling the sting.
"The government tried to explain that there's no money.
They're even getting tough on income tax. They're like a wounded
lion opening its mouth. You can feel it," Akot said.
Corruption and mismanagement have not helped. In June, Kiir
sent a letter to current and former officials asking them to
return $4 billion of "stolen" government money.
On Monday, Kiir vowed to end such abuses. "This government
will not tolerate what is called corruption," he said.
The country would also trim its government and was working
on developing alternatives to oil revenues, including tax
collection and "alternative oil infrastructure," he said.
South Sudan had started work on a small refinery in its
Upper Nile state, he said. "These will solve some of our
problems although it will not solve all our problems."
FLOWER OF FREEDOM
Independence has also failed to end violence both inside the
country and on the border with Sudan. In April, South Sudan's
army occupied an oil-producing region also claimed by Sudan,
bringing the countries close to a new war.
A few months earlier, the armed forces failed to prevent
cattle raids between warring ethnic groups that killed hundreds
Human rights groups say weak rule of law allows security
forces to carry out abuses against civilians with impunity.
The challenges have not dampened everyone's optimism.
Leaning back on a plastic garden chair in an unfinished building
near Juba airport, student Pater Achuil sipped a glass of milk
and listed the ways life had improved since secession.
"We have waited for the flower of freedom," he said, shards
of concrete poking through the capital's skyline behind him.
"The difference you can feel here in South Sudan is that ...
even the government cannot hassle you (now)."
But moments later, police in blue camouflage brandishing
Kalashnikov rifles raided the tea stall, confiscated the shisha
water pipes and loaded the chairs onto a truck.
Achuil stood with his friend to the side, baffled. The
officer brushed off a question about whether the raid was part
of a drive to clean up Juba ahead of celebrations.
"This is not your concern," he said.
(Writing by Alexander Dziadosz; Editing by Robin Pomeroy)