Sudan's removal from US terrorism list: What does it mean?

former President Omar al-Bashir was toppled in April 2019 and Sudan is in transition under a military-civilian ruling council and a government of technocrats.

Sudanese protesters shout slogans and wave flags during a rally honouring fallen protesters at the Green Square in Khartoum, Sudan July 18, 2019 (photo credit: REUTERS/ MOHAMED NURELDIN ABDALLAH)
Sudanese protesters shout slogans and wave flags during a rally honouring fallen protesters at the Green Square in Khartoum, Sudan July 18, 2019
(photo credit: REUTERS/ MOHAMED NURELDIN ABDALLAH)
The US decision to end Sudan's designation as a state sponsor of terrorism comes into effect on Monday. The listing, in place for almost three decades, restricted Khartoum's economic links and cut it off from much-needed financial assistance.
WHY WAS SUDAN ON THE LIST?
The United States designated Sudan as a state sponsor of terrorism in 1993 on the grounds that former President Omar al-Bashir's regime was supporting militant groups including al-Qaeda, Hamas and Hezbollah.
In the 1990s, the regime became a pariah, hosting Osama bin Laden and Carlos the Jackal and positioning itself as a fulcrum for Islamist movements under ideologue Hassan al-Turabi.
Its stance began to shift as Turabi was sidelined, and Bashir cooperated with the United States on counter-terrorism after 9/11.
In recent years, many Sudanese thought Sudan's listing alongside Syria, Iran and North Korea had long-since become outdated and undeserved.
Bashir was toppled in April 2019 and Sudan is in transition under a military-civilian ruling council and a government of technocrats.
WHAT WAS THE IMPACT ON SUDAN?
The designation meant the United States could not give Sudan economic assistance, and effectively blocked financing or debt relief by the International Monetary Fund and the World Bank.
It also impeded dollar transactions for Sudanese businesses and complicated imports of many goods needed for infrastructure, healthcare and transport.
Even when US trade sanctions were lifted in 2017, foreign investment remained meager and foreign banks were reluctant to deal with Sudan as they tried to ensure compliance with sanctions.
WHAT WAS NEEDED TO END THE LISTING?
Conditions included counter-terrorism cooperation, improving religious freedom, expanding humanitarian access and payment of compensation over attacks that the United States linked to Sudan.
Washington had signaled last year that it was preparing to remove Sudan from the list.
In February, a deal was struck over compensation for the victims of an attack on the USS Cole in 2000. But compensation for al-Qaeda bombings of the US embassies in Kenya and Tanzania in 1998 became a sticking point.
Sudan agreed to pay a $335 million settlement for the embassy attacks, and moved the money to an escrow account.
AND RELATIONS WITH ISRAEL?
According to sources, the United States tried to use the prospect of delisting to pressure Sudan into following the United Arab Emirates and Bahrain by normalizing relations with US ally Israel. The two moves were announced in quick succession.
Sudanese government officials, more reluctant than Sudan's military to establish ties with Israel, insisted publicly that the issues should be treated separately.
WHAT'S LEFT?
US President Donald Trump notified Congress on Oct. 23 of his intention to remove the designation, which comes into effect after a 45-day congressional review period.
However, the $335 million for the embassy bombings will only be released when the United States grants Sudan sovereign immunity -- protection against being sued in American courts.
Legislation to reinstate immunity has been hampered by two US senators, Robert Menendez of New Jersey and Chuck Schumer of New York, who have said they are concerned about restricting future claims against Sudan by 9/11 victims and families.
Experts say Sudan's liability for 9/11 is questionable.
With the sovereign immunity issue outstanding, there have been no official visits or signing ceremony for the deal with Israel.
WHAT COULD CHANGE FOR SUDAN?
Sudanese officials say removal from the list is a big step that could help stabilize and revive the economy.
It should allow Sudan to re-join international financial networks, boosting remittances, trade and investment flows, they say.
The United States can support clearance of Sudan's debt arrears and back debt relief, helping it access more than $1 billion annually from international lenders, according to a Sudanese finance ministry official.
However, officials have also warned that the economy will not be transformed overnight. Bankers and analysts say moves to re-establish relations with foreign banks will likely be slow.
Without sovereign immunity, investors may still see their funds as potentially at risk.