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Sudanese Prime Minister Abdullah Hamdok, left, elbow bumps U.S. Treasury Secretary Steven Mnuchin at the Cabinet Building, in Khartoum, Sudan, on Jan. 6, 2021.The Associated Press

Sudan on Wednesday said it had signed an agreement with the United States that paves the way for the cash-strapped African nation to normalize relations with Israel and clear some of its massive debt to the World Bank.

Justice Minister Nasredeen Abdulbari signed the deal with visiting U.S. Treasury Secretary Steven Mnuchin, according to the Prime Minister’s Office.

“This is a very, very significant agreement. It would have a tremendous impact on the people of Israel and the people of Sudan as they continue to work together on cultural and economic opportunities and trade,” Mr. Mnuchin said in comments carried on the state-run SUNA news agency.

Mr. Abdulbari said Sudan welcomed “the rapprochement that took place between Israel and the countries in the region, as well as the beginning of diplomatic relations, which we will work, from our side in the near future, to strengthen and expand them in the interest of Sudan and in the interest of other countries in the region.”

Also during Mr. Mnuchin’s visit, the U.S. and Sudan signed a “memorandum of understanding” to facilitate the payment of the African’s country’s debt to the World Bank, the Finance Ministry said, a move that is widely seen as a key step toward Khartoum’s economic recovery.

The ministry said the settlement would enable Sudan to receive more than US$1-billion annually from the World Bank for the first time in the nearly three decades since the country was designated a pariah state.

Sudan has more than US$60-billion in foreign debt.

On Oct. 23, U.S. President Donald Trump announced Sudan would become the third Arab state to normalize ties with Israel as part of a U.S.-brokered deal known as the “Abraham Accords” after the biblical patriarch revered by Muslims and Jews.

That followed the North African nation agreeing to put US$335-million in an escrow account to compensate U.S. victims of terrorist attacks. Those include the 1998 bombings of the U.S. embassies in Kenya and Tanzania by the al-Qaeda network while its leader, Osama bin Laden, was living in Sudan. The country also was believed to have served as a pipeline for Iran to supply weapons to Palestinian militants in the Gaza Strip.

In exchange, Mr. Trump notified Congress of his intent to remove Sudan from the U.S. list of state sponsors of terrorism, a key incentive for the deal.

There was no immediate comment from Israel on Wednesday.

The Trump administration announced diplomatic pacts in the past year between Israel and the United Arab Emirates and Bahrain – the first since Jordan recognized Israel in the 1990s and Egypt in the 1970s. Morocco also established diplomatic ties with Israel. The agreements are all with countries that are geographically distant from Israel and have played a minor role, if any, in the Arab-Israeli conflict.

The accords have contributed to the severe isolation and weakening of the Palestinians by eroding a long-standing Arab consensus that recognition of Israel should only be given in return for concessions in the peace process.

Although Sudan is not a regional powerhouse, establishing ties with Israel is deeply symbolic. Sudan hosted the 1967 Khartoum summit where Arab countries vowed never to make peace with Israel, and more recently had close ties with Israeli enemies such as Hamas and Hezbollah.

Sudan is on a fragile path to democracy after a popular uprising led the military to overthrow long-time autocrat Omar al-Bashir in April, 2019. The county is now ruled by a joint military and civilian government that seeks better ties with Washington and the West.

During his visit, Mr. Mnuchin met with General Abdel-Fattah Burhan, head of the ruling sovereign council, and Prime Minister Abdalla Hamdok.

It is the first visit by a sitting U.S. treasury chief to Sudan, the statement said. Secretary of State Mike Pompeo in August became the first top U.S. diplomat to visit Sudan since 2005, when Condoleezza Rice visited.

The visit came “at a time when our bilateral relations are taking historical leaps towards a better future. We’re planning to make tangible strides today as our relations enter a #NewEra,” Mr. Hamdok tweeted.

The Justice Ministry said last month that the U.S. would give a US$1-billion bridge loan to the World Bank on behalf of Sudan, in addition to US$1.1-billion in direct and indirect aid from the U.S.

Since the ouster of Mr. al-Bashir, Sudan has been ruled by a joint military and civilian government that seeks better ties with the West. It has been struggling with a huge budget deficit and widespread shortages of essential goods, including fuel, bread and medicine.

Annual inflation soared past 200 per cent in the past months as prices of bread and other staples surged, according to official figures.

Mr. Mnuchin’s visit came amid rising tensions between military and civilian members of Sudan’s transitional government. That tensions, which resurfaced in recent weeks, have largely centred on the military’s economic assets, over which the civilian-run Finance Ministry does not have control.

John Prendergast, co-founder of The Sentry watchdog group, said Mr. Mnuchin should pressure the military and security apparatus to allow “independent oversight” to businesses they control.

“As Secretary Mnuchin engages with the leadership in Khartoum, it is critical that he weighs in with strong support for international anti-money laundering standards and fiscal transparency, which are essential for Sudan to counter the looting of its national economy,” he said.

Mr. Mnuchin flew to Sudan from Cairo, where he met with Egypt’s President Abdel-Fattah el-Sissi, a close United States ally. The stops are part of a flurry of activity during the final days of the Trump administration.

Mr. Mnuchin later tweeted that he was headed to Israel “for important meetings.”

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