By Lesley Wroughton
WASHINGTON (Reuters) - The Obama administration took steps on Friday to lift a 20-year-old trade embargo against Sudan, unfreeze assets and remove financial sanctions in what the White House said was a response to the African nation's cooperation in fighting Islamic State and other groups, angering human rights organizations.
The move in the last days of the Obama administration will however will be delayed by 180 days to see whether Sudan acts further to improve its human rights record, and resolve political and military conflicts, including in Darfur.
That leaves the final decision of sanctions relief, after the review period, to President-elect Donald Trump and his secretary of state, who is likely to be Rex Tillerson, a former oil executive.
"Sudan has long expressed a desire to get out from under sanctions, as well as other restrictions that the United States has imposed on Sudan going back 20 years," a senior administration official said.
"Over the past two years we have looked for a way to engage with Sudan in a way we could overcome some of the lack of trust of the past," the official said on a conference call with reporters, adding that talks with Khartoum had intensified over the past six months.
Trump's transition team had been briefed on the move, the official said, adding that the measures do not affect Sudan's label as a state sponsor of terrorism nor does it impact sanctions tied to Khartoum's role in the Darfur conflict.
The sanctions relief is expected to impact businesses that deal with agriculture, import-export services, transportation, technology and medical equipment, and oil, the official said.
Sudan's foreign ministry welcomed the move, calling it an "important positive development in bilateral relations between Sudan and the United States."
The ministry said it hoped further cooperation would allow Sudan to be removed from the U.S. list of states sponsoring terrorism.
The United States first imposed sanctions on Sudan in 1997, including a trade embargo and blocking the government's assets, for human rights violations and terrorism concerns. It layered on more sanctions in 2006 for what it said was complicity in the violence in Darfur.
In a letter to Congress, U.S. President Barack Obama said "actions of the government of Sudan has been altered by Sudan's positive actions over the past six months."
There were signs last year of a thaw between Sudan and the United States, which accuses Sudanese President Omar al-Bashir of war crimes related to the conflict-torn Darfur region.
On Sept. 20 the State Department issued a statement on increased cooperation with Sudan, saying the government had taken steps to counter Islamic State and "other terrorist groups and has sought to prevent their movement into and through Sudan."
The Darfur conflict began in 2003 when mainly non-Arab tribes took up arms against the Arab-led government, accusing it of discrimination. The U.N. says up to 300,000 people have been killed and millions displaced in Darfur.
The Enough Project, a Washington-based anti-genocide group, called the lifting of sanctions "premature" and said any easing of pressure on Sudan should be in exchange for resolving conflicts in Darfur and South Kordofan, and ensuring humanitarian access to those affected by military blockades.
Leslie Lefkow, deputy Africa director at Human Rights Watch, called the decision "inexplicable" and said there had been no progress on ongoing war crimes, crimes against humanity in Darfur and other conflict zones, and repression of opponents.
"Instead of using its leverage to press for real reforms that would benefit Sudanese citizens, the Obama administration is sending the worst possible message to Sudan and other repressive governments," Lefkow said.
House Foreign Affairs Committee Chairman Ed Royce, a Republican, called on the Trump administration to ensure there was progress on the humanitarian front before it lifts sanctions.
"While counterterrorism cooperation has increased, the government still abuses the fundamental human rights of the Sudanese people," he said in a statement.
But Peter Pham, director of the Africa Center at the Washington-based Atlantic Council, said Friday's move was reasonable and would remove measures that have mainly hurt ordinary Sudanese.
"The actions taken do not 'reward' Bashir; in fact, the measures against the regime and some of those accused of human rights violations remain," he said. "What is being rolled back - with the possibility for snap-back in case of backsliding or egregious acts - are blunt sanctions that disparately impacted ordinary Sudanese, while hardly afflicting the regime," he added.
(Additional reporting by Susan Heavey; Editing by Andrea Ricci, Andrew Hay and James Dalgleish)