Sudan's Ministry of Justice says it has finalised a settlement deal with the families of 17 United States sailors killed in an attack on a US Navy warship at a port in Yemen in the year 2000.

The agreement is seen as the latest move by Sudan's transitional government aimed at removing the country from a US list of state sponsors of "terrorism".

The announcement on Monday came two months after the government said it had agreed to compensate the families of those killed in the al-Qaeda-claimed attack, without disclosing the sum. Relatives of the US sailors had accused Sudan of providing support to the armed group.

"The settlement deal ... with the families of the victims of the destroyer USS Cole, who initiated judicial procedures against the Sudanese government before the US courts, has been fully completed," the ministry said in a statement.

It added that the government and the families on April 3 submitted a joint petition to write off the lawsuits, leading to the termination of all cases heard by US courts.

The statement maintained Sudan's position that it was not responsible for the attack on the ship or any other "terrorist" act.

This agreement was made "because of the strategic interests of Sudan and as part of its efforts to deal with terrorist claims against Sudan so it can remove its name from the US list of state sponsors of terrorism", the statement added.

The US listed Sudan as a "state sponsor of terror" in 1993, four years after former President Omar al-Bashir took power in a military coup, over allegations that the government was supporting "terrorism", in particular attacks in Kenya and Tanzania.

The designation makes Sudan ineligible for much-needed debt relief and funding from international institutions, strangling its economy by limiting potential foreign investment.

"Removing Sudan's name from this list is necessary to remove the stigma of terrorism off the people of Sudan and to reintegrate Sudan back in the international community," the statement said.

Two-pronged approach

A senior official in Khartoum, speaking to Al Jazeera on the condition of anonymity because he was not allowed to speak to the media, said that the government adopted a two-pronged approach to settle the issue, using separate negotiating tracks with the families of the sailors and the US government.

The first approach involved negotiating "a settlement with the families of the victims, which was done last February, resulting in Sudan agreeing to pay them about $70m," the official said. The figure could not be independently verified.

The second was "to negotiate a separate agreement with the US government ... to compensate other American families who were hurt in the bombings attributed to al-Qaeda in Africa," he added, referring to the attacks in the East African countries. "This line of talks with the US government has all outstanding US-Sudan issues almost finished."

The families of the US sailors had sued Sudan under the 1976 Foreign Sovereign Immunities Act, which normally shields foreign governments from lawsuits in US courts except governments designated by the US as sponsors of "terrorism", as in the case of Sudan.

Sudan entered a new phase in April last year, when the military overthrew al-Bashir in the face of months-long protests against his rule.

In August, following protracted talks with the generals who removed al-Bashir, protesters secured a deal to set up a transitional government and pave the way for civilian rule. The agreement provided for a joint civilian-military ruling body during a transition period of a little over three years before elections can be held, while veteran economist Abdalla Hamdok was appointed transitional prime minister.

Sudanese officials have since said the removal from the terror list is one of their top priorities, urging the US "to stop punishing" the people of Sudan "for crimes committed by the former regime".

Gamal Gasim, professor of political science and Middle East politics at Grand Valley State University in Michigan in the US, said the current Sudanese leaders were mistaken if they thought that by simply reinstating ties with the US or other Western nations, Sudan's political and economic problems would be resolved.

He said al-Bashir's 30-year corrupt rule devastated Sudan and transformed it into a pariah state.

"The new leaders of the country must address al-Bashir's legacy through democratic and economic reform," he said.

On October 12, 2000, two Yemeni suicide bombers rammed the USS Cole while it was refuelling off the coast of Aden.

In January 2019, a US air raid in Yemen killed Jamal Badawi, who was charged as being part of the attack on the guided missile destroyer.

The US government alleges that Abd Rahman al-Nashiri, a Saudi citizen, was the mastermind of the 2000 attack. Al-Nashiri is currently in US custody in Guantanamo Bay prison following his capture in 2002.

Follow Ali Younes on Twitter: @ali_reports