WRAPUP 1-U.S. keeps Sudan sanctions but offers dialogue
* U.S. seeks concrete progress on Darfur, southern Sudan
* Khartoum says new policy has "positive points"
* Rights groups say lack of detailed benchmarks a concern
By Andrew Quinn
WASHINGTON, Oct 19 (Reuters) - The Obama administration on Monday said it would renew economic sanctions on Sudan, but also offered Khartoum new incentives to end violence in Darfur and the semi-autonomous South ahead of polls next year.
President Barack Obama, who during last year's U.S. presidential campaign urged a tougher line on Khartoum, said the action was necessary to prevent the oil-rich African giant from falling further into chaos.
"If the government of Sudan acts to improve the situation on the ground and to advance peace, there will be incentives; if it does not, then there will be increased pressure imposed by the United States and the international community," Obama said in a statement, repeating accusations that the violence in Darfur amounted to genocide.
Sudan's government welcomed the new U.S. approach, which it said exemplified "the new Obama spirit."
"This is a strategy of engagement. It is not a strategy of isolation," Sudanese presidential adviser Ghazi Salahadin told a news conference. "Compared to the previous policies, there are positive points."
Secretary of State Hillary Clinton said the U.S. goals would be to end war crimes and other violence in Darfur and ensure implementation of a fraying 2005 peace deal between Khartoum and former southern rebels ahead of national elections next year and a 2011 referendum on southern secession, both potential threats to stability.
"We view the crisis in Sudan as two-fold," Clinton told a news briefing.
"The situation in Darfur remains unresolved after six years and the comprehensive peace agreement between North and South will be a flashpoint for future conflict," she said adding that it was also important to prevent Sudan from becoming a haven for international terror groups
"We are looking to achieve results through broad engagement and frank dialogue. But words alone are not enough."
Clinton said Washington would seek to "reconstitute, broaden, and strengthen" international support for action on Sudan, where China in particular has been reluctant to support sanctions against one of its major oil suppliers.
Obama's special envoy for Sudan, former Air Force General Scott Gration, said Beijing was being "very helpful" and had its own reasons for backing stability and security in Sudan in the run-up to next year's elections.
"While we might have differences in some of the tactical issues, certainly strategically we have the same goals," he said.
Sudan's former southern rebel Sudan People's Liberation Movement (SPLM) urged Obama not to go soft on Khartoum.
"There were reasons for which those sanctions were placed on Khartoum and those situations have not changed," said Anne Itto, a senior SPLM official.
The SPLM accuses the North of stalling on a democratic transformation outlined in the North-South peace deal, a necessity for Sudan to hold free elections due in April 2010.
NO TALKS WITH BASHIR
Announcement of the new Sudan policy follows months of speculation which saw Gration -- a proponent of more engagement with Khartoum -- pitted against more skeptical members of the Obama administration. The result, many analysts agreed, was a compromise.
U.S. officials said Washington's outreach to Khartoum would not include President Omar Hassan al-Bashir, indicted in March by the International Criminal Court for war crimes while fighting mostly non-Arab rebels in Darfur.
The United Nations says more than 2 million people were driven from their homes and some 300,000 people died in the Darfur crisis, although levels of conflict have fallen since the mass killings of 2003 and 2004. Khartoum puts the death toll at 10,000.
But officials stressed that going forward Khartoum had to be involved to end the violence in Darfur as well as ease tensions in south Sudan, where insecurity has raised concern of a return to all-out war.
"The United States is prepared to work with all sides," said U.S. Ambassador to the United Nations Susan Rice, seen as one of the more skeptical voices in the administration.
"There will be no rewards for the status quo. No incentives without concrete and tangible progress. There will be significant consequences for parties that backslide or simply stand still."
CARROTS VS STICKS
Clinton declined to specify what carrots or sticks would be offered to Sudan's government to encourage cooperation, saying they were part of a classified strategy document.
But analysts said the United States had tools at its disposal, ranging from removing Sudan from the official U.S. list of state sponsors of terror as a reward for good behavior to expanding the number of Sudanese officials targeted for individual sanctions as punishment.
"Basically, what ... they are talking about is taking off those scarlet letters one at a time," said John Prendergast of the Enough Project, a nonprofit group that seeks to prevent genocide and crimes against humanity.
Human rights groups were cautiously optimistic about the new policy, although some pointed out that the lack of a detailed timeline or specific requirements was a concern.
"Clarity on the benchmarks -- and the rewards or sanctions for success or failure in meeting them -- is essential if the policy is to effect real change for the vulnerable people of Sudan," Joel Charny, acting president of Refugees International, said in a statement.
(Additional reporting by Deborah Charles and Arshad Mohammed in Washington, Opheera McDoom in Khartoum; editing by Patricia Wilson and Cynthia Osterman)