President Trump announced today that he will be removing Sudan from the State Department’s state sponsors of terrorism list after the Sudanese government agreed to pay $335 million in compensation for families of American victims of terrorism.

The big picture: Trump's announcement is part of a wider agreement which is expected to include moves from Sudan toward normalizing relations with Israel.

• Sudanese, Israeli and U.S. officials say more steps towards such a deal are expected to be announced later this week.
• The designation as a sponsor of terrorism restricts Sudan's access to investment, and the transitional government that replaced dictator Omar al-Bashir — who was listed for harboring al-Qaeda — has made its removal a top priority.

What’s next: The Sudanese government will transfer the money to a designated account set up for the compensation fund in the next few hours, Sudanese sources say.

• Once the money is transferred, Trump is expected to sign an executive order to remove Sudan from the State sponsors of terrorism list.
• The next step, the Sudanese sources say, is expected to be a bipartisan announcement from U.S. senators about a bill to protect Sudan from future lawsuits in America by terror victims.
• Sudan is also expecting the U.S. to announce an aid package in coming days. It will include financial aid, wheat, medicine, oil shipments; as well as commitments by the Trump administration to organize a Sudan donors conference and help to mobilize private sector investments in Sudan, Israeli and Sudanese sources say.

The big picture: Trump’s tweet comes after two months of talks between Sudanese leaders and officials from the White House and State Department.

• The talks aimed at a deal with multiple components: the US. would remove Sudan from the terror sponsor list, the U.S. and UAE would provide Sudan with a big aid package, and Sudan would agree to normalize relations with Israel.

Behind the scenes: Sudan's transitional government has been split on the issue of normalization with Israel, which could lead to domestic blowback amid the country's fragile transition to democracy.

• The top military official, Gen. Abdel Fattah al-Burhan, has supported the idea, but Prime Minister Abdallah Hamdok has been more resistant and demanded $3 billion in aid to Sudan in exchange for normalization with Israel.
• For weeks, Hamdok has opposed the U.S. proposal despite heavy pressure from the U.S. and UAE, as well as from Burhan.
• But he appeared to change his mind in the last few days, Sudanese sources say, after receiving assurances from the U.S. that Sudan would be removed from the terror list and receive an aid package first, and only then would be expected to announce steps forward on normalization.

What to watch: If and when those hurdles are cleared, Israeli sources say the normalization process could begin with a phone call between Trump, Burhan, Hamdok and Israeli Prime Minister Benjamin Netanyahu.

What they're saying:

• Trump wrote on Twitter: “GREAT news! New government of Sudan, which is making great progress, agreed to pay $335 MILLION to U.S. terror victims and families. Once deposited, I will lift Sudan from the State Sponsors of Terrorism list. At long last, JUSTICE for the American people and BIG step for Sudan!”
• Burhan welcomed Trump’s tweet: “I would like to express my deep appreciation and that of the Sudanese people to President Trump and to the U.S. Administration for the constructive step taken to remove Sudan off the Terror List in recognition of the historic change that has taken place in Sudan and for the struggle of the Sudanese people for Freedom, Peace and Justice."
• Hamdok tweeted: “Thank you so much, President Trump! We very much look forward to your official notification to Congress rescinding the designation of Sudan as a state-sponsor of terrorism, which has cost Sudan too much. This Tweet and that notification are the strongest support to Sudan’s transition to democracy and to the Sudanese people. As we’re about to get rid of the heaviest legacy of Sudan’s previous, defunct regime, I should reiterate that we are  peace-loving people and have never supported terrorism."