A US proposal to remove Sudan from a list of states that sponsor terrorism – in exchange for a $330 million payment compensation to American victims of al-Qaida – has caused anger in the poverty-stricken east African country.

Mike Pompeo, the US secretary of state, visited Khartoum on Tuesday to underline US support for the new transitional government that took power following the fall of Omar al-Bashir last year, whose 30 year authoritarian rule saw Sudan become an international pariah.

Pompeo, who also pressed for improved ties between Sudan and Israel, discussed the lifting of sanctions with the Sudanese prime minister, Abdalla Hamdok.

The US has moved to incrementally restore relations with Sudan over recent years but has insisted that outstanding legal claims are settled before the country is struck from the list of state sponsors of terrorism. North Korea, Iran and Syria are also on the list.

Sudan has been on the list since 1993, and so faces a range of damaging measures including the denial of much needed financial aid from international multilateral institutions.

The double bombing of embassies in Tanzania and Kenya in 1998 was the work of al-Qaida, then run by Osama bin Laden from Afghanistan. More than 224 people died and 4,000 were injured in the bombings.

Courts in the US have found Sudan guilty of providing essential support to al-Qaida when Bin Laden was based in the country between 1991 and 1996.

But ministers, opposition leaders and ordinary people in the country have expressed their dismay at the prospect of a multimillion-dollar payment to the US. Some complained that it was unfair that the new reformist government in Sudan should suffer for the misdeeds of a fallen dictator.

Activist Mohamed Babiker, 32, accused the US of intensifying Sudan’s problems: “We opposed the regime and overthrew it. Now we have to pay for what it did wrong,” he said.

Shamael el-Noor, a participant in the mass protests that led to Bashir’s ousting, said that the US should have immediately removed Sudan’s name from the list of countries supporting terror once Bashir was gone.

“The terrorism was linked to the former regime’s ideology … It’s unfair to keep Sudan on that list while people revolted against the terrorism of that regime,” El-Noor said.

Others contested the basis for the compensation claim, saying that Sudan had sought to cooperate with the US by expelling Bin Laden and that the attacks had occurred two years after the Saudi-born extremist had left their country.

Hassan Abdulrahman, defence minister in Sudan at the time of Bin Laden’s stay, said Washington had refused an offer to hand the extremist leader to them.

“The politicians suggested we send him to the Americans but [the Americans] rejected that … The Sudanese also said they were prepared to detain or otherwise restrain Bin Laden,” Abdulrahman said.

US officials in key counter-terrorist posts at the time have since denied that the Sudanese offer wasserious. Bin Laden was eventually expelled by Khartoum and found a safe haven in eastern Afghanistan, then under the control of warlords.

The proposed compensation deal follows an earlier payment of a smaller sum to victims of another al-Qaida attack, on a warship just offshore of Aden in Yemen in 2000.

With its economy crippled by decades of Bashir’s misrule, continuing internal conflict, recent political upheaval and the Covid-19 pandemic, Sudan may have little choice but to agree US demands.

About 10 million people in Sudan are facing food shortages, according to the UN, and inflation was over 130 percent in June.

Faisal Mohamed Salih, the communications and media minister, said Sudan was compelled to pay the compensation because it had been ordered by a court and was “binding on the United States government before being binding on us”.

However this is contested by many, and the deal is controversial even among potential beneficiaries.

One complaint is the amount to be paid by Sudan. US judges have awarded damages of more than $10bn against the country – around 30 times the sum negotiated by the state department.

But the main concern is that victims who were US citizens at the time of the attacks will receive much more than Kenyan and Tanzanian victims, who will receive nothing at all, lawyers say.

“Sudan was led down a total blind dead end alley by the state department by telling them they can roll over the non-Americans. My clients are very sympathetic to the people of Sudan and they want them to have a bright future under the rule of democracy and human rights. They want this to be resolved in a fair way for everyone,” said Gavriel Mairone, a lawyer who represents several hundred victims.

The responsibility of Sudan for the bombings is also contested. Though Khartoum was undoubtedly supportive of Bin Laden as officials sought to build a coalition of Islamist extremists in the early 1990s, evidence for direct involvement in the actual attacks less clear.

The attacks took place in Kenya and Tanzania, and involved a Kenyan, a British-born Saudi, several Egyptians and others, who belonged to an organisation that was based in Afghanistan with some infrastructure in Pakistan. They were conceived after Bin Laden had left Sudan and dismantled his operations there.

In trial hearings against Sudan, which did not mount a defence, three experts said that the attacks would have been impossible without infrastructure, knowledge and experience gained during Bin Laden’s stay in Khartoum and through the efforts of Sudanese officials.

The use of Sudanese diplomatic passports, and funds laundered through Sudan were also cited.

The bombings were an opening salvo in al-Qaida’s war against the US, which the organisation described as the “far enemy” in contrast to the near enemy, which were regimes in the Arab world.

“There has to be some kind of accountability. If you deal in violence, whether you are a bank, a company or a country, the day will come when you have to account for it,” said Mairone.

Babiker, the activist, disagreed. “It’s unfair to punish a whole nation for what a dictator did. The dictator ruled his country by force and the whole world was watching and did nothing to stop the massacres that the regime committed or its terrorism, and after all that they want to punish the nation,” he said.