WASHINGTON - 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 crucial 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 said the new U.S. approach had positive points as a policy of engagement, not isolation.

Secretary of State Hillary Clinton said the U.S. goals would be to end war crimes and other violence in Darfur, ensure implementation of a fraying 2005 peace deal between the Khartoum government and former southern rebels, and to prevent Sudan from becoming a haven for international terror groups.

We view the crisis in Sudan as two-fold. 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 told a news briefing.

We are looking to achieve results through broad engagement and frank dialogue. But words alone are not enough.

Sudan exports most of its oil to China, complicating U.S. efforts to win stronger support from Beijing for sanctions on Khartoum.

NO TALKS WITH BASHIR

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.

But they stressed Khartoum ultimately had to be involved to end the violence in Darfur as well as ease tensions in south Sudan, where mounting insecurity could affect national polls next year and a southern referendum on secession in 2011.

The United States is prepared to work with all sides, U.S. Ambassador to the United Nations Susan Rice said.

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.

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.

So many of these things that are in place now isolating the government of Sudan in some small way are little scarlet letters that ... the United States placed on the shirt of the Khartoum regime, said John Prendergast of the Enough Project nonprofit group that seeks to prevent genocide and crimes against humanity.

Basically, what ... they are talking about is taking off those scarlet letters one at a time, he added.

(Additional reporting by Deborah Charles and Arshad Mohammed in Washington, Opheera McDoom in Khartoum; editing by Patricia Wilson)

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