Sitting in his empty seafood restaurant in Sudan's historic port of Suakin, Hashem Abdullah is dreaming of better times -- particularly the hope that foreign tourists will one day visit his run-down hometown.

Further down the seafront from his Mistero Seafood Restaurant, Turkish workers are restoring the ruins of a customs house and other buildings from the Ottoman era.

We expect tourists will come after this is finished, Abdullah says, eating the latest catch from the Red Sea as he waits for lunchtime customers.

Restoring the old city in Suakin, which has been decaying for decades but was once a major trade hub and port to ship slaves and Muslim pilgrims, is part of government efforts to boost tourism as Sudan struggles with a severe economic crisis.

The Red Sea coast, with its beaches and the biggest port city, Port Sudan, is already a popular destination for Sudanese from the capital and other parts of the vast African country.

But Sudan has had little success in attracting foreign tourists because of tight visa rules, a lack of hotel infrastructure and a severe branding problem after years of armed conflicts in the country. The U.S. government warns U.S. citizens of security risks in travelling to Sudan. Suakin, 60 kilometres (40 miles) south along the Red Sea coast from Port Sudan, is not even considered by most foreign travellers.

So far, very few tourists come, but we hope this will change, said Nasser el-Din, head of the tourism authority in Red Sea State, estimating the number of foreign tourists arriving in the region during the main winter season at just 3,000-4,000.

We're restoring a lot...Infrastructure has been built...We have very nice and clean beaches which are among the most beautiful in the world, he said.

Sudan's coast also offers diving spots and a lifestyle a bit less rigid than the rest of the Muslim country. Cafes in Port Sudan serve water pipes, taboo in conservative Khartoum. But alcohol is banned, as it is in the rest of the country.

Tourism may be key to accelerating development in a region where anger has been simmering over its economic backwardness compared to the capital, where the country's wealth is concentrated. East Sudan was hit by an insurgency involving the Beja people, which ended in 2006 with a shaky peace agreement that promised more government projects.

Benefiting from oil exports, Port Sudan has seen some development with a new seaside promenade and airport. A five-star hotel has opened. But much of the city recalls the British era which ended in 1956 -- the tourism authority sits in a typical colonial villa with spacious balconies and huge, slow-moving fans.

There is little regional economic data available but annual inflation in Red Sea State was 24.7 percent in September, higher than the 18.7 percent measured in Khartoum.

PRIVATE SECTOR

Sudan wants to promote tourism to help offset the loss of much of its oil since South Sudan became independent in July. Khartoum hopes for national tourism revenues worth up to $1 billion (626 billion pounds) this year, officials have told the local press; that would be a fifth of what the north of Sudan made from oil sales last year, before the split.

But Abdulrahim Hamdi, a former finance minister, said the $1 billion target would be hard to reach and hard to verify since the government seemed to include business travellers in the statistics. He said the tourism industry had annual revenue potential of $3-4 billion within five to 10 years, but only if the government, which lacked experience in the business, handed over development to foreign and local firms.

We have safari parks, pharaonic sites and the Red Sea with scuba diving, but the government should get out of this. They should leave it to the private sector and give incentives to the private sector, he said.

Business people working in the tourism sector in Red Sea State say government decision-making is slow and concentrated in Khartoum, 1,100 km away to the west.

We see good opportunities for more tourism but the problem is, how to bring people here? We need flights to Port Sudan, said Shahinaz Mustafa, a lawyer in Port Sudan.

State-owned Sudan Airways offers only one international connection with Port Sudan every week, a link to Cairo, forcing many visitors to fly to Khartoum first and then rely on the unreliable domestic transport network.

Foreign tourists also face an uphill struggle with bureaucracy, which requires them to obtain permits for any domestic trip.

Even then, police are often nervous with foreigners -- security is tight in the coast area since two people were killed near Port Sudan by an apparent missile strike in April. Sudan has blamed Israel, which analysts say worries about arms smuggling to the Gaza Strip. Israel has declined to comment.

Reuters reporters trying to take pictures in Suakin's old city were stopped by police until accompanying tourism officials intervened.

Despite the obstacles, some economic impact can already be seen from the work to rebuild the city. The Turkish restoration company, which is being paid by the Turkish government, has hired some 60 Sudanese workers. More work on other construction sites.

Suakin also benefits at this time of year from tens of thousands of Sudanese pilgrims boarding ferries to Jeddah to perform the haj in Saudi Arabia.

Two-thirds of Sudan's pilgrims have passed through this port since ancient times, said Mohamed Ahmed, head of the regional haj committee.

(Editing by Andrew Torchia)

Sudan