Libya army transport deal frozen after U.S. approval

WASHINGTON -- The U.S. government quietly green-lighted a $77 million deal to provide at least 50 refurbished armored troop carriers to Moammar Gadhafi's army, approving a license that signaled growing American business contacts with his regime in the months before Libya imploded in civil war.

Congress balked, concerned the deal would improve Libyan army mobility and questioning the Obama administration's support for the agreement, which would have benefited British defense company BAE. The congressional concerns effectively stalled the deal until the turmoil in the country scuttled the sale.

As all military exports to the regime were suspended last week and President Barack Obama told Gadhafi he should step down, the State Department's Directorate of Defense Trade Controls informed Congress that the troop transport deal had been returned without action -- effectively off the table, according to U.S. officials who spoke on condition of anonymity to describe the deal's sensitive details.

State Department spokesman Mark C. Toner said the proposed license was suspended along with the rest of "what limited defense trade we had with Libya."