Lockerbie settlement may end sanctions by U.S. against Libya

CAIRO, Egypt -- For years, Libyan leader Moammar Gadhafi has been trying to get into America's good graces. He condemned the Sept. 11 attacks, arrested Islamic militants and handed over two Libyans for trial in the 1988 bombing of a Pan Am jumbo jet over Lockerbie, Scotland.

Washington wasn't moved.

But Libya's agreement on a financial settlement with the families of the 270 Lockerbie victims could finally open the most important door that has remained closed to Gadhafi: the lifting of U.S. sanctions that have kept American oil companies away from Libyan oil fields.

The U.S. government has not commented on the Lockerbie settlement announced Wednesday by attorneys for the victims' families. A State Department official, speaking on condition of anonymity, said Thursday that the administration had not reached any decisions on sanctions.

Libyan Foreign Minister Abdel-Rahman Shalqam made clear Thursday that the Lockerbie agreement is part of the drive for international rehabilitation that Gadhafi began in the mid-1990s.

Shalqam said that if Washington did not lift the sanctions it imposed in 1986 and remove Libya's name from the State Department list of states that support terrorism, his country would pay only half the agreed $2.7 billion in compensation to the Lockerbie families.

Under the agreement outlined by lawyers, Libya was supposed to transfer the $2.7 billion into an escrow account by Thursday and follow up with a letter to the United Nations admitting responsibility for the Lockerbie attack.

Today is the target for the United States and Britain to send letters saying Libya has met requirements for formally ending suspended U.N. sanctions, for Britain to circulate a draft resolution on lifting those sanctions and for the State Department to hold a meeting with victims' families, U.N. diplomats said.

"The Libyans have a lot to gain," said Jeremy Binnie, Middle East editor for Jane's Sentinel Security Assessments magazine in London.

If the U.S. administration responds, Binnie added, it would send a message that Washington policy is "not just about punishing rogue states -- that if you actually conform to U.S. demands you can be brought in from the cold and that these situations can get better."

In 1999, Gadhafi surrendered two Libyans charged in the 1988 bombing of Pan Am Flight 103 over Lockerbie, a move that led the United Nations to suspend -- but not lift -- sanctions it imposed in 1992.

The United States, however, continued the embargo it unilaterally imposed in 1986 barring most Americans from using their passports to travel in Libya, which forced U.S. companies to leave the oil-rich North African nation. It also has banned the sale of oil equipment.

Cohen said U.S. oil companies are eager to return to Libya. But he said he did not expect Washington to restore relations immediately, although he thinks it will lift the travel ban or allow the sale of some equipment.

Gadhafi has long been a pariah for Washington, which accused his regime of supporting international terrorism. U.S. warplanes bombed Gadhafi's palace and other targets during the Reagan administration in retaliation for terrorist attacks Washington blamed on Libya.

The Libyan leader has sought in recent years to distance himself from terrorist groups, and his attempts to woo the Americans accelerated after the Sept. 11 attacks, which he condemned as "horrifying and destructive."

In an interview earlier this month on ABC, Gadhafi said his country has cooperated with Washington to fight terrorism and the "common enemy" of al-Qaida terrorists, whom he called "crazy and insensible people."

Libyan officials stress they harbor no ill feelings toward Americans.

For one, they note that Gadhafi's government has kept open the oil concessions abandoned by American companies under U.S. sanctions. They say that shows Libya's good will, although experts say it also is a bargaining chip.

"If they did award these American concessions to other companies then there will really be no chance of rapprochement with the U.S.," Binnie said.