Libya's Final Payment to Victims' Fund Clears Way for Normal U.S. Ties

By Glenn Kessler
Washington Post Staff Writer
Saturday, November 1, 2008

Libya made its final payment yesterday into a $1.5 billion fund for American victims of terrorism, the State Department said, clearing the way for full normalization of ties between two countries with a history of antagonism dating to the 1980s.

President Bush, in exchange, signed an executive order yesterday restoring Libya's immunity from terrorism-related lawsuits and dismissing pending compensation cases.

The rapprochement with Libya began during the Clinton administration but intensified under Bush in 2003 after Tripoli agreed to give up its weapons of mass destruction. Secretary of State Condoleezza Rice in September became the first secretary of state in more than half a century to visit the Libyan capital, where she had dinner with the country's mercurial leader, Moammar Gaddafi.

In 2003, Libya agreed to pay $2.7 billion to the families of the 270 victims of the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, and diplomatic relations between the two countries were restored in 2006. But full progress was slowed by litigation stemming from Libya's involvement in other acts of terrorism.

In August, the last hurdle preventing Rice's visit was cleared when the United States and Libya agreed to settle all outstanding terrorism-related litigation, including claims resulting from the 1986 bombing of the La Belle disco frequented by U.S. military personnel in Berlin. The deal also settled Libyan claims for 40 deaths -- including an adopted child of Gaddafi's -- caused by a U.S. bombing raid over Tripoli in retaliation for the Berlin deaths.

All told, the fund will hold $1.8 billion, including $1.5 billion for claims for the Lockerbie and La Belle cases and $300 million for the Libyan victims.

"This removes the last obstacle to a normal relationship between the United States and Libya, and we will work on that now going forward," said Assistant Secretary of State C. David Welch.

Libyan payments to the fund came slower than expected, prompting U.S. lawmakers to refuse to confirm Bush's nominee for ambassador to Libya or approve funds for a new U.S. embassy in Tripoli. Welch said Libya made a $300 million payment on Oct. 9, a payment of $600 million on Thursday and a final payment of $600 million yesterday.

Welch would not say whether the $300 million for Libyan victims had been deposited, but he said none of the funds would come from U.S. taxpayers. Welch said there was no ban against U.S. companies in Libya participating in the fund, adding, "I obviously don't know whether they have done so or not."

Sen. Frank Lautenberg (D-N.J.), who had protested the slow progress on filling the fund, issued a statement welcoming the move. "American victims and their families have waited decades for Libya to pay for its deadly acts of violence, and today they have received long-overdue justice," he said. "I am pleased that our relentless pressure and support for terror victims has led to this historic moment."

Victims' families, who should begin receiving payments within days, also hailed the announcement.

"Today the government of Libya paid its final debt to terror committed long ago," Kara Weipz, spokeswoman for the Families of the Victims of Pan Am 103, whose brother Rick Monetti was aboard the plane, told the Associated Press. "While our loved ones will never be forgotten, we are glad this chapter in our efforts is finally over."

The announcement came as Gaddafi began his first visit to post-Soviet Russia, seeking a variety of arms deals. Kommersant, a leading Russian business newspaper, reported that Gaddafi was prepared to offer Russia's navy access to Libya's Mediterranean port of Benghazi.

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