- The Washington Times - Saturday, May 31, 2008

The United States and Libya yesterday agreed to try to quickly compensate families of U.S. victims of three terrorist attacks blamed on Libyan agents in the 1980s, a State Department official said.

The settlement would speed up the resolution of lawsuits that have dragged on for two decades and clouded a deal that Libyan leader Moammar Gadhafi struck to give up weapons of mass destruction in return for improved relations with the United States. Libyan officials have become increasingly frustrated by what they regard as U.S. delays in making diplomatic and political concessions to Libya.

Libya has long said it wants to resolve outstanding compensation claims from the U.S. families of victims of the 1980s terror attacks, but legal and financial arrangements bogged down.

Libya had agreed to pay $10 million to each victim in the 1988 bombing of Pam Am Flight 103 over Lockerbie, Scotland, but it has not made the final payment because of a dispute over U.S. obligations in return.

The all-in-one deal would address the Lockerbie bombing, along with the 1986 bombing of a Berlin disco and the 1989 bombing of a French UTA airliner.

The Pan Am bombing killed 270 people, including 189 Americans. Two U.S. servicemen died in the Berlin disco bombing. Libya was implicated in both cases.

The United States restored diplomatic ties with Libya two years ago and removed Libya from the State Department list of nations that sponsor terrorism.

The State Department’s top diplomat for the Middle East, Assistant Secretary of State David Welch, led talks on the package with a Libyan delegation this week in London.

Libya did not propose a specific dollar amount when it broached the idea of a comprehensive settlement in March, State Department officials said.

The offer is being weighed in tandem with a Bush administration effort to shield Libya from new lawsuits under a law allowing terrorism victims to seize U.S.-based assets of state sponsors of terrorism.

The law was part of a defense policy bill that President Bush signed in January.

The White House said the seizing-of-assets provision in the law could discourage nations like Libya that have renounced the export of terrorism from now helping the United States to fight terrorism.

There is potential for billions of dollars in investment by U.S. companies in Libya’s oil sector, among other areas, meaning Libyan assets increasingly could wind up on American soil.

Libya says the new law unfairly punishes Libya after it has made concessions to the United States.

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