Libya and the United States settled all outstanding lawsuits by American victims of terrorism on Thursday, clearing the way for the full restoration of diplomatic relations.
The top U.S. diplomat for the Middle East, David Welch, signed the deal with Ahmed al-Fatouri, head of America affairs in Libya's Foreign Ministry, in a ceremony before reporters and members of both delegations.
There were 26 pending lawsuits filed by American citizens against Libya for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, which killed 270 people, and other attacks, said a senior Libyan government official, who spoke on condition of anonymity because the details of the deal had not been publicly announced.
He said there were also three outstanding lawsuits filed by Libyan citizens, including for U.S. airstrikes on Tripoli and Benghazi in 1986 that Libyans say killed 41 people, including Moammar Gadhafi's adopted daughter.
Under the agreement, a fund will be set up to compensate the American and Libyan claimants, the official said, without giving further details.
U.S. embassy possible now
The agreement paves the way for a full restoration of relations, including the opening of a U.S. embassy in Tripoli, the confirmation of an ambassador, direct U.S. aid and a visit by U.S. Secretary of State Condoleezza Rice before the end of the year.
It also gives the Libyan government immunity from any further terror-related lawsuits, the government official said.
Thursday's signing completes a nearly five-year effort to rebuild ties between the two countries.
The U.S. had no diplomatic relations with Libya from 1980 until late 2003, when leader Gadhafi pledged to abandon his weapons of mass destruction programs, stop exporting terrorism and compensate the families of victims of the Lockerbie bombing and other attacks.
After that, the nation that once was a global pariah was given a reprieve from U.N., U.S. and European sanctions, removed from the U.S. State Department's list of state sponsors of terrorism and allowed a seat on the U.N. Security Council.
The last hurdle was over full compensation for Americans harmed in Libyan-sponsored attacks, including the Lockerbie attack, the 1989 bombing of a French UTA airliner and the 1986 bombing of La Belle discotheque in Berlin, which killed two American soldiers. The disco attack prompted former U.S. President Ronald Reagan to order the 1986 airstrikes on Libya.
Libya has paid the 268 families involved in the Pan Am settlement $8 million each, but was withholding an additional $2 million it owed each of them because of a dispute over U.S. obligations in return.
Some kin are opposed
Many of the relatives of victims from the Pan Am bombing have opposed any deal on compensation, saying Libya should be held fully accountable in all the attacks pinned o it.
"They allow this horrible terrorist who murdered my daughter and all these other people to triumph. This is a triumph for terrorism," said Susan Cohen, the mother of Pan Am 103 bombing victim Theodora Cohen.
"All this does, it says 'we swept the families away. We pretend that Gadhafi never blew up an American plane," she said.
The main Libyan lawsuit was filed by 45 families of those killed in the 1986 airstrikes. There are two other cases pending related to other incidents.
Negotiations began in March 2007. Six rounds of talks were held in several European and Arab capitals, the Libyan government official said.
"We went through a long path of negotiations until we reached this agreement," al-Fatouri said just before the signing. "It opens new horizons for relations based on mutual respect. ... "The agreement turns the page on the negative past forever."
The American diplomat, Welch, echoed that sentiment and called the deal a "historic agreement." He also said he delivered a letter from U.S. President George W. Bush to Gadhafi.