President George W. Bush walks across the South Lawn of the White House, 15 Nov 2008

The White House said President George Bush has called Libyan leader Moammar Gadhafi to thank him for following through on a pledge that settles a long-standing dispute between the two countries over terrorist attacks in the 1980s.

A White House spokesman, Gordon Johndroe, Monday said the two leaders agreed that the deal should help bring "a painful chapter in the history" between the two countries "closer to closure."

On October 31, Libya paid $1.5 billion into a fund for families of the victims of Libyan-backed terrorist attacks, including the 1988 downing of a U.S. airliner over Lockerbie, Scotland, and the 1986 bombing of a Berlin disco.

The move cleared the final obstacle in full normalization of diplomatic relations between

Libyan leader Moammar Gadhafi, 06 Nov 2008

Washington and Tripoli. As part of the deal, President Bush signed an executive order granting Libya immunity from any pending legal action in U.S. courts.

The White House said the United States will keep working on its relationship with Libya, with the goal of establishing a dialogue that "includes all subjects" -- including human rights, reform and the fight against terrorism.

After the Berlin disco bombing, the U.S. carried out retaliatory air strikes on Libya's capital and on the city of Benghazi in 1986. Washington is providing $300 million to a fund to compensate Libyan victims of those strikes.

Some information for this report was provided by AFP and AP.