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US, Libya Near Compensation Deal on Terror Attacks

The State Department confirms that the United States and Libya are close to finishing a comprehensive deal to settle outstanding claims from Libyan-backed acts of terrorism in the 1980s. The U.S. Senate Thursday approved a key component of the deal. VOA's David Gollust reports from the State Department.

Relations between the two countries have improved markedly since 2003 when Libya renounced terrorism and agreed to give up its weapons of mass destruction programs.

But political and economic relations have not been completely normalized due to lingering disputes over compensating American and other victims of 1980's acts of terrorism for which Libya has taken responsibility.

Now, in an apparent breakthrough, the Bush administration and the government of Libyan leader Muammar Gadhafi have worked out a tentative deal that would clear away remaining claims.

Officials say that under terms of the accord, Libya would set aside about $1 billion to pay remaining claims from the 1988 bombing of a Pan Am jetliner over Lockerbie, Scotland, a 1986 bombing of a West Berlin disco frequented by U.S. servicemen, and other attacks tied to Libya.

A critical part of the deal is approval by the Congress of a measure giving Libya immunity from a previous U.S. law that gave victims enhanced powers to seize assets of countries involved in terrorism.

The U.S. Senate quietly approved such legislation Thursday morning and State Department officials are hopeful the House will quickly follow suit.

At a Senate committee hearing Thursday, Deputy Secretary of State John Negroponte welcomed the unanimous Senate vote. "I wanted to take the opportunity to thank you all for your support for the legislation that just passed the Senate to help facilitate a comprehensive claims-settlement agreement with Libya. This initiative provides the best opportunity for American claimants to receive fair compensation in an expedited manner, and would help turn the page on the last vestige of our contentious past with Libya so that we can focus on the future of our relationship," he said.

Libya agreed in 2003 to pay out $10 million each to the families of all 270 people killed in the Lockerbie attack, in a phased payout linked to normalization steps.

But the process was bogged down by legal disputes and more than $500 million is yet to be paid in the Pan Am case, as is nearly $300 million in the Berlin disco attack.

The legislation pending in Congress would empower the Secretary of State to set up an entity that would distribute the additional funds from Libya.

Most, but not all, victims' families support the pending deal.

Lawyers for some plaintiffs in the Berlin case say they could be left out of the arrangement, and contend that the immunity legislation for Libya sets a bad precedent for future dealings with other countries listed as terrorism sponsors.

The lingering legal cases are believed to have curtailed potential U.S.-Libyan trade, with Libyan firms in particular reluctant to invest in the United States out of concern their assets could be seized.

The United States restored diplomatic relations with Libya in 2006. But members of Congress concerned about compensation issues have prevented a U.S. ambassador from taking up residence in Tripoli, and have blocked funds to build a new embassy.

Though Libya's foreign minister has visited Washington, aides to Secretary of State Condoleezza Rice have said she would not go to Libya without a compensation settlement.