After nearly 25 years of virtually no diplomatic contact, U.S.-Libya relations have entered a new era. But most analysts agree that while the future of bilateral cooperation looks promising, a host of issues need to be addressed before further progress can be made.

Six months after the restoration of U.S.-Libyan relations, progress toward normalization remains slow.

Speeding up the process, notes Michele Dunne, a Middle East expert with the Washington-based Carnegie Endowment for International Peace, requires more work.  "We have not seen a U.S. ambassador designated to go to Libya. We have not seen very senior visitors such as members of the U.S. cabinet, U.S. Secretary of State or Defense or others going to Libya. And we have not seen very senior officials of the Libyan government invited to the United States. Those are the kinds of steps that the Libyan government is looking for to constitute a further development in the relationship," says Dunne.

Some observers suggest that Libya is disappointed at the pace and level of U.S. diplomatic engagement. But this perception, says David Goldwyn, President of the Washington-based U.S.-Libya Business Association, is not shared by Washington.  "The United States believes that it is moving quite quickly in terms of restoring relations. So I think there's some disparity between the expectations on both sides. But I think, in fact, there's a lot more room for improvement. As the U.S. and Libya increase their level of diplomatic engagement, we'll see more progress on the trade-investment side as well," says Goldwyn.

Path to Reconciliation

Turbulence marked U.S.-Libya relations soon after Colonel Muammar Qaddafi seized power in a 1969 coup and put Libya on a socialist, anti-western path. The United States severed ties with Libya in 1981. In 1986, U.S. warplanes struck targets in Libya in response to its alleged involvement in a Berlin Discotheque bombing that killed two American servicemen. In 1991, two Libyan agents were convicted by a special Scottish court for their role in the bombing of an American jetliner over Scotland that killed 270 people.

Eleven years later, Libya agreed to pay reparations, renounce terrorism and give up its chemical weapons and nuclear arms ambitions. In 2004, the United States reopened its Interests Section in Tripoli. And last May, Washington announced it would upgrade its mission to embassy status and remove Libya from the U.S. State Department's list of countries that sponsor terrorism.

Libyan opposition groups and some analysts argue that by normalizing relations with Tripoli, Washington risks ignoring human rights abuses in Libya. Michele Dunne of the Carnegie Endowment for International Peace notes that several political activists have been jailed over the years for publicly criticizing Libyan leader Muammar Qaddafi.

"There are important human rights cases in Libya, such as the case of the jailed political activist Fathi Eljahmi. He has been in Libyan custody for quite a while now. And there are a number of cases like this that I think the United States would like to see resolved before it takes further steps in relations with Libya," says Dunne.

Another issue impeding progress is the case of five Bulgarian nurses and a Palestinian doctor charged in a Tripoli court with deliberately infecting more than 200 Libyan children with H.I.V.-AIDS. The court is expected to deliver its verdict in December.

Libyan affairs expert Ronald Bruce St. John says many consider these charges to be unjust.  "There's a widespread international movement to see those people freed, which the United States is supporting actively, because there appears to be very little, if any, evidence that they were actually involved in the children becoming infected. That's a major diplomatic, domestic policy issue that is going to slow a full resumption of diplomatic relations with Libya," says St. John.

Setting an Example

But many analysts say American diplomacy has achieved a great deal by convincing Libya to renounce terrorism and forgo building weapons of mass destruction, and has set an example for dealing with rogue states.

Now, says analyst David Goldwyn of the U.S.-Libya Business Association, the United States sees a great deal of promise for future cooperation with Libya on both foreign policy and commercial issues.

"There's already interest by the [U.S.] Defense Department in making Libya part of the Trans-Sahel Counterterrorism Initiative [a U.S. effort to help Sub-Saharan African nations fight terrorism]. So I think we have great potential for collaboration with Libya on peace in Sudan, humanitarian aid to Darfur, counterterrorism in general, and trade and investment as well," says Goldwyn. "I don't think the diplomatic infrastructure has quite caught up with the potential, but we're getting there on a pretty good pace. In terms of business opportunities, Libya has to be one of the countries with the greatest potential for the United States in the Arab World. It is far more open in its receptivity to foreign investment in the oil sector than many other countries."

Libya's Economic Reforms

Eager to attract American and western companies, Libya has begun extensive reforms to liberalize its markets. It has teamed with the World Bank and private groups to restructure its socialist economy.

But The Heritage Foundation's James Phillips, a Middle East specialist, says Libya needs to do more. "It [should] probably focus on increasing the transparency of Libyan operations and treatment of foreign investment. The Libyans are very anxious to get increased foreign investment to expand oil production, which has long been neglected.  And Libyans seek access to advanced U.S. oil-drilling technology, as well as the newest methods of finding new oil fields," says Phillips.

Many experts argue the United States should also move forward by appointing an ambassador to Libya and by engaging Tripoli in bilateral talks on economic and trade issues. While some fear Libya might backtrack on its commitment to renounce terrorism, most agree that what has been accomplished toward normalizing relations points to a promising future in U.S.-Libya cooperation.

This story was first broadcast on the English news program,VOA News Now. For other Focus reports click here.