President Bush Monday lifted sanctions barring most U.S. trade with Libya. The move clears the way for compensation payments to families of victims of the 1988 bombing of Pan Am flight 103, for which Libya has taken responsibility.
The White House action lifts several more layers of U.S. economic sanctions against Libya and follows a set of what administration officials said were productive senior-level talks between the two governments late last week in London.
In a message to Congress, President Bush said he was revoking executive orders dating back to the mid-1980's that, among other things, barred scheduled and charter air service to Libya, banned U.S. imports of Libyan refined petroleum products, and impounded some $1.3 billion in Libyan assets.
At a news briefing, State Department spokesman Adam Ereli said the move is a further reward for Libya's decision last December to renounce weapons of mass destruction:
"This step is taken in response to actions that Libya has taken over the past nine months to address concerns by the international community about its weapons of mass destruction programs," he said.
Libya began secret negotiations with the United States and Britain more than a year ago, climaxing with the December announcement that it was giving up efforts to develop chemical and nuclear weapons, and long-range missiles to deliver them.
The Bush administration lifted an initial set of sanctions against Libya in April. But even after Monday's announcement, it will still remain subject to some U.S. sanctions stemming from its continued presence on the State Department's list of state supporters of terrorism.
U.S. officials say they believe Libya long ago ceased active involvement in acts of terrorism, but they add the country has lingering ties with radical groups impeding Middle East peace efforts and fomenting instability in North Africa.
The latest U.S. action is expected to open the way to Libya's payment of another one billion dollar installment of compensation to families of the 270 people killed in the downing of Pan Am flight 103 over Scotland in 1988.
Seeking to end its international isolation, Libya last year admitted responsibility for the airliner bombing and agreed to a phased $2.7 billion compensation payout, linked to the lifting of sanctions.
It had threatened to withhold the latest payout unless more sanctions were removed this week.
The Bush administration has depicted Libya's surrender of banned weapons as a major diplomatic achievement. The United States earlier this year re-established diplomatic links with Libya and opened a sub-embassy-level liaison office in the Libyan capital, Tripoli.