US transfers Libyan money to Lockerbie victims

[November 10, 2008]  SHANNON, Ireland (AP) -- The U.S. said Sunday it has begun transferring more than $500 million in Libyan compensation money to the families of American victims of the 1988 Pan Am 103 bombing over Lockerbie, Scotland.

More money is on the way to complete the settlement, but $504 million of $536 million to be distributed to the families was moved from the Treasury to a private account administered by Lockerbie families' lawyers on Friday, the top U.S. diplomat for the Mideast said.

David Welch spoke to reporters aboard Secretary of State Condoleezza Rice's plane as she returned to Washington from the Middle East. He said he expected the rest of the Lockerbie payments would be made soon as soon as administrative details were worked out.

The cash comes from a $1.5 billion fund for U.S. victims of Libyan-linked terrorism in the 1980s that Libya finished paying into last month.

In addition to paying compensation for the Lockerbie victims, the fund will distribute an additional $283 million to the victims and families of victims of a 1986 attack on a Berlin disco. The remainder will go to settle claims for other deaths, injuries and damage caused by Libyan agents.

Welch could not say when those transfers would take place, but that any "delays are pretty much administrative in nature."

The United States and Libya completed a comprehensive agreement this year to settle all terrorism-related claims from the 1980s. Welch negotiated the agreement.

Under the deal, $1.5 billion will go to American victims and their families. Some $300 million will go the Libyan victims and families of U.S. airstrikes in Libya ordered in retaliation for the bombing of Berlin's La Belle disco in 1986.

Libya has not said where its portion of the money came from. The Bush administration insists that no U.S. taxpayer money will be used to pay the American portion.

Libya's payment into the fund cleared the last hurdle in full normalization of ties between Washington and Tripoli. On Oct. 31, President Bush signed an executive order restoring the Libyan government's immunity from terror-related lawsuits and dismissing pending compensation cases.

U.S.-Libyan relations reached a low in the 1980s but began to improve after Libyan leader Moammar Gadhafi -- whom President Reagan called the "mad dog of the Middle East" -- renounced weapons of mass destruction and terrorism in 2003.

The rapprochement stalled after Libya halted payments to the families of Lockerbie victims under a previous compensation deal. But it picked up again in August when Libya and the United States agreed to a new, comprehensive package that would cover compensation for all the 1980s-era claims.

All 269 passengers and crew, including 180 Americans, on the Pan Am flight and 11 people on the ground were killed in the Lockerbie bombing. Three people, including two American soldiers, were killed and 230 wounded in the Berlin disco attack. That attack prompted Reagan to order airstrikes on targets in Tripoli and Benghazi that Libyans say killed 41 people, including Gadhafi's adopted daughter.

There has been a huge increase in interest from U.S. firms, particularly in the energy sector, in doing business in Libya, where European companies have had much greater access in recent years. Libya's proven oil reserves are the ninth largest in the world, close to 39 billion barrels, and vast areas remain unexplored for new deposits.

[Associated Press; By MATTHEW LEE]

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