Lockerbie Deal to End Libya's Isolation

Libya will present a letter to the UN security council today accepting responsibility for the Lockerbie bombing, in a move that looks set to end its pariah status.

Following protracted negotiations, Colonel Muammar Gadafy's government has produced a statement of responsibility for the bombing of the Pan Am airliner in 1988 which is acceptable to the UK and the US.

In return for Libya accepting responsibility and renouncing terrorism, the UK will table a resolution calling for UN sanctions imposed in 1992 to be lifted. "We are looking at things going ahead in New York on Friday," said a British official.

The UK's draft resolution could come as early as today but the official said it was more likely to be put before the security council at the beginning of next week.

William Burns, an assistant secretary of state at the US state department, has cut short a visit to the Middle East and will meet American victims' relatives this afternoon to brief them on developments.

Libya's formal admission will come two days after lawyers agreed a $2.7bn (£1.6bn) package for the relatives of the 270 people who died in the bombing.

Under the deal Libya will pay the sum into an account at the International Bank of Settlements in Basel, Switzerland today. Each family will receive an initial payment of $4m when UN sanctions are lifted.

A further $4m will be paid when the US lifts its sanctions on Libya and a final payment of $2m will be made if the US repeals its Iran-Libya Sanctions Act and removes Libya from its list of state sponsors of terrorism. If the US fails to meet these requirements within eight months, the families will receive only an extra $1m.

Some US sanctions against Libya predate Lockerbie and some American relatives claim the staged payment system is a bribe designed to allow Libya to re-enter US oil markets.

Dan and Susan Cohen from New Jersey, who lost their daughter Thea, 20, in the attack, said they would not be taking any of the second staged payments. "We won't take a dime of that money and we've given those instructions to our lawyer," said Mr Cohen.

But most UK relatives said they believed the time had come to lift sanctions against Libya. John Mosey from Worcestershire, who lost his daughter, Helga, 19, in the bombing, said: "We are taking the money because it's the only way for Libya to get back into the civilised world. We made certain demands on them and it looks as if they are going to comply with those demands."

Compensation and Libya's letter pave the way for the permanent lifting of UN sanctions, which were suspended in 1999 when Col Gadafy handed over Abdel Baset al-Megrahi and Al Amin Khalifa Fhimah for trial. Megrahi was convicted and Mr Fhimah acquitted.

But a late hurdle could come from France, which is pushing for compensation from Libya for the 1989 bombing of a French airliner over Niger before any permanent lifting of sanctions takes place.

Despite the eagerness of US oil companies to work in Libya, the Bush administration is divided on the issue of lifting US sanctions.

Last year the state department said there was no credible evidence that Libya had been involved in terrorism since 1994. But a recent CIA report claimed Libya was seeking weapons of mass destruction.

Experts predicted that Libya would seek bilateral talks with the US. Unemployment in the country runs at 30% and Libya's economic reforms will be hindered unless it re-establishes relations with the US.

guardian.co.uk/lockerbie