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US restores trade ties with Libya

US President George W. Bush took steps Friday to restore normal trade and investment ties with Libya, moving to allow resumption of oil imports and most commercial and financial activities as a reward to Muammar Qaddafi for eliminating his most weapons of mass destruction.

Libya's actions "have made our country and the world safer," the White House said. But significant sanctions remain on the books as an inducement to Libya to resolve issues that are still pending.

In an extraordinary move, Gadhafi agreed last December to dismantle Libya's biological, chemical and nuclear weapons programs.

In response, the administration two months ago lifted a ban on use of American passports to travel to Libya.

"Through its actions, Libya has set a standard that we hope other nations will emulate in rejecting weapons of mass destruction and in working constructively with international organizations to halt the proliferation of the world's most dangerous systems," White House press secretary Scott McClellan said.

Last year, Libya removed a major obstacle to more normal relations with the US by meeting US demands stemming from the bombing of Pan Am flight 103 in 1988. Libya accepted responsibility for the bombing and promised to pay US$10 million in compensation to each family of the 270 victims.

In addition to the economic steps the White House announced, fledgling diplomatic ties will be upgraded to permit the opening of liaison offices in Washington ands Tripoli. This would be a prelude to the eventual establishment of normal diplomatic relations.

The easing of sanctions imposed in 1986 and those called for under a 1996 Libya sanctions law will allow a resumption of oil imports from Libya and permit most commercial activities, financial transactions and investments.

The 1996 measure also carried the threat of penalties against foreign companies that made significant investments in Libya's energy sector. No penalties have been applied.

Democratic Senator Edward M. Kennedy said that while he welcomed Libya's decision to disarm, he was surprised that Bush "would so quickly strengthen relations with a dictator who opposes democracy, persecutes his own people, and continues to cause instability in Africa."

Friday's action allows four American oil companies to resume commercial activities in Libya after an 18-year absence. They are Occidental Petroleum Corp, Amerada Hess Corp, Marathon Oil Co and Conoco Inc. The latter three operated jointly in Libya as the Oasis Group.

Marathon spokesman Paul Weeditz welcomed Bush's action, noting that it will allow the Oasis partners to resume production.

In Tripoli, a Libyan official, speaking on condition of anonymity, called Bush's action a "great step" that enhances the Gadhafi government's political stature.

He said the easing of sanctions will benefit US oil companies as well as the Libyan and American peoples.

According to oil experts, Libyan production nowadays is only about half of what it was in the peak year of 1970 when it reached 3.3 million barrels a day. They say the return of the American oil company technology to Libya should help reverse the decline in the country's production capacity.

Bush declined to permit a resumption of direct air service to Libya or to release hundreds of millions of dollars in Libyan assets frozen in the US.

Libya also remains on the US list of state sponsors of terrorism. The State Department says Libya has curbed ties with some -- but not all -- terrorist groups. Officials says legal claims by Americans based on past terrorist acts are still pending.

Nations designated as terrorist states are barred from receiving US economic assistance or arms-related exports or sales of US origin. The US government also is barred from supporting loan requests from such countries in international lending institutions.

The US and Libya have been at odds since Gadhafi took power in 1969. President Ronald Reagan ordered air attacks against Libya in 1981 and 1986. A further strain occurred in the early 1990's with the discovery that Libyan officials had a hand in the 1988 Pan Am 103 bombing. For many years, Gadhafi also caused unease here by trying to destabilize pro-Western countries in Africa.
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