Analysis: Will US lift Libya sanctions?

By Michael Buchanan BBC Washington correspondent

Critics are sceptical Gaddafi will put past behind him

As a poster boy for how isolated nations can gain international respect, Libya now hopes its agreement with the US will lead to the end of sanctions.

But first, the US Congress must approve their removal and its reaction to Friday's announcement is yet to be gauged.

US sanctions have been in place since 1986, when Washington accused Tripoli of being responsible for a series of

bomb attacks on Americans in Europe.

They ban direct trade, commercial deals and the import of Libyan crude oil.

"Gaddafi deserves to be treated as a pariah in the world community," President Ronald Reagan said at the time.

Relations between the two countries deteriorated further following the bombing of PanAm flight 103 over Lockerbie in 1988 in which 270 people, mostly Americans, were killed.

'Competing demands'

Years of diplomacy to get Libya to admit responsibility and pay compensation to the victims' families finally paid off earlier this year when Tripoli agreed to renounce international terrorism and pay $4m to each family.

That led to the lifting of UN sanctions, but US sanctions remain even though the families could get a further $6 million each if Washington were to lift the penalties and remove Libya from its list of states that sponsor terrorism.

Libya must now convince Congress of its willingness to co-operate

While President Bush did not directly mention the sanctions in his statement, he did indicate that Tripoli's renunciation of weapons of mass destruction would be looked on favourably.

"Libya can regain a secure and respected place among the nations, and over time, achieve far better relations with the United States."

But while lifting the sanctions has in theory become easier now, the administration still has to weigh up competing demands.

Second chance

US oil companies are keen to get back into the north African state where they once produced more than a million barrels per day, and where the energy department estimates output could reach two million barrels per day within five years.

Companies like Marathon and ConocoPhilips are understood to still have extensive assets in Libya, which have been frozen since 1986.

But sentiment among the relatives of the Lockerbie victims, who commemorate the 15th anniversary of the bombing on Sunday, is divided about lifting the sanctions.

Libya is believed to have gathered nuclear experts from ex-communist states

Susan Cohen, whose lost her daughter in the attack told the New York Times that she was unhappy that Mr Bush had failed to mention the Lockerbie case in Friday's statement and by the overall agreement reached.

"It was a total betrayal," she is quoted as saying in the Times.

However Bob Monetti, president of the Families of Pan Am 103, says he is willing to give Colonel Gaddafi a chance.

"Most of us are in a 'Let's-see-what-goes-on attitude.'

"If, in fact, they have changed their stripes, maybe we should just get on with it," he told the Washington Post.

The unknown factor in the discussions so far is how Congress sees the latest Libyan actions.

Many members, speaking after the Lockerbie agreement was reached, said they still didn't think it was time to lift the sanctions as they were not convinced that Libya had truly turned its back on terrorism.

Whether this latest development is enough to tip the balance will become more apparent as international inspectors dismantle Libya's WMD programmes.