EU looks to new ties with Libya

France had been pursuing a Lockerbie-type settlement

The head of the European Commission has predicted a key change in the EU's ties with Libya since it settled with France over a 1989 airliner bombing.

"This confirms that 2004 can mark a decisive turning-point in relations between Europe and Libya," Romano Prodi said as news of the settlement emerged.

France earlier called for "progressive" normalisation of EU ties with Libya.

Libya has agreed to pay $170 million to the families of 170 people killed when a UTA plane was destroyed over Chad.

The BBC's Peter Biles says that deal should also be seen amid other recent overtures to the West by Tripoli.

In the last six months, Libya took responsibility for the Lockerbie airliner bombing and announced it would cease banned weapons programmes.

The European Commission president said in a statement, which was carried by the French news agency AFP, that he hoped the settlement would "allow Libya to take its full place in the Euro-Mediterranean Partnership".

'New relationship'

French Foreign Minister Dominique de Villepin met his Libyan counterpart, Abdel Rahman Shalgham, in Paris hours after the families accepted Libya's compensation offer.

France, which lost 54 citizens on the plane, had campaigned for a more "equitable" settlement for the UTA families after Libya agreed a $2.7bn payout for the 270 people killed in the Lockerbie attack.

LIBYA CONCILIATION STEPS April 1999: Libya hands over suspects in bombing of Pan Am flight over Lockerbie January 2002: The US and Libya reveal they are in talks to improve relations August 2003: Relatives of Lockerbie victims agree $2.7bn payout from Libya; Tripoli takes responsibility for the bombing September 2003: UN Security Council votes to lift sanctions December 2003: Libya announces it will halt programmes to develop weapons of mass destruction December 2003: UN nuclear inspectors begin checks Relatives welcome deal Slow and painful changes

"The entire relationship between France and Libya is thus going to be enjoying a fresh impetus. A new phase is opening up," Mr De Villepin said.

"We are in favour of a progressive normalisation of the EU's relations with Libya."

Mr Shalgham said: "Bilateral relations were good. They will become excellent."

Mr De Villepin acknowledged that there still needed to be a settlement of Libya's alleged involvement in the bombing of a disco frequented by US military personnel in Germany.

For France's part, Mr De Villepin said officials were keen to work with Libya to help development across Africa.

He added that he hoped to work towards warming ties with Libya in concert with Washington and London.

The United States and Britain have been at the forefront of Libya's attempts to shed its status as a pariah to the international community.

Its acknowledgement of complicity in the Lockerbie attack removed many diplomatic barriers though Washington has not lifted its sanctions against Tripoli.

A final settlement of compensation for the UTA bombing over the Sahara was equally important for the French, correspondents say.

France had threatened to block the lifting of UN sanctions against Libya if there was no deal.

Multinational tragedy

Families of the victims, who included many Congolese and Chadians, welcomed the compensation and said it was a sign that Libya was changing.

Guillaume Denoix de Saint-Marc, who lost his father in the attack and who helped lead the negotiations for the compensation, said: "We're happy to have succeeded... the scar will always remain, but at least it has healed."

NATIONALITY OF UTA VICTIMS France: 54 Congo: 50 Chad: 38 Italy:11 US: 7 UK: 4

The $1m-per-victim deal, clinched late on Thursday, is far smaller than the $2.7bn promised to the families of the 270 people killed when Pan Am Flight 103 exploded over Lockerbie in Scotland.

But Mr Denoix de Saint-Marc said much of the Lockerbie cash would be taken up by legal fees and taxes and consequently the amount received by families of the UTA victims would not be so different.

The $170m is expected to be shared among families of victims of 17 nationalities who were on board the UTA plane when it exploded over the west African state of Niger.

Tripoli has never accepted responsibility for the bombing - despite the conviction of six Libyan officials tried in absentia by a French court in 1999.

Libya refused to extradite the six - who include Libyan leader Colonel Gaddafi's brother-in-law - and has always maintained their innocence.