The Libyan leader has been applauded for giving up his WMD programme
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The European Union has said it may follow the US in lifting sanctions against Libya, as long as Tripoli shows willingness to curb illegal migration.
Libya needs to demonstrate it has a "comprehensive strategy" to stem flows of illegal immigrants, the EU said.
The body imposed trade sanctions on Libya in 1986.
Europe's relations with Libya have improved since Tripoli pledged to compensate families of victims of the Lockerbie and UTA air crashes.
Eyeing oil
Washington lifted its sanctions against Tripoli on Monday as a reward for giving up weapons of mass destruction.
If EU member states agreed to lift some of its sanctions on Libya, a mission would be sent to the country to assess the country's progress on stemming illegal migrant flows, EU spokeswoman Emma
Udwin told correspondents.
Some 270 people were killed in the Lockerbie bombing
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"If there is a consensus among the member states... we
would like this mission to go and work out with the Libyans a
set of proposals to co-operate in the fight against illegal
immigration in a broader fashion," she said.
Italy's interior ministry says more than 9,700 illegal immigrants, many from North Africa, have arrived on Italy's shores so far this year.
Italy has called for the EU to allow exports to Libya of equipment, such as
binoculars and boats, to help the country tackle the problem.
President George W Bush formally revoked all remaining trade sanctions, which affected general trade, aviation and the importing of Libyan oil on Monday. They had been suspended in April.
A freeze on Libyan assets in the US has also been lifted.
Libya had threatened to cancel compensation payments if the sanctions had not been lifted by Wednesday.
The sanctions were first imposed by then US president Ronald Reagan in 1986 in retaliation for what the US saw as Libyan support for terrorist groups.
Members of the EU, like the US, are keen to invest in Libya's substantial oil reserves.