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Page last updated at 21:31 GMT, Friday, 31 October 2008

Libya compensates terror victims

People visit the Lockerbie Garden of Remembrance (image from May 2000)
Most of those killed in the Lockerbie bombing were Americans

Libya has paid $1.5bn into a US compensation fund for relatives of victims of terror attacks blamed on Tripoli, the US state department says.

The fund was agreed in August to settle remaining lawsuits in the US.

The attacks include the 1988 Lockerbie bombing that killed 270 people and the 1986 bombing of a Berlin disco which killed three and wounded more than 200.

Under the deal, Libya did not accept responsibility for the attacks, but agreed to compensate victims.

The BBC's Kim Ghattas in Washington says it is the final step in a long diplomatic process, which has seen Libya come back into the international fold.

No US taxpayer money

The first $300m Libyan payment into the fund was made on 9 October, shortly after an historic visit to Tripoli by US Secretary of State Condoleezza Rice.

Its second payment of $600m was received on Thursday and a final instalment of $600m was made on Friday, said David Welch, the US diplomat who negotiated the settlement.

In exchange, President Bush has signed an executive order restoring the Libyan government's immunity from terror-related lawsuits and dismissing pending compensation cases in the US, the White House said.

Our correspondent says it is unclear why it took so long for the money to be paid into the fund.

She adds that there may have been contributions by American companies lured by business opportunities in Tripoli and keen to expedite the process of normalising ties.

US Assistant Secretary of State for Near Eastern affairs David Welch (l), and Libyan Deputy Foreign Minister Ahmad Fitouri (14.8.2008)
The US and Libya agreed to the compensation deal in August

The US State Department, however, has insisted that no money from the American taxpayer will be used for the US portion of the fund.

Libya has already paid the families of Lockerbie victims $8m (4m) each, but it owes them $2m more.

The fund will also be used to compensate relatives of seven Americans who died in the bombing of a French UTA airliner over Chad in 1989.

In 2004, Libya agreed to pay $35m in compensation to non-US victims of the 1986 Berlin bombing.

In the same year, relatives of non-US victims of the UTA bombing accepted a payment of $1m each from the Gaddafi International Foundation for Charity Associations.

Relations between Libya and the US improved in 2003 when Tripoli stopped working on weapons of mass destruction.

The decision led to the restoration of US diplomatic ties with Libya in 2006.

In turn, it was removed from America's list of countries sponsoring terrorism.

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