U.S., Britain Reach Understanding With Libya on Lockerbie Bombing

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The United States and Britain have reached an understanding with Libya requiring Moammar Gadhafi's government to renounce terrorism, accept responsibility for the 1988 bombing of a Pan Am jet and compensate families of the 270 victims, U.N. diplomats said Tuesday.

But a U.S. official, speaking on condition of anonymity, stressed that "an agreement has not yet been reached." The U.N. diplomats, also speaking on condition of anonymity, said an agreement could be signed as early as Wednesday.

At a Monday meeting in London, senior officials from the three countries reached an understanding on how Libya could meet the final requirements of a Security Council resolution for lifting sanctions, the U.N. diplomats said.

Barring a last-minute glitch, Libyan lawyers and lawyers for the families of those killed in the bombing of the airliner over Lockerbie, Scotland (search), will sign an agreement Wednesday under which Libya will pay $2.7 billion total in compensation, said Mark Zaid, an attorney representing more than 50 relatives of victims.

The meeting will occur in Basel, Switzerland, the U.N. diplomats said. The deal will provide at between $5 million and $10 million for each of the 270 victims, depending on certain conditions, lawyers have said.

Zaid said $4 million will be paid when U.N. sanctions against Libya are lifted, another $4 million when the United States lifts its own sanctions against the country, and $2 million when Libya is removed from the U.S. State Department's list of countries sponsoring terrorism.

Under the deal, the Libyan government will start transferring the $2.7 billion into an escrow account Wednesday and the transfer is expected to be confirmed Thursday, the diplomats said.

The Bank for International Settlements, which is headquartered in Basel, will be the escrow agent, Zaid said.

Once the money is transferred, the Libyan government will send a letter to the Security Council saying it has met the conditions for lifting sanctions -- by taking responsibility for the bombing, renouncing terrorism and paying compensation to the families, the U.N. diplomats said.

When that letter arrives, the United States and Britain will send a joint letter to the president of the Security Council saying they believe Libya has met the requirements to have sanctions lifted, the diplomats said.

Britain then is expected to circulate a draft resolution that would lift sanctions, they said.

U.N. diplomats said Friday is the target date for sending both letters and circulating the draft resolution.

A Security Council resolution passed in 1992 banned arms sales and air links to Libya in an effort to force Gadhafi's government to hand over two Libyans indicted in the Pan Am bombing. After the men were handed over for trial in April 1999, the council suspended sanctions indefinitely.

In 2001, a Scottish court convicted Libyan intelligence agent Abdel Basset Ali al-Megrahi (search) of the bombing and sentenced him to life imprisonment. A second Libyan was acquitted.

Under the U.N. resolution, sanctions cannot be lifted permanently until Libya acknowledges responsibility for the bombing, pays fair compensation, renounces terrorism and discloses all it knows about the explosion.