Libya offers new deal to terror victims

By Sue Pleming

WASHINGTON (Reuters) - Libya has proposed a "comprehensive" new deal to the United States aimed at resolving a string of cases to compensate terrorism victims, a senior U.S. official said on Wednesday.

The official, who requested anonymity because the issue is so sensitive, told Reuters that senior Libyan officials presented the deal during talks in London on Tuesday and Wednesday with U.S. Assistant Secretary of State David Welch.

The United States restored diplomatic ties with Libya almost two years ago after Tripoli gave up its weapons of mass destruction program, but the terrorism compensation cases have soured ties between the former foes.

"The purpose of it is to deal with the claims and to keep the path of normalization (of ties) going in a way that meets the interests of all," the official said of Libya's offer.

He declined to provide details of the deal or say how much money could be offered to the families of terrorism victims, such as those from the 1988 bombing of a Pan Am flight over Lockerbie, Scotland.

"Basically they (the Libyans) have suggested a way to expedite the resolution of these cases through a comprehensive settlement agreement. The reason it is interesting is because it is comprehensive and offers the promise of being more expeditious if it works," said the official.

"It is a complex proposal and will take some time to look at," he said.

Libya's new suggestions were partly driven by Tripoli's concern over U.S. legislation this year that expanded existing laws to enable terrorism victims to collect damages from governments like Libya by having their assets frozen.