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U.S., Libya near deal to compensate terror victims

WASHINGTON (Reuters) - Libya would pay hundreds of millions of dollars to compensate U.S. victims of terrorism under a tentative agreement that hinges on action by the U.S. Congress, sources familiar with the accord said on Wednesday.

An engineer from the Air Crash Investigation Unit peers out in this December 8, 1988 file photo, from the reconstructed remains of the Pan Am Boeing 747 jumbo jet that crashed into the Scottish village of Lockerbie in December 8, 1988. REUTERS/Kieran Doherty/Files

The United States and Libya worked out the tentative deal to resolve all outstanding cases of what Washington regards as past Libyan terrorist acts that killed or injured Americans.

If carried out, the deal could end the legal liability to Libya stemming from multiple lawsuits by families of the U.S. victims and it could herald a further warming in ties between Tripoli and Washington.

Long estranged, the two nations have dramatically improved relations since Libya’s 2003 decision to abandon its pursuit of chemical, biological and nuclear weapons.

Under the deal, Libya would set aside $536 million to pay the remaining claims from the 1988 Lockerbie bombing and $283 million to compensate those killed and injured in the bombing of a West Berlin disco in 1986, said attorney Jim Kreindler, whose law firm represents 130 Lockerbie victims.

Two hundred and seventy people died when a bomb destroyed a Pan Am flight over Lockerbie, Scotland in December 1988. The Berlin disco bomb killed three and injured 229.

The deal would also set aside additional funds to compensate victims of other incidents blamed on Libya, possibly bringing the total payout to more than $1 billion.

To implement the tentative agreement, however, Congress would have to relieve Libya of the effects of a law enacted this year making it easier for terrorism victims to collect damages by having the assets of target governments frozen.

“It’s not locked in,” a senior U.S. official said of the tentative agreement. “Congressional action would help us enormously to make sure it happens.”


U.S. senators have been discussing legislation to smooth the way for the deal by protecting Libya from the effects of the new law.

The legislation would also create a mechanism for the U.S. secretary of state to select an entity to receive funds from Libya that would then be used to compensate the victims.

It would also require the U.S. government to certify to Congress that Libya had turned over sufficient funds.

The deal has been structured to respect Libyan sensitivities about making a large payout to compensate victims of incidents for which it has not taken responsibility.

“By careful orchestration of these steps we can ultimately provide that these claimants would receive what are really unprecedented payouts,” said the senior official.

“Libya ... doesn’t have to accept any responsibility,” he added. Making the payments to the victims indirectly, through the designated entity, “provides a way for them to (get some) distance from it.”

Asked about the deal, a State Department spokeswoman said negotiations were continuing and the Department was working with Congress on supporting legislation.

“This will provide the best opportunity for American claimants to receive fair compensation in an expedited manner and help turn the page on the last vestige of our contentious past with Libya so that we can focus on the future of our relationship,” she said.