* Senior diplomat visiting Tripoli in wake of row
* U.S. firms have major energy investments in Libya
By Ali Shuaib
TRIPOLI, March 16 (Reuters) - A senior U.S. diplomat said he was happy with the state of relations with energy producer Libya on Tuesday after the two countries patched up a diplomatic row.
Libya demanded an apology from Washington and warned U.S. energy companies could face repercussions after a State Department official made acerbic comments about a speech by Libyan leader Muammar Gaddafi. The official later apologised.
Assistant Secretary of State for Near Eastern Affairs, Jeffrey D. Feltman, met Libyan officials in Tripoli on Tuesday in the first high-level visit since the dispute broke out.
Libya, for decades an international outcast, has built extensive business ties with the United States since sanctions were lifted. Firms including ExxonMobil (XOM.N) and ConocoPhillips (COP.N) have invested in oil projects there.
“I am happy about the relations between Libya and the United States and these are growing step by step,” Feltman told reporters at a briefing after his talks with officials.
He said Tripoli and Washington were planning to sign a commercial agreement in the next few weeks to follow up on the visit last month of an official U.S. trade mission, the first since diplomatic relations were restored in 2004.
Feltman also said he used his meetings with Libyan officials to explain the U.S. position on the Middle East peace process, Yemen and Iraq before a summit of the Arab League which Libya will be hosting later this month.
The dispute between Libya and the United States flared up in the wake of a speech last month in which Gaddafi called for a “jihad” against Switzerland.
Tripoli has been locked in a row with the Swiss since July 2008 when police in Geneva arrested one of the Libyan leader’s sons, Hannibal, on charges — which were later dropped — of mistreating two domestic employees.
State Department spokesman P. J. Crowley said Gaddafi’s speech reminded him of a previous address by the Libyan leader which, he said, involved, “lots of words and lots of papers flying all over the place, not necessarily a lot of sense.”
Though the row with Washington is resolved, Libya remains at odds with Europe after Tripoli stopped issuing entry visas to citizens of the Schengen zone, a borderless travel area that includes most European countries.
That was in retaliation for Switzerland issuing a blacklist of senior Libyans, including members of Gaddafi’s family, barring them from travelling to Schengen zone countries.
Libya’s Public Security Minister, speaking at a conference of Arab interior ministers, said a Swiss referendum last year that banned the construction of minarets was at the root of his country’s dispute with Switzerland.
“This decision is racist, Switzerland is a senseless country. We Arabs do not dare destroy cathedrals and churches because we are not racists,” Abdel Fattah Younes al Abidi told the conference in Tunisia. (Additional reporting by Tarek Amara in Tunis; Writing by Christian Lowe; Editing by Charles Dick)