U.S. Department of State Country Reports on Terrorism 2004 - Libya

Following Libya's December 19, 2003, announcement that it would eliminate its weapons of mass destruction and non-Missile Technology Control Regime class missiles, the United States, the United Kingdom, and relevant international agencies worked with Libya to eliminate these weapons in a transparent and verifiable manner. In recognition of Libya's actions, the United States and Libya began the process of improving diplomatic relations. On February 26, the United States lifted its restriction on the use of US passports for travel to Libya and eased some economic sanctions. On April 23, the United States eased more sanctions and terminated the applicability of the Iran-Libya Sanctions Act provisions to Libya. On June 28, the United States reestablished direct diplomatic relations with Libya by upgrading its Interests Section to a US Liaison Office. On September 20, the President terminated the state of emergency declared in 1986 and revoked the related executive orders. This rescinded the remaining economic sanctions against Libya under the International Emergency Economic Powers Act (IEEPA).

Libya remains designated as a state sponsor of terrorism and is still subject to the related sanctions. In 2004, Libya held to its practice in recent years of curtailing support for international terrorism, although there are outstanding questions over its residual contacts with some past terrorist clients. Libya has provided cooperation in the global war on terrorism, and Libyan leader Muammar Qadhafi continued his efforts to identify Libya with the international community in the war on terrorism. Prior to the January 30, 2005, elections in Iraq, senior Libyan officials made statements that defended insurgent attacks on US and Coalition forces; following strong US protests, Libya encouraged Iraqi participation in the elections, indicating its intent to recognize the upcoming Transitional Iraqi Government, and support reciprocal diplomatic missions with Iraq.

Following Libya's steps to eliminate its weapons of mass destruction and the September 20 revocation of US economic sanctions related to the national emergency, Libya authorized a second payment of $4 million per family to the families of the 270 victims of the 1988 Pan Am 103 bombing over Lockerbie, Scotland. This payment was part of a deal concluded in 2003 between Libya and the families in which Libya agreed to pay $10 million per family, or $2.7 billion, contingent upon the lifting of UN and US sanctions and removal of Libya from the state sponsors of terrorism list. By year's end, UN and US sanctions were lifted and the families had received a total of $8 million each, even though Libya remained designated as a state sponsor of terrorism. A remaining $2 million per family remained in a third-country escrow account, pending Libya's removal from the terrorism list.

Libya resolved two other outstanding international disputes stemming from terrorist attacks that Libya conducted during the 1980s. In January, the Qadhafi Foundation agreed to pay $170 million to the non-US families of victims of the 1989 bombing of a French UTA passenger aircraft. Separate cases for compensation filed by US victims' families are still pending in the US courts. In 2001, a German court issued a written opinion finding that the Libyan intelligence service had orchestrated the 1986 bombing of the La Belle nightclub in Berlin, in which two US servicemen and a Turkish woman were killed and 229 people were injured. The Court convicted four individuals for carrying out the attack. In August, the Qadhafi Foundation agreed to pay $35 million to compensate non-US victims of the La Belle attack. In reaching the agreement to pay compensation, Libya stressed that it was not acknowledging responsibility for the attack, but was making a humanitarian gesture. The families of the US victims are pursuing separate legal cases, and Libyan officials publicly called for compensation for their own victims of the 1986 US air strikes in Libya.

In October, Libya was instrumental in the handover of Amari Saifi, also known as Abderrazak al-Para, the number two figure in the Salafist Group for Call and Combat (GSPC), to Algeria. Al-Para, responsible for the kidnapping of 32 Western tourists in Algeria in 2003, had been held by a Chadian rebel group, the Movement for Democracy and Justice, for several months. In August, Abdulrahman Alamoudi pled guilty to one count of unlicensed travel and commerce with Libya. Alamoudi stated that he had been part of a 2003 plot to assassinate Saudi Crown Prince Abdullah at the behest of Libyan officials. The United States expressed its serious concerns about these allegations and continues to evaluate Libya's December 2003 assurances to halt all use of violence for political purposes.

In December 2004, the US designated the Libyan Islamic Fighting Group (LIFG) as a Foreign Terrorist Organization.