Qaddafi seeks U.S. immunity before paying up

By Paul Taylor

LONDON (Reuters): Behind a facade of defiance, Libyan leader Muammar Qaddafi is seeking reassurance that the United States will not indict him over the Lockerbie airliner bombing before he agrees to compensate the victims' families, experts say.

Qaddafi has blown hot and cold since a Scottish court convicted Libyan secret agent Abdel Basset al-Megrahi last month of the murder of 270 people in the mid-air destruction of a Pan Am jumbo jet over Scotland in 1988.

Diplomats say the Libyan leader was stunned by Megrahi's conviction because lawyers had advised Tripoli he was likely to be acquitted along with co-accused Al-Amin Khalifa Fahima.

Qaddafi's response was an anti-Western tirade, playing to a domestic audience angered by nearly a decade of sanctions and isolation that Libya says have cost it US$23.5 billion.

Behind the scenes, Libya signaled it would do the necessary to close the Lockerbie file, provided the West did not move the goal posts, the diplomats said.

Diplomats said UN Secretary-General Kofi Annan assured Qaddafi in a February 1999 letter before the suspects were handed over for trial in a special court in the Netherlands that they would not be used to undermine the Libyan regime.

But in Washington, relatives of Americans killed in the blast are lobbying to maintain sanctions on Libya and seek the prosecution of leading Libyans, arguing only Qaddafi himself can have ordered the most deadly bombing in aviation history.

The Bush administration, facing conflicting pressures from the families on one hand and U.S. oil companies keen to return to Libya on the other, has said it will follow the evidence wherever it leads but has avoided any talk of indicting Qaddafi.

Libya is also worried about civil lawsuits in the United States claiming billions of dollars in damages. U.S. law allows the government to pay out such awards and recover the money from assets of the state held liable.

"The more the United States sticks to the original agreement that the aim of the process was the surrender and trial of the two accused, the more the Libyans will cooperate and compensate the families," said Saad Djebbar, a London-based lawyer and political analyst who has advised the Libyan authorities.

"They feel more comfortable with the British stance of restricting state responsibility to compensation. The closer the U.S. stance comes to the British stance, the better the prospect of getting this thing resolved," he said.

U.S. and British diplomats were due to hold talks with Libyan officials in New York on Tuesday on the next steps before suspended UN sanctions against Tripoli can be formally lifted.

British Foreign Office minister Brian Wilson told parliament the talks would focus on "the remaining requirements, no more and no less. Those requirements are not fulfilled simply by the trial having come to an end."

Security Council resolutions required Libya to accept responsibility for the actions of its officials, pay appropriate compensation, and "satisfy us that it has renounced terrorism and disclosed all it knows of the Lockerbie crime," Wilson said.

Some U.S. officials have interpreted those terms as requiring an apology by Qaddafi, an admission that the Libyan state was responsible for the bombing and a full disclosure of Libyan intelligence records on the incident.

After Megrahi's conviction, the Libyan leader accused the West of misleading the world, rejected any responsibility for the bombing and staged a protest outside the British embassy.

Privately, Libyan diplomats stressed their respect for Scottish justice and suggested Libya would offer compensation without formally accepting guilt if Megrahi's appeal fails.

"The contradictory signals have a certain logic. They are driven by fear of what is the Americans' agenda. If they pile one condition on top of another, the Libyans won't respond positively," Djebbar said.

He said Saudi Arabia and former South African President Nelson Mandela, who helped broker the original agreement, were working to try to reconcile the two sides.

George Joffe, a leading British expert on Libya, said Qaddafi was waiting to see what the United States really wanted and whether Megrahi's appeal might succeed.

The level of compensation was also problematic, he said. British Foreign Secretary Robin Cook has cited a figure of $700 million -- more than $2 million per family.

Joffe said the Libyan offer was likely to be close to the $33 million it paid out last year after a French court convicted six Libyan agents in absentia of a similar 1989 mid-air bombing of a UTA airliner over West Africa.

"Qaddafi knows he's going to have to pay compensation. The question is whether he can control the domestic agenda and curb his own tongue over the next few months, and whether extremists on the other side of the Atlantic among the families and their supporters in Congress, can be kept under control," he said.