Libya and the United States Thursday signed a compensation deal for victims of Libyan attacks and US reprisals, paving the way for full normalisation of ties between the two countries.
The agreement was signed by visiting US assistant secretary of state for Near Eastern affairs David Welch and Libyan deputy foreign minister Ahmad Fituri at the conclusion of a series of high level meetings.
Fituri told reporters that inking the deal was "the crowning of a long process of exhausting negotiations" and added that "there was a desire on both sides to find a conclusion to this issue."
The deal will see compensation paid for US victims of Libyan attacks in the 1980s and of the US reprisals that followed, Fituri said.
Welch, too, was upbeat.
"This is a very important agreement. This turns a new page in our relationship," he said after the signing ceremony.
"This agreement signed today is designed to resolve the last major historical issue that has stood in the way of a more normal relationship between our two countries," Welch said.
"Under this agreement each country's citizens can receive fair compensation for past incidents. When fulfilled, the agreement will permit Libya and the US to develop their relations."
In 2006, the United States announced a full normalisation of ties, dropping Libya from a State Department list of state sponsors of terrorism and raising diplomatic relations to the level of ambassadors.
However, the appointment of a US envoy to Tripoli as well as approval of funds for a new embassy have been held up in the Senate.
Welch arrived in Tripoli on Wednesday to hold final discussions on the agreement that will see a fund set up to compensate US victims of Libyan-sponsored attacks.
The state news agency JANA on Thursday published the text of the agreement which said the "humanitarian fund" would rule on compensation claims. Amounts to be paid and ways of doing so were set out in another document and not reported.
Both US houses of Congress have passed a bill that grants Libya immunity from lawsuits once compensation has been paid through the fund.
US Secretary of State Condoleezza Rice said after the bill was passed on August 1 that she looked forward to further improvements in ties with the north African state.
JANA also said that US President George W. Bush had sent a message to Libyan leader Colonel Muammar Gaddafi in which he expressed his "satisfaction" at the improvement in relations between Washington and Tripoli.
Welch gave the message to Gaddafi on Wednesday, the report said.
Bush's message also stressed "the important role Libya is playing internationally and expressed his hope that cooperation between the two countries would continue," JANA said.
Libyan newspaper Oya said last month that Tripoli and Washington had resumed talks in Abu Dhabi on fully compensating the relatives of US victims of Libyan attacks and Libyan victims of American air raids.
Washington wants Tripoli to fully compensate families of the victims of the 1988 bombing of a Pan Am flight over Lockerbie, Scotland, that killed 270 people, and a Berlin disco bombing that killed two Americans.
Libya meanwhile stressed the need for a mechanism to compensate victims of US reprisals.
Libya was subjected to several US airstrikes on Tripoli and Benghazi on April 16, 1986, in which 41 people were killed, including an adopted daughter of Gaddafi.
US-Libya relations were restored in early 2004 after more than two decades after Gaddafi announced that Tripoli was abandoning efforts to acquire weapons of mass destruction.
Rice has also said after the compensation fund bill was passed that she wants to visit Tripoli, but has not yet done so.