- Italy - Libya - Muammar Gaddafi - Silvio Berlusconi
Italy will invest five billion dollars in Libya over the next 25 years in a deal to be signed on Saturday, turning the page on colonial-era disputes that have long tarnished their relations.
Prime Minister Silvio Berlusconi made the announcement during a visit to the Mediterranean city of Benghazi for a meeting with Libyan leader Moamer Kadhafi to seal a cooperation accord with the oil-rich north African nation.
"The accord will provide for 200 million dollars a year over the next 25 years through investments in infrastructure projects in Libya," Berlusconi said in remarks translated into Arabic.
"This agreement should put an end to 40 years of discord. It is a concrete and moral acknowledgement of the damage inflicted on Libya by Italy during the colonial era," he told reporters.
Italy and Libya, which gained independence in 1951, have spend years negotiating a wide-ranging treaty to cover compensation for Rome's military occupation and colonisation which dates back to the last century.
US Secretary of State Condoleezza Rice is set to follow in Berlusconi's footsteps next week, for the first visit by such a high-ranking US official to Libya since 1953.
Berlusconi, who is on his second trip to Libya since June, said among the major projects to be financed by Italy will be a motorway running along the coast from the Tunisian border to Egypt.
It will also fund house construction, bourses for Libyan students to study in Italy, pensions for those mutilated by landmines laid by Italy during its rule.
The agreement will also cover cooperation on the fight against illegal immigration, which Berlusconi termed a battle "against slave traders."
Funding for the road -- previously estimated to cost three billion euros (4.65 billion dollar) was promised by Berlusconi on a visit to Tripoli in 2004, when he headed a previous administration.
When the two leaders met in June, Berlusconi was pushing for the rapid implementation of a December 2007 accord on joint maritime patrols to curtail the flow of thousands of illegal immigrants from Africa to Europe.
Italian shores, especially the small island of Lampedusa south of Sicily, are a favourite destination for those making the crossing North Africa in the hope of a new life in Europe, despite the perilous journey.
Italy also on Saturday returned a Roman statue of the goddess Venus dating back to the second century which was found in 1913 by Italian troops near the ruins of the Greek and Roman settlement of Cyrene, on the Libyan coast.
Formerly a part of the Ottoman Empire, Libya was occupied by Italy in 1911 before becoming a colony in the 1930s. The country gained its independence in 1951 after a brief period under a UN-mandated Franco-British administration.
Berlusconi's visit to Benghazi -- which lies 1,000 kilometres (650 miles) east of Tripoli -- coincides with the anniversary of the coup that brought Kadhafi to power in September 1, 1969.
Libya has welcomed a host of foreign dignitaries since Kadhafi ended years of diplomatic isolation with his 2003 announcement that Tripoli was abandoning efforts to acquire weapons of mass destruction.
Rice will be visiting shortly after an agreement with Libya to compensate US victims of Libyan attacks, and US reprisals, from the 1980s.
US-Libya relations, suspended in 1981 due to Tripoli's alleged support of terrorism, were restored in early 2004 after Kadhafi's weapons pronouncement.
Bolivia's leftwing President Evo Morales was also in Libya on Saturday to reinforce new diplomatic ties with Tripoli, ahead of a similar visit to Iran on Monday and Tuesday.
Kadhafi has also hosted a gathering of African tribal leaders who on Thursday bestowed the title of "king of kings" on the Libyan leader.