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Proposed U.S.-Libya deal angers Pan Am Flight 103 families

  • Story Highlights
  • U.S. families say Libya has not fully compensated them for '88 bombing
  • Bush wants waiver on law allowing families to sue Libya and U.S. companies
  • Law has halted billions in contracts between U.S. companies and Libya
  • Libya agreed to pay each family $10 million; has paid $8 million to each already
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From Zain Verjee
CNN State Department Correspondent
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(CNN) -- Nearly 20 years after the terror bombing aboard Pan Am Flight 103 killed 189 Americans, the Bush administration is trying to resolve a bitter dispute between U.S. terror victims and Libya -- while still boosting oil supplies.

The wreckage of Pan Am 103.

The victims' families say Libya, which admitted its involvement in the attack, hasn't fully compensated them for the bombing.

And the relatives accuse the administration of letting the north African nation off the hook by trying to ease limits on investment in Libya before the full payments are made.

The Bush administration wants to give Libya a waiver on a law that allows terror victims to sue the country as well as the U.S. companies that are eager to do business with Libya. The law has halted billions of dollars in contracts between U.S. companies and Libya and slowed exploration for new oil supplies because of questions about liability.

"Are we willing to trade the blood of Americans for oil?" Kara Weipz, president of Victims of Pan Am Flight 103, told CNN. "If Libya is really serious about their commitments to the victims, why don't they just do what they are supposed to do?"

Americans made up the majority of the 270 people killed when the Pan Am flight exploded over the Scottish town of Lockerbie on December 21, 1988. Libya has accepted responsibility for the involvement of its intelligence officials, one of whom was convicted of masterminding the bombing. A second official was acquitted.

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Libya agreed to pay each family $10 million and has paid $8 million to each already. But Weipz says the families will keep fighting for the rest.

"We are not ready to back down," she said.

Secretary of State Condoleezza Rice and Defense Secretary Robert Gates have told congressional leaders that the waiver would benefit U.S. national security, economy and foreign policy interests.

The administration says it sympathizes with the families, but Rice contends that U.S. interests could be hurt if the government doesn't fulfill rewards it promised to Libyan leader Moammar Gadhafi for giving up weapons of mass destruction.

"Obviously, when you have a major strategic shift of the kind that Libya has made, you want some affirmation," Rice told reporters earlier this year.

That position differs significantly from the one the administration took six years ago, when it promised the families that the United States would not resume any kind of ties with Libya until it accepted responsibility for the Lockerbie bombing and paid appropriate compensation.

The oil companies are letting the U.S. Chamber of Commerce take the lead in lobbying for the exemption from the law.

"It's an horrific incident, and Libya should pay up," said Bruce Josten, executive vice president of the U.S. Chamber of Commerce. "That's very different from what this provision in law now provides -- it actually puts American companies on the hook for that claimant's interests and payment."

Meanwhile, Libya is spending millions of dollars hiring The Livingston Group, a Washington lobbying firm headed by former Republican congressman Robert Livingston, to make its case on Capitol Hill.

Libyan Ambassador Ali Aujali told CNN in a written statement that his government relies "on the good faith of the United States not to create impediments that could delay a positive result."

The State Department says it's working with Libya to strike a final deal to settle all victims' claims, as oil companies and Libya are lobbying Congress for waivers. E-mail to a friend E-mail to a friend

CNN's Charley Keyes contributed to this report.

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