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Official: Libya gives U.S. money for terror victims

  • Story Highlights
  • Libya gives "substantial amount of money" to United States
  • Funds represent partial compensation for victims of terrorism
  • Payment is part of complex deal that would lead to normalized relations
  • U.S. companies seek to reap billions in new investment in Libya
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From Charley Keyes
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WASHINGTON (CNN -- The United States has received "a substantial amount of money" from Libya to settle claims by American victims of terrorism, a senior U.S. official announced Thursday.

In this December 1988 photo, policemen look at some of the wreckage of Pan Flight 103 in Lockerbie, Scotland.

Libyan leader Moammar Gadhafi's government has made a partial payment to the United States for terror victims.

"We believe that [the] direct deposit of these funds is evidence of Libya's commitment to fully implementing the claims settlement agreement," the official said.

Kara Weipz, president of Families of Pan Am 103, had a mixed reaction to the news, calling it "a positive step, but a small step."

"I'm a little bit cynical," said Weipz, whose brother died when Pan Am Flight 103 was blown out of the sky over Lockerbie, Scotland, in 1988. "It's a positive step, but what are we going to have to do to see the next step and how many more months will that take?"

Weipz, who spoke to CNN from her New Jersey home, said she has not been contacted by the State Department about the development.

Last month, State Department spokesman Sean McCormack said the United States was still waiting for the promised payment following Secretary of State Condoleezza Rice's meeting with Libyan leader Moammar Gadhafi in the Libyan capital, Tripoli.

Washington has promised to normalize relations with Libya to reward it for abandoning its weapons of mass destruction program and for taking responsibility for the downing of Pan Am 103 and other terror attacks against Americans.

Part of the complicated agreement between the two nations called for the creation of a special fund set up by the State Department to finalize the terrorism claims. The partial payment announced on Thursday is a step toward full compensation sought by the families of the terrorist victims.

In a conference call with reporters, Assistant Secretary of State David Welch described the deposit as "a substantial amount."

He said the Libyan government had approached Libyan and multinational companies, including some U.S.-based firms, about donating to the fund.

"I don't believe any American companies have yet contributed," he said, but added that he was not sure.

He said a total of $1.8 billion would fulfill the financial obligation; of that, $1.5 billion would go to U.S. victims of Libyan terrorist acts.

The remaining $300 million would go to Libyan victims of the bombing of Libya by U.S. warplanes in 1986.

President Reagan ordered the attacks on Tripoli and Benghazi after U.S. soldiers were killed in the bombing of a Berlin disco. Libyans say dozens of people died in the U.S. air attack, including an adopted daughter of Libyan leader Col. Moammar Ghaddafi.

Welch, who would not predict when the final payments might be made, said Libyan officials have told him they are committed to solving the issue. "I realize collecting contributions for a humanitarian fund, especially in today's economic climate, could be a bit of a challenge, but they give me every sense there are proceeding apace," he said.

Meanwhile, the U.S. Senate has refused to approve sending an ambassador to Libya until full payment is made.

The State Department has pushed to have an ambassador confirmed, but has been blocked by Sen. Frank Lautenberg, D-New Jersey.

Rice's visit to Libya in September was the first by an American secretary of state since 1953, and both countries hailed it as a breakthrough. It followed months of complicated negotiations between the two countries.

However, some relatives of victims of the Pan Am explosion, which killed all 259 people on board the plane and 11 more on the ground, have criticized Rice for going to Tripoli, especially before the Libyans paid the final installments of the settlement.

"It's absolutely absurd they sent high-ranking officials before this was settled," Weipz said.

U.S. companies hope the new relationship will reap billions in new investment in Libya -- a country rich in petroleum reserves but lacking a developed infrastructure. But both sides were blocked from doing business until Libya agreed to pay in full the terrorism claims to U.S. victims.

The U.S. official would not say how much money Libya had deposited in the special fund set up for the victims' families, but he said it "demonstrates Libya's commitment to fully resolving outstanding claims."

"We will continue to work with Libya to ensure the expeditious receipt of the remaining agreed funds to compensate the victims and families," the official said.

Families of victims of Pan Am 103 had received part but not all of the $10 million per person compensation promised by Libya.

Following the full payment, Rice must certify to Congress that the necessary funds have been received to cover outstanding settlements and wrongful death and physical injury claims.

Then, as part of the carefully orchestrated step-by-step process, the U.S. government will restore Libya's immunity to court cases -- a key point sought by Libya to allow U.S. companies to invest in Libya without fear of future lawsuits from terrorism victims.

CNN's Elise Labott contributed to this report.

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