Libya Completes Its Diplomatic Rehabilitation

Two decades after a Pan Am airliner exploded in the skies over Lockerbie, Scotland, Libya and the United States have settled all outstanding lawsuits by U.S. victims over that incident and other terrorist attacks sponsored by the Libyan government.

The move was the last major step required to allow the restoration of diplomatic relations between the two countries and to complete the rehabilitation of Libyan strongman Muammar Qadhafi.

It also clears the way for a visit by Secretary of State Condoleezza Rice, which could come before the end of the year.

For Libya, the prospect of a normal diplomatic relationship with the United States marks a tremendous transformation from six years ago, when the regime was on the cusp of being added to the Bush administration's "axis of evil" over its pursuit of weapons of mass destruction. But in 2003, Qadhafi chose to abandon his weapons program after U.S. and European officials discovered a shipment of nuclear-related centrifuges aboard a German ship bound for Tripoli.

When U.S. News visited Tripoli in 2004, the old U.S. Embassy stood empty and decaying, frozen in time after a hurried 1979 evacuation.

But there were already plenty of signs that Libya had firmly chosen a new path aiming at greater economic prosperity.

Perhaps the area of greatest potential is Libya's oil sector, which was badly neglected during years of economic sanctions. U.S. oil firms returned to Libya after Qadhafi's initial rapprochement with Washington in 2003, but the settlement of outstanding claims could prompt other U.S. firms to re-enter the Libyan market.