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Associated Press

Bush Administration Seeks Libya Waiver For Terror Statute

Jennifer Loven

WASHINGTON - The Bush administration is asking Congress to exempt Libya from a law allowing terrorism victims to seize the U.S. assets of state sponsors of the attacks.

The law was part of a defense policy bill that President Bush signed in January.

The bill's passage had been held up over Bush's objections to the provision letting victims of state-sponsored terrorism sue responsible foreign governments and collect judgments by seizing their assets in the United States. Bush was concerned the provision would be applied to Iraq, so Democrats gave ground by giving the president permission to waive it for that country. He did so immediately upon signing the legislation.

Now, the administration has asked lawmakers to quickly grant Bush waiver authority for Libya.

Gordon Johndroe, Bush's national security spokesman, said the seizing of assets provision in the law could discourage nations like Libya that have renounced the export of terrorism from now helping the United States to fight terrorism. There is potential for billions of dollars in investment by U.S. companies in Libya's oil sector, as well as in other areas, meaning Libyan assets increasingly could wind up on American soil.

"Commercial relationships ... provide important continuing incentives for them to cooperate with us on counterterrorism," Johndroe said. "This will deprive the U.S. of investments helpful to our economy, deny U.S. companies international business opportunities and reduce the opportunities for us to engage with these states on a wide range of issues including claims."

The administration's request to Congress came in a letter to Senate Majority Leader Harry Reid, D-Nev., House Speaker Nancy Pelosi, D-Calif., and their Republican counterparts in the House and Senate, as well as relevant committee chairmen and ranking GOP lawmakers. The letter, dated March 18, was from Secretary of State Condoleezza Rice, Defense Secretary Robert Gates, Energy Secretary Sam Bodman and Commerce Secretary Carlos Gutierrez.

The United States had no diplomatic relations with Libya from 1980 until late 2003 when leader Moammar Gadhafi pledged to abandon his weapons of mass destruction programs, stop exporting terrorism and pay compensation to the families of victims of several attacks, including the infamous 1988 bombing of Pam Am flight 103 over Lockerbie, Scotland.

Those steps marked the beginning of the end of decades of international pariah status for Libya, once so reviled that it was the target of U.S. airstrikes ordered by President Reagan in 1986.

Libya was given a reprieve from U.N., U.S. and European sanctions, removed from the State Department's blacklist of state sponsors of terrorism, and allowed a seat on the U.N. Security Council. International investment also has increased in Libya's oil sector, a considerable industry for a nation with a long-suffering economy.

Amid the improvements, though, U.S.-Libya relations remain unsettled.

Congress is holding up key elements of the rapprochement _ money to open a new American embassy in Tripoli and a confirmation hearing for the new U.S. ambassador there _ until Libya completes compensation payments for the downing of Pan Am 103 and a 1986 bombing of a Berlin disco.

The Libyan government also is being sued for the bombing of UTA flight 172 from the Republic of Congo to Paris in 1989 that killed all 170 people aboard.

Families of the Pan Am 103 victims have been particularly outspoken in their opposition to full ties with Libya.

It was unclear how Bush's request would be received on Capitol Hill. Lawmakers led by Sen. Frank Lautenberg, D-N.J., who sponsored the lawsuit provision in the defense bill, have demanded that payments be completed before normalized relations are finalized.

Johndroe said the Bush administration's waiver request does not mean it is backing out on victims of terrorist attacks.

"We continue to do everything possible to bring the perpetrators of such acts to justice," he said. "We are also committed to helping American victims of terrorism obtain fair and appropriate compensation."

Susan Cohen of Cape May Court House, N.J., who lost her 20-year-old daughter Theodora on Pan Am 103, said she was disgusted at such talk from the White House. She said she stands to collect no money in any lawsuit, but can't abide what she says is a move to let Libya off the hook in order to help oil companies.

"They are nothing but money," she said of the Bush administration. "I am just sick about it."

© 2008 Associated Press

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