[JURIST] US Assistant Secretary of State David Welch said Thursday that Libya has made an initial deposit [briefing transcript] into a US government account as part of a deal to settle claims involving Libyan-linked terrorism in the 1980s. Under the agreement, Libya will pay $1.5 billion to settle claims for victims of the 1988 bombing of Pan Am Flight 103 [BBC backgrounder; JURIST news archive] over Lockerbie, Scotland and the 1986 bombing of the La Belle disco [BBC backgrounder] in Berlin, Germany. An additional $300 million will be provided by the United States to compensate Libyan victims of retaliatory air strikes that followed the disco bombing. Funding for the US portion is unclear; Bush Administration officials indicated that no US tax dollars would be used to pay for the settlement. Welch said: "we deem [the deposit] to be evidence of [Libya]'s commitment to fully implementing the whole agreement, and a substantial indication of their commitment". AP has more.

This March, the US and Libya began working to find a way to speed compensation for families of Americans who were killed by acts of terrorism authorized by the Libyan government. An agreement was signed [JURIST report] in August. The settlement is seen as a way to normalize relations between the US and Libya and to allow Libya to accelerate development of its oil resources.