In late 2003, after 10 years of behind-the-scenes negotiations, Tripoli finally accepted responsibility for the Lockerbie bombing, renounced terrorism and agreed to pay $2,700 million in compensation to the families of the victims. In return, the Western powers committed to help rehabilitate Libya within the international community.

Yet, even though US businessmen and politicians are becoming regular sights in Tripoli, the Great Socialist People’s Libyan Arab Jamahiriya remains a pariah state. ‘We have got a peculiar situation where the administration in Washington seems to be making every effort to normalise relations with Tripoli, yet Libya is still on the list,’ says Oliver Miles, vice-chairman of the Libyan British Business Council and chairman of the UK’s Middle East Consultants.

One of the reasons behind Libya’s continuing presence on the list, say diplomats, centres on the very public fallout between Gaddafi and Crown Prince Abdullah of Saudi Arabia at an emergency Arab League summit in the Egyptian resort of Sharm el-Sheikh in March 2003.

The summit, which came shortly after the US-led invasion of Iraq, was convened to discuss a proposal by the UAE that Iraqi President Saddam Hussein go into exile, but the proceedings were overshadowed by a heated exchange between the two statesmen over their respective relationships with the US. The exchange culminated in Gaddafi and Abdullah trading insults, with the Libyan leader accusing King Fahd of being a colonialist agent, and describing his agreement to accept US troops on Saudi soil as ‘an alliance with the devil’. To which Abdullah replied: ‘Who exactly brought you to power? You are a liar and your grave awaits you.’ Following the exchange Tripoli withdrew its ambassador from Riyadh.

Relations between the two states hit rock bottom in August of that year, with the arrest in London of prominent US Islamist leader Abdurahman Alamoudi, who claimed in a plea-bargain with US prosecutors to be part of a Libyan plot to assassinate Abdullah. Alamoudi claimed the disagreement in Sharm el-Sheikh had been the catalyst for the plot. Tripoli denies the allegations and accuses Riyadh of fabricating the plot in order to discredit Gaddafi.

Washington says it cannot take Libya off the list of countries until the matter has been cleared up. But that is easier said than done. Intense negotiations between Tripoli, Washington and Riyadh are taking place to resolve the dispute, but it appears to have gone beyond the level of a disagreement between two states. Instead, say analysts, it has become an intensely personal fight between the two leaders that has left observers wondering how the deadlock can be broken.

Whatever the way out, it is clear that the Saudi saga has delayed Libya’s full detente with the West. ‘The reason Libya is still on the list of states sponsoring terrorism is because the US does not know what to do,’ says Miles. ‘The rest of world has reached a modus vivendi with Libya. There have already been many high-level visits so there is no longer the need to get hung up on that. It is now down to the spadework.’


There are a number of recent events that indicate that the spadework is taking place, including Tripoli’s decision in July to pay $25 million in unpaid medical bills to Jordan and recent exercises between the Libyan and Italian navies to improve immigration control. There has even been some progress, albeit limited, on the human rights front, with a visit to Tri