Eximbank’s board of directors voted in mid-March to provide export credit guarantees for US exporters selling goods and services to public sector organisations in Libya, providing the loans for the purchases are backed by sovereign guarantees from Tripoli.

The move follows the 28 February lifting of a 21-year-old presidential directive banning Eximbank guarantees to Tripoli announced by President Bush. In his announcement, Bush said: ‘It is important to the national security interests of the US that direct loans, credits, insurance and guarantees of the Export-Import Bank or its agents may be made available for or in Libya.’ The waiver will apply for 24 months.

The move is the latest in a series of actions taken by Washington to normalise relations between the two countries since Tripoli announced its intention to give up its weapons of mass destruction programme in December 2003. Full diplomatic relations cannot be restored until Libya is removed from Washington’s list of state sponsors of terrorism.