In the 1970s, Libyan leader Moammar Khadafy set out to use oil wealth to revolutionize the economy and by the end of 1982 had nationalized 70 per cent of the oil industry.

Tensions with the United States led to a US embargo on Libyan oil in 1982 and the pullout of US oil companies. Washington recalled its ambassador after a mob sacked its embassy in 1980.

In January 1986, US President Ronald Reagan announced new economic sanctions against Libya banning trade, loans and travel to Libya by US citizens.

On April 15, 1986, US planes bombed targets in Tripoli and Benghazi, including Khadafy's Tripoli home. Libya said more than 40 people were killed, nearly all civilians, including Khadafy's 15-month-old adopted daughter.

Washington said the raid was a response to Libyan involvement in a blast at a West Berlin discotheque which killed two Americans.

Libya suffered wide international isolation after a Pan Am Flight 103 from London to New York blew up over Scotland in December 1988, killing all 259 people aboard the jumbo jet and 11 residents of the town of Lockerbie.

The United States and Britain accused Libyans Abdel Basset al-Megrahi and Al-Amin Khalifa Fahima of involvement and in 1992 the Security Council told Libya to surrender the suspects. Libya refused and sanctions were imposed on April 15 of that year.

Libya agreed in 1998 to the two standing trial in the Netherlands under Scottish law.

In 1999, the European Union suspended sanctions against Libya, although the US continued to apply similar measures.

Earlier this year Libya, in a letter to the Security Council, accepted responsibility for the Lockerbie bombing and agreed to pay compensation to the victims' families. In September, the Security Council voted unanimously to lift the sanctions on Libya but US sanctions remained. Washington signalled that it could ease some sanctions if Tripoli addressed US concerns on terrorism and weapons of mass destruction.

Also this year a charity headed by the son of Khadafy pledged to compensate victims of the Berlin disco bombing. Germany said it could encourage it to back lifting sanctions.

But a deal with France to compensate families of 170 people killed in the 1989 bombing of UTA flight 772, is yet to be agreed upon. Libya never acknowledged responsibility for the bombing.

Agencies via Xinhua

(China Daily 12/22/2003 page1)