France, Libya sign UTA bomb compensation pact

France and Libya pledged to boost their links yesterday after families of 170 people killed in the 1989 bombing of a French UTA airliner blamed on six Libyans signed a $170 million compensation deal with Tripoli.

The pay-out was signed in Paris by a representative of a private fund run by the son of Libyan leader Muammar Gaddafi, marking Libya's latest step to mend relations with the West.

French Foreign Minister Dominique de Villepin and his Libyan counterpart, Mohamed Abderrhmane Chalgam, met afterwards and signed a joint declaration on boosting diplomatic and economic ties as part of Libya's wider rapprochement bid with the West.

"This is a new era dawning," Mr Villepin told reporters. He added that he hoped French businesses could now "participate fully in the envisaged opening of the Libyan economy".

France and Libya have diplomatic ties and some French firms carry out business in the North African country, but Mr Villepin said relations between them could enter a new phase now the dispute over compensation was resolved.

"We will, in particular... conduct a deeper political dialogue in favour of peace, and notably in favour of development of the African continent," Mr Villepin said.

"Our relations were good, now they will be excellent," said Mr Chalgam, who added that during his trip to Paris he had already discussed with French business leaders ways in which they could boost their presence in Libya.

The pay-out total, clinched late on Thursday by family representatives and Libyan negotiators, falls short of the $2.7 billion pay-out agreed by Libya last year for 270 victims of the 1988 bombing of a Pan Am airliner over Lockerbie, Scotland.

Guillaume Denoix de Saint-Marc, who lost his father in the attack, said the gap between the French deal he helped negotiate and the Lockerbie pay-out was not as large as it seemed.

He estimated 40 to 60 per cent of the Lockerbie compensation would go to legal fees and a further 10 per cent in federal taxes. He reckoned the Lockerbie families would end up with at most $2 million each.

"The Lockerbie deal made us realise they were deaths which were seen as more important financially than our deaths," said Danielle Klein, whose brother Jean-Pierre died in the UTA crash.

"At least now, we are receiving compensation worthy of the name - it's not the jackpot, but it's a decent amount."

The UTA pay-out is expected to be shared among families of victims of 17 nationalities, including Africans, Americans, Britons and Italians who were on board the UTA plane when it was bombed over the West African state of Niger.

Mr Chalgam was due to meet French President Jacques Chirac later yesterday.

France convicted six Libyans in absentia for the UTA attack, but Tripoli has always denied responsibility for the bombing and insisted it would not match the amount of the Lockerbie pay-out.

Since the Lockerbie deal, Libya moved further to improve ties with the West by pledging in talks with Washington and London last month to scrap its banned arms programmes. France insisted a UTA settlement must be part of any reconciliation.

The Paris government threatened last year to veto the lifting of UN sanctions on Libya unless Tripoli upped its initial $34 million UTA settlement offer, later relenting after Libya pledged to do so.

Libyan officials have insisted in the past that France recognise the innocence of the six Libyans convicted of the attack, but Mr Chalgam indicated that call had been dropped.

"For us the affair is closed... One should leave legal matters to legal institutions," he added, reflecting a French view that it could not alter the verdict of a court in France.