The release of Abdel Basset Ali Al-Megrahi from a Scottish jail has opened cash spigots from Tripoli to London, but a Justice Department spokesman says the Libyan Pan Am 103 bomber could be arrested again, along with other unnamed conspirators.

"There remains an open indictment in the District of Columbia and an open investigation," Richard Kolko, an FBI agent and Justice Department spokesman, told SpyTalk Thursday.

Speculation mounted Wednesday about the imminent release of Abdul Baset Ali al-Megrahi, the lone Libyan convicted in connection with the 1989 terrorist bombing of PanAmerican flight 103, following a prison visit by the Scottish Justice Secretary.

The Bush administration's plan for a quick resumption of relations with oil-rich Libya spent another day in limbo Thursday, idled by Muammar el-Qaddafi's failure to pony up the nearly $2 billion he still owes to the American victims of his terrorist plots in the 1980s.

The erratic dictator promised to pay the money in exchange for the resumption of full diplomatic relations in a deal negotiated last month with U.S. Secretary of State Condoleezza Rice.

Because of Qadaffi's failure to make deposit this week, the Senate Foreign Relations Committee Wednesday refused to consider the nomination of State Department official Gene A. Cretz to be ambassador to Libya, the first U.S. envoy there since diplomatic relations were broken in 1980.

Despite all the warm fuzzies between Condoleezza Rice and Muammar el-Qaddafi in Tripoli  last week, there can be little optimism that Libya will make final payments to relatives of the hundreds of Americans killed in the PanAm 103 and LaBelle discotheque terrorist attacks anytime soon.

 

The Bush administration has said repeatedly that Libya's bizarre dictator must finish making promised payments to the families before normal relations can resume.

 

The Comprehensive Claims Settlement Agreement that Secretary of State Rice negotiated with the erstwhile rogue obligates Libya to put up $1 billion in compensation to the families in return for the normalization of relations with Washington.

 

But the agreement has no timetable or deadline. And none of the funds, which Libya originally promised to pay in 2003, have shown up.

 

There's little reason to be optimistic they will anytime soon. Qaddafi has a history of discarding his promises once he gets what he wants.

 

And now he's laughing about it.

 

After he renounced his nuclear weapons program in 2006 -- which a number of experts say was going nowhere anyway -- the Bush administration announced it was removing Libya from its list of state sponsors of terrorism. Qaddafi promptly ditched a near-agreement with a lawyer for families of the LaBelle discotheque bombing for final payments.

 

When the State Department moved last summer to exempt Libya from suits filed by victims of its terrorist attacks, critics cried that the Bush administration was systematically removing incentives for Qaddafi to pay up.  

 

Meanwhile, even before Rice and Qaddafi were televised beaming at each other last week, the dictator's son, a powerful official in his own right, was denying any responsibility for the bombing of Pan Am 103, which was blasted out of the air over Lockerbie, Scotland in 1989, killing all 270 aboard, including 180 Americans.

 

Saif al-Islam Qaddafi said Libya had accepted responsibility for the attack -- but only to get international sanctions lifted.

 

"It doesn't mean that we did it, in fact," he told the BBC in a little-noted program broadcast Aug. 31, calling the victims' families "very greedy" for pursuing their claims.

 

"They were asking for more money and more money and more money," said Junior, who is expected to succeed his father on the throne someday.

 

Only months earlier Muammar Qaddafi himself had bragged publicly that he'd squeezed  as much money out of American oil companies for the rights to drill in Libya as he'd paid out in claims.

 

"We have paid off the compensations to the victims' families but the US oil companies, which wanted to enter our country had to pay such fees that they brought this money back to Libya," he said in a speech. "So, what we gave with the right hand was later taken with the left."

 

A State Department spokeswoman, Ann Somerset, told me Monday that the department remains "optimistic" that Qaddafi will pay up, emphasizing that the normalization of relations with Libya, with all its commercial and political benefits, will not go forward "until the entire amount" has been paid.

A lawyer for 38 American victims of a quarter century old Libyan terrorist attack says he's not joining the celebration over a Senate bill that seemed to open the door to a restoration of full diplomatic and business relations between Washington and the erstwhile rogue state.

Attorney Thomas  Fay, who represents victims of the La Belle discotheque attack carried out against GIs in West Germany by Libyan agents in 1986, says he will not remove the liens he filed against American companies who have budding business relations with the North African police state ruled by Muammar Qaddafi.

Last week Congress unanimously approved legislation, enthusiastically backed by the White House and an organization representing families of the 180 Americans killed in 1989 by Libyan agents' sabotage of PanAm Flight 103, which would establish a universal settlement mechanism to resolve all U.S. cases of Libya's terrorism.    

Kara Weipz, spokesperson for the Families of the Victims of Pan Am 103, applauded the legislation as "a final step toward resolving the last payment by Libya.  The Pan Am 103 families urge Secretary Rice to act swiftly and finalize an agreement with Libya that fairly resolves all claims against Libya."    

But Fay, who represents 38 of the La Belle victims, denounced a statement by Washington  superlawyer Jacob Stein, another lawyer representing Libyan victims, that seemed to speak for all the La Belle families as well as the PanAm 103 victims.

"Stein had no authority from my clients to make an announcement in which they purported to speak for all of the La Belle victims," Fay told me.

He added, "No liens will be released until all of our clients are paid."

In March, Fay filed liens that put such as firms as Blank & Rome, the Livingston Group and White & Case on notice that assets from Libyan contracts could be seized to compensate victims of terrorist attacks that have been linked to their new client, Libya.  
   

"Former congressman Curt Weldon is helping broker deals between Russian and Ukranian weapons suppliers and the Iraqi and Libyan governments as part of his new job with a private American defense consulting firm," says Weinberger, author of A Nuclear Family Vacation: Travels in the World of Atomic Weaponry.

Weldon did not respond to e-mails and phone requests to be interviewed or comment for this article. But in a 2006 interview, before the FBI probe was public, Weldon spoke enthusiastically about setting up a "front company" to work with the Russian arms agency, Rosoboronexport. Weldon hoped this company could sell weapons to the Middle East, and other regions, particularly to countries where the U.S. has strained relations. He claimed the director of Rosoboronexport approached him to work with "an American company that would act as a front for weapons these nations want to buy."