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.

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.