By Keith B. Richburg
Washington Post Foreign Service
Saturday, January 10, 2004; Page A01

PARIS, Jan. 9 -- Libya formally agreed Friday to pay $170 million in compensation to the families of people killed when a French airliner blew up over the Sahara more than 14 years ago. The deal was the latest step by Moammar Gaddafi, the Libyan leader, to try to end his country's long international isolation and shed his image as one of the principal sponsors of anti-Western terrorism in the 1980s.

In an accord signed at a Paris law office after years of negotiations, Libyan representatives admitted no responsibility for the 1989 downing of UTA Flight 772, which exploded over Niger en route from Brazzaville, Congo, to Paris, scattering debris over 50 square miles of desert. But the Gaddafi Foundation, a nominally private charity headed by Gaddafi's son, Saif Islam Gaddafi, agreed to give families $1 million for each of the 170 people who were aboard the plane.

A French court ruled that Libyan agents destroyed the DC-10 airliner with a bomb. Western intelligence agencies concluded that the bombing was intended as retaliation for French military aid to the government of Chad, which at the time was fighting Libyan-supported insurgents.

The compensation is to be paid in four installments over the next six months, and the first $42.5 million was transferred today. The money is in addition to $34 million that Libya paid to the French government in 1999 in connection with the flight.

The dead were from 17 countries, including the United States; Bonnie Barnes Pugh, wife of the U.S. ambassador to Chad, was among them. France had the largest number of victims, 54, and took the lead in keeping the case alive before the United Nations.

Still, UTA 772 had become known among victim groups here as "the forgotten flight," because the case never received as much attention as the bombing of Pan Am Flight 103 over Lockerbie, Scotland, nine months earlier. That attack killed 270 people, most of them Americans. An international court later convicted a Libyan intelligence agent.

The French government was technically not a party to Friday's agreement, signed by the Gaddafi Foundation and representatives of the families, a French group representing victims of terrorism and a French state-run bank that will handle the transactions. But French officials view closure of this case as allowing them to begin normalizing relations with Libya.

That was underscored by the presence here of the Libyan foreign minister, Abdel-Rahman Shalqam, who met later in the day with French Foreign Minister Dominique de Villepin. The two sides promised to work to restore bilateral ties. "All of our relations will benefit from a new dynamism from today, this new stage that's opening," de Villepin told reporters.

Shalqam called the deal "an important accord that opens the way to new perspectives," and said he hoped for a "progressive normalization" of relations between Tripoli and Paris.

The settlement came three weeks after Libya announced that it would halt efforts to acquire weapons of mass destruction and would open the country to international weapons inspections. Gaddafi has also promised to launch a campaign to persuade other Middle Eastern countries, including Iran, to give up nuclear ambitions.

But in the 1980s, the man known in Libya as "Brother Colonel" became the number one nemesis of the Reagan administration, which saw him as a prime sponsor of world terrorism. U.S. warplanes bombed the country in 1986 after explosives blamed on Libyan agents killed two U.S. soldiers and a Turkish woman at a nightclub in West Berlin. The Libyan economy has faltered under years of international sanctions.

After the downing of the UTA flight, a French investigating judge, Jean-Louis Bruguiere, spent more than eight years reconstructing the bombing. He traveled to Libya in 1996 and met with Gaddafi. Bruguiere concluded that the plane was blown up by a plastic explosive known as pentrite that was smuggled aboard the plane in a suitcase. He used the remains of detonator wires to trace the bomb back to Libyan intelligence agents.

In March 1999, a French court in Paris convicted six Libyans in absentia -- including Gaddafi's brother-in-law, Abdallah Senoussi, and several leading Libyan intelligence officers -- and sentenced each to life in prison. But Libya maintained that the men were innocent and that it had nothing to do with the bombing, and it refused to hand over the suspects.

Nonetheless, in July 1999, Libya paid the French government $34 million in compensation for the UTA flight, part of which went to families of victims. Last year, the families called for additional payment after Libya agreed to pay far more -- $2.7 billion, or $10 million per victim -- in connection with the Lockerbie bombing. To pressure Libya, the French government held up a vote at the United Nations on lifting sanctions.

Saif Islam Gaddafi, 34, said in a recent interview in the French newspaper Le Figaro that the then-pending compensation agreement for the UTA flight "was just part of an overall settlement with France."

Amounting to $1 million per victim, the package is still far below what Lockerbie families will get. But a spokesman for the UTA families said the difference will not be as great after lawyers' fees and U.S. government taxes are subtracted from the Lockerbie amounts.

"This shows that Libya is changing, has changed," said Guillaume Denoix de Saint-Marc, a spokesman for the families, who lost his father in the bombing. "We're happy with this." In Brazzaville, capital of Congo, a spokesman for the families of the 49 Congolese victims also said he was satisfied with the settlement, according to the Associated Press. But in Paris, a lawyer claiming to speak for the families of a dozen Congolese victims said "it is out of the question to accept less than the $10 million paid for the Americans."