Secretary of State Condoleezza Rice Friday hailed Congressional approval of legislation aimed at settling remaining compensation claims from Libyan-backed acts of terrorism in the 1980s. Libya has agreed to put up about $1 billion in new compensation money. VOA's David Gollust reports from the State Department.

U.S. Secretary of State Condoleezza Rice

Rice is applauding votes by the House and Senate that will implement the U.S. side of a deal with Libya intended to clear away compensation cases that have been blocking full normalization of relations.

As Congress rushed to begin its August recess Thursday, the two chambers, within hours of each other, approved legislation creating a new U.S.-administered fund to compensate victims, while giving Libya immunity from additional terrorism related lawsuits.

Libya agreed in 2003 to accept responsibility, and pay compensation for, past acts of terrorism including the 1988 bombing of a U.S. Pan Am Jetliner over Lockerbie, Scotland that killed 270 people.

Libya agreed to provide $10 million to the families of each Lockerbie victim in a phased payout linked to normalization steps with Washington.

It has paid out most of the money but the process has stalled amid legal disputes between the Tripoli government and lawyers for the Lockerbie families.

Under a newly-negotiated deal with Washington, Libya is putting up another $1 billion in compensation money to be distributed by the new entity created by the legislation.

Echoing remarks by Secretary Rice, State Department Acting Spokesman Gonzalo Gallegos said the Congressional action will help the United States and Libya turn a new page in their relations.

"Yesterday Congress passed important legislation that will further efforts to obtain fair compensation for American citizens in their claims against the Libyan government. The State Department hopes administration efforts, working with the Congress, will help our fellow citizens close a painful chapter in their lives. The United States also looks forward to expanding its relationship with Libya and its people, as we resolve contentious issues from the past," he said.

Gallegos said after President Bush signs the legislation, U.S. diplomats will meet with Libyan officials to complete the compensation plan.

Under the arrangement, Libya is setting aside more than $500 million to pay remaining claims from the Lockerbie bombing, nearly $300 million for the 1986 bombing of a Berlin disco, and additional funds for other terrorist incidents blamed on Libya.

The United States restored diplomatic relations with Libya in 2006. But members of Congress concerned about compensation issues have prevented a U.S. ambassador from taking up residence in Tripoli and have blocked funds for building a new U.S. embassy.

While Libya's foreign minister has visited Washington, Secretary Rice has refrained from visiting Libya in the absence of closure on the compensation cases.