VZCZCXRO8075
OO RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHTRO #0036/01 0221740
ZNY SSSSS ZZH
O 221740Z JAN 08
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3002
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHLO/AMEMBASSY LONDON IMMEDIATE 0715
RUEHFR/AMEMBASSY PARIS IMMEDIATE 0408
RUEHRO/AMEMBASSY ROME IMMEDIATE 0370
RUEHNM/AMEMBASSY NIAMEY IMMEDIATE 0029
RUEHNJ/AMEMBASSY NDJAMENA IMMEDIATE 0122
RHEHAAA/NSC WASHINGTON DC
RUEHTRO/AMEMBASSY TRIPOLI 3452
S E C R E T SECTION 01 OF 03 TRIPOLI 000036
SIPDIS
SIPDIS
DEPT FOR NEA/MAG AND L (JSCHWARTZ)
E.O. 12958: DECL: 1/22/2018
TAGS: PGOV PREL PTER LY
SUBJECT: GOL SUGGESTS U.S.-LIBYAN BILATERAL TIES "GREATLY
COMPLICATED" BY UTA CASE DAMAGES AWARD TRIPOLI 00000036 001.2 OF 003 CLASSIFIED BY: Chris Stevens, DCM, Embassy Tripoli,
Department of State. REASON: 1.4 (b), (d)
1.(S) Summary: The recent decision by a U.S. judge to award roughly $6 billion in damages to families of seven Americans
killed in Libya's 1989 bombing of a French-operated UTA passenger plane has apparently caught the GOL off-guard and
angered elements within the GOL. The MFA told us the award would "greatly complicate" U.S.-Libya ties. In a letter to
the Secretary (septel), Secretary of the General People's Committee SIPDIS for Foreign Liaison and International
Cooperation (FM-equivalent) Abdhurrahman Shalgham requested USG intervention in the case on behalf of the GOL, as well
as intervention with the Congress to rescind a provision in the 2008 Defense Authorization Bill that would facilitate
lawsuits against states accused of sponsoring terrorism. The GOL intends to send a legal team to the U.S. soon to
discuss the UTA case and possibly other pending terrorism-related cases as well, according to the MFA. End summary.
THREE TIMES AS BIG AS PAN AM 103
2.(U) According to press reports, which also appeared in Arabic language media, U.S. District Court Judge Henry Kennedy
January 15 awarded approximately $6 billion in damages to families of seven U.S. victims killed the September 1989
bombing of French-operated UTA flight 772. The $6 billion award, to be paid by the GOL and six Libyan intelligence
officials convicted of involvement in executing the attack, is roughly three times the total compensation package in the
case of Pan Am flight 103. The UTA 772 award represents the value of the aircraft, compensation for pain and suffering
of the victims, compensation for the pain and suffering of the victims' families, compensation for expected earnings had
the victims lived and interest backdated to the date of the bombing. The GOL has until February 25 to appeal Judge
Kennedy's decision. As we understand it, if there is no appeal and/or negotiations on a settlement by February 25,
claimants can attempt to seize Libyan government assets to satisfy the judgment.
JUDGMENT A "CONSIDERABLE SHOCK" FOR THE GOL ...
3.(C) Former French Ambassador to Tripoli, Jean-Jacques Beaussou, a consultant for the UTA 772 claimants' counsel, U.S.
law firm Crowell & Moring, briefed the CDA and A/DCM January 16 on his efforts to engage the GOL on next steps in the case. He said the
GOL's direct liability is approximately $1.5 billion; the remaining $4.5 billion is to be paid by the six convicted
Libyan intelligence officers. Noting that the GOL decided last fall not to continue negotiations for an out-of-court
settlement for UTA 772 involving a much smaller damages award, he said Judge Kennedy's decision was a "considerable
shock" for the regime.
... WHICH IS SCRAMBLING TO FORMULATE A RESPONSE
4.(C) According to Beaussou, the GOL believed the proposed out-of-court settlement amount would have prompted families
of French victims, who settled in 2004 for approximately $170 million, to ask for more compensation. It also cited
concern about adverse Libyan public reaction to the proposed out-of-court settlement amount. Judge Kennedy's $6 billion
damages award suggests the GOL's calculus was flawed, creating a political problem for the GOL and exposing the GOL's
claims litigation committee headed by Ahmad Mesalati to criticism that it has bungled management of the case. Mesalati,
who is typically able to meet Beaussou in person, declined January 16, saying he first had to consult with key regime
figures, who were "surprised" by the award and were working to formulate a strategy.
POSSIBLE SCENARIOS
5.(C) Referencing conversations with counsel for the U.S. claimants, Beaussou speculated that the unanticipated size of
the judgment might constitute sufficient "shock therapy" to prompt the GOL to negotiate payment terms or, should it
appeal, an out-of-court settlement. Beaussou sees four possible scenarios for the GOL: 1) pay the damages (not a likely
outcome, in his view); 2) appeal the decision (also not likely in his view, as the GOL must deposit a sizeable portion
of the award in TRIPOLI 00000036 002.2 OF 003 an escrow account pending outcome of the appeal); 3) refuse to pay and
ignore the court's judgment (the most likely outcome in his view, and the most injurious to U.S.-Libyan relations); or
4) use the judgment as a pretext to work out a comprehensive compensation package covering all outstanding claims agains
the GOL in U.S. courts. Beaussou noted that option three (non-payment and ignoring the judgment) could allow claimants
to begin efforts to attach Libyan assets, including eight C-130 aircraft stored in Georgia, whose delivery to the GOL
was blocked in the 1970's and which have been a neuralgic issue for the GOL. (Note: Further discussion of the C-130's
during visiting AFRICOM General Herbert Altshuler's January 15-16 reported septel. End note.)
MFA: AWARD WILL "GREATLY COMPLICATE" BILATERAL RELATIONSHIP
6.(S) Ahmed Fituri, MFA Secretary for the Americas, flatly told the CDA and A/DCM January 17 that the UTA 772 decision
would "greatly complicate" relations. He noted that there were "several" senior-level GOL discussions January 16 that
lasted all day and involved - by phone or in person - Saif al-Islam al-Qadhafi, National Security Adviser Mutassim
al-Qadhafi, Prime Minister al-Baghdadi al-Mahmoudi, Foreign Minister Shalgham, Deputy External Security Organization
Chief Abdullah Sanussi and MFA Secretary for European Affairs Abdulati Obeidi. (Note: The involvement of NSA Mutassim
al-Qadhafi is potentially troublesome given his remarks in meetings last August and November with visiting NEA A/S Welch
and S/CT Coordinator Dell Dailey, respectively, to the effect that the GOL feels it has paid enough compensation in
claims cases and that the U.S. Congress should adopt legislation preventing any further claims. End note.) Fituri added
that another high-level meeting had been scheduled for late January 17 to continue discussions on how the GOL will
respond.
7.(C) Fituri offered his "personal opinion" that the planned visit of musician Robert McNamara, who received a PAS grant
to give guitar concerts and lead master classes in Benghazi and Tripoli in late January, was ill-timed in light of the
UTA 772 decision and recommended that we postpone. The "Libyan people" would not view favorably the confluence of the
UTA decision, McNamara's concerts and the upcoming General People's Congress (scheduled to open in mid-February), and
would wonder why the GOL was facilitating cultural exchanges at a time when it had been "insulted" by the UTA 772
judgment. The CDA told Fituri we'd take his remarks under advisement; we subsequently learned that the MFA had rescinded
McNamara's visa approval.
8.(C) In a follow-on January 21 meeting with CDA, Fituri said that the GOL response would comprise a letter from FM
Shalgam to the Secretary requesting the Administration's intervention with the court to facilitate a GOL appeal of the
judgment. According to Fituri, the court requires that the GOL make a large deposit upon appeal; the GOL would like to
avoid making this payment by way of a USG guarantee to the court. Shalgam would also request that the Administration
intevene with the Congress to rescind a provision in the 2008 Defense Authorization Act known as "the Lautenberg
Amendment." This provision facilitates private lawsuits against states accused of sponsoring terrorism, in particular by
making it easier for victorious claimants to seize foreign government assets. The GOL would also send a team of "three
or four" lawyers to the U.S. to discuss the UTA case and perhaps other cases (i.e., La Belle) with the claimants'
lawyers. The team will be headed by litigation claims chair Mesalati, who is scheduled to travel to the U.S. on January
23.
COMMENT
9. (S) The Shalgam letter to Secretary Rice is vague as to what the GOL wants and intends. It does not specifically
mention an appeal nor does it specifically state that the GOL is sending the team of lawyers. It remains unclear to the
Embassy why the appeal option seems to be preferred if the same result -- delaying the day of judgment and negotiating a
favorable payment -- could be attained by beginning a negotiation with the claimants' lawyers. This would elimiinate the
need for a large deposit with the court. It may be that the GOL assesses that it can come to a more favorable out of
court settlement with an appeal pending.
10.(S) After a four-month period of relatively good bilateral cooperation bracketed by NEA A/S Welch's August 2007 visit
and FM Shalgham's January 2008 trip to Washington, we may be on the cusp of another downturn in relations, unless the
GOL engages TRIPOLI 00000036 003.2 OF 003 seriously on the UTA case. We made the point to Fituri that the thrust of FM
Shalgham's recent visit to Washington and our senior-level discourse was to broaden and deepen bilateral ties in a way
that made them more durable and less subject to lingering issues like the claims cases. Fituri was polite, but made it
clear that the quarters of the GOL that really count continue to interpret developments such as the UTA 772 decision as
political signals and may retaliate by putting the brakes on the kind of broader engagement we seek. This would not
augur well for our efforts to move forward with education and economic reform programs, a human rights dialogue,
counter-terrorism finance training and other forms of expanded cooperation. STEVENS MILAM 0 01/22/2008 9883
PGOV,PREL,PTER,LY GOL SUGGESTS U.S.-LIBYAN BILATERAL TIES "GREATLY COMPLICATED" BY UTA CASE DAMAGES AWARD TRIPOLI
00000036 001.2 OF 003 The recent decision by a U.S. judge to award roughly $6 billion in damages to families of seven
Americans killed in Libya's 1989 bombing of a French-operated UTA passenger plane has apparently caught the GOL
off-guard and angered elements within the GOL. The MFA told us the award would "greatly complicate" U.S.-Libya ties. In
a letter to the Secretary (septel), Secretary of the General People's Committee SIPDIS for Foreign Liaison and
International Cooperation (FM-equivalent) Abdhurrahman Shalgham requested USG intervention in the case on behalf of the
GOL, as well as intervention with the Congress to rescind a provision in the 2008 Defense Authorization Bill that would
facilitate lawsuits against states accused of sponsoring terrorism. The GOL intends to send a legal team to the U.S.
soon to discuss the UTA case and possibly other pending terrorism-related cases as well, according to the MFA.