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.