Libya has agreed to compensate more than 160 victims of the 1986 bombing of a West Berlin nightclub on Tuesday, making another major step toward ending its international isolation.

The Libyan ambassador to Germany, Said Abdulaati, told Reuters the compensation would total US$35 million, a figure later confirmed by the German government.

Chancellor Gerhard Schroeder's spokesman Bela Anda said the deal would enable Germany and Europe to improve economic and political relations with the oil-rich North African nation and that Schroeder would shortly travel to Tripoli.

Two US soldiers and a Turkish woman were killed and more than 200 people injured in the explosion at "La Belle," a disco popular among US soldiers. The compensation covers non-US victims only.

A German court ruled in 2001 that the Libyan secret service was behind the bombing and convicted four people, including a former Libyan diplomat.

"In accordance with its European partners Germany advocates a new quality in the relations between the European Union and Libya," Schroeder's spokesman Anda said after the deal.

Abdulaati said the deal would improve relations between Libya and the European Union and told Reuters that Schroeder was planning to visit Tripoli "in the next weeks."

Germany and Libya will also hold a bilateral business forum there November 28-30.

The deal was negotiated by German lawyers and members of Libyan leader Muammar Gaddafi (news - web sites)'s charitable foundation.

Payouts to US victims and their families are the subject of separate legal action in the United States.

The ambassador said the relatives of the Turkish woman would receive US$1 million.

A spokesman for lawyer Ulrich von Jeinsen said 11 people who were severely injured would receive US$350,000 and the other victims US$190,000. Both amounts are less than half what the lawyers had demanded as recently as Monday.

The formal agreement on the compensation will be signed on September 3, the spokesman said. The ambassador said this would be done in Tripoli.

Libya has taken significant steps to win over western countries and end three decades of international isolation.

Gaddafi announced in December he was renouncing weapons of mass destruction, a promise which helped earn him a visit to Brussels for talks with EU officials.

Libya has already agreed to pay US$2.7 billion to families of victims of the 1988 Lockerbie airliner bombing (news - web sites), for which a Libyan secret agent was convicted. It has also pledged US$170 million compensation for the 1989 bombing of a French airliner over Niger.

(China Daily August 11, 2004)