Gaddafi Readies His Checkbook

By Adam Zagorin

Libyan strongman Muammar Gaddafi has long insisted his country had nothing to do with the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, even after last year's conviction of a Libyan intelligence agent for involvement in the attack. But according to a letter obtained by TIME, Gaddafi will make a "substantial formal offer" to compensate families of the 270 victims within a month. The April 23 letter to families was written by New York City attorney James P. Kreindler, who has been in Paris negotiating with senior Libyans behind closed doors. Kreindler's missive does not predict how much money Gaddafi will put on the table. However, a number of estimates place the figure as high as $3.5 billion.

There is a catch, and it's a big one. If Gaddafi pays compensation and also admits Libyan responsibility for the crime, he will expect in return a resumption of oil trade and other commerce currently prohibited by U.S. sanctions and, eventually, renewed diplomatic relations with Washington. But that may not be so easy, especially since a recent CIA report says Libya is aggressively seeking weapons of mass destruction, notably chemical arms and ballistic-missile delivery systems. "The President has made absolutely clear that these weapons will not be tolerated," a senior Bush Administration official tells TIME. "That means, very simply, that removing sanctions from a country like Libya, which is trying to obtain them, is not going to happen, no matter how much money Gaddafi is prepared to offer."

--By Adam Zagorin