Libyan strongman Muammar Gaddafi agreed last week to pay up to $5 million to relatives of each of the 270 victims of Pan Am Flight 103, downed over Lockerbie, Scotland, in 1988. He also sent a statement to the U.N. Security Council in which his country renounced terrorism and accepted responsibility for the actions of a Libyan spy found guilty of blowing up the aircraft. A U.S.-backed agreement calls on the U.N. to permanently lift sanctions on Libya, which were suspended in 1999 after Gaddafi handed over two suspects.
But it's not a done deal yet, thanks to a familiar U.S. nemesis. France has threatened to veto the plan when it reaches the Security Council. Its beef: Libya has paid only $3,378 to $33,780 apiece to the relatives of 170 people killed in another Libya-backed terrorist attackon a French airliner in 1989. Paris' stance has not won it any new friends in Washington. Secretary of State Colin Powell, sore over France's opposition to the Iraq war, privately warned his French counterpart last week not to veto the deal.
Even if the French wind up acceding, families of the Lockerbie victims may not see all the money called for under the agreement. U.S. sanctions on Libya remain in force, and the country is still on the State Department's list of state sponsors of terrorism. Those two restrictions must be lifted before the families of the victims can collect an additional $5 million apiece, according to an agreement they negotiated separately with Tripoli. But there are no signs the U.S. is about to relent. A senior U.S. official tells TIME that Washington still has grave concerns about Gaddafi's illicit nuclear-weapons program--and what the official calls the leader's "active and robust" stockpiles of chemical and biological weapons. --By Unmesh Kher and Adam Zagorin