On May 15, Secretary of State Condoleezza Rice announced that the United States was removing Libya from its list of state sponsors of terrorism and would soon resume normal diplomatic relations with the one-time pariah. Rice said the move was in response to "historic decisions taken by Libya's leadership in 2003 to renounce terrorism and to abandon its weapons of mass destruction (WMD) programs." Yet the resumption of diplomatic ties remains unsettling to some Americans. Though Libya has made a concerted effort to enter the good graces of the international community, leader Muammar el-Qaddafi has amassed a bad human-rights record since he took power in 1969.

In the early 1970s, Qaddafi established terrorist training camps on Libyan soil, provided terrorist groups with arms, and offered safe haven to terrorists, say U.S. officials. Among the groups aided by Qaddafi were the Irish Republican Army, Spain's ETA, Italy's Red Brigades, and Palestinian groups such as the Palestine Liberation Organization. Libya was also suspected of attempting to assassinate the leaders of Chad, Egypt, Saudi Arabia, Sudan, Tunisia, and Zaire (now Democratic Republic of Congo).

A Scottish court, convening in the Netherlands for reasons of neutrality, connected Libyans to the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, that killed 270 people on board. Qaddafi's regime was also implicated in the 1989 bombing of a French passenger jet over Niger in which 171 people died. In 1986, Libya sponsored the bombing of a Berlin disco popular among U.S. servicemen, killing two U.S. soldiers.

Also of concern was Libya's pursuit of WMD. As early as the mid-1970s Qaddafi expressed interest in gaining nuclear-weapons capability to match that of Israel. Libya has been accused of using chemical weapons against Chadian forces during clashes in 1986 and 1987.

One group that Libya never supported was al-Qaeda. As Libya expert Lisa Anderson told CFR.org's Bernard Gwertzman, al-Qaeda regards Qaddafi as "no better than the Saudi government, no better than any of these other governments that they hate." In fact, Qaddafi issued the first Interpol warrant for Osama bin Laden in 1998 for the killings of two German counterterrorism agents in Tripoli four years earlier.

Any nation the U.S. State Department deems a "sponsor of terrorism" faces a range of economic and trade restrictions from the United States. This includes a ban on imports and exports of arms as well as on dual-use items such as equipment that could be used to manufacture chemical weapons. The designated state is ineligible to receive any economic assistance, and U.S. citizens are forbidden from doing business there without express consent from the Treasury Department. Further, the United States suspends the foreign government's diplomatic immunity so that families of terrorist victims may file suit in U.S. courts.

The process of welcoming Libya "in from the cold" began in the late 1990s. The first significant step came in 1999 when, after prolonged negotiations with UN and UK representatives, Libya turned over two of its citizens to be tried in The Hague for their role in the Pan Am 103 bombing. Subsequently, Clinton administration officials, led by then-Assistant Secretary of State Martin Indyk, began secret negotiations with Libya. Writing in the Financial Times in 2004, Indyk recounts Libya's offers to surrender its WMD programs and cut ties to terrorist groups. The U.S. delegation did not accept the offers at the time because of the unresolved investigation into the Pan Am 103 bombing, Indyk says. Though Libya had turned over two Pan Am suspects, it had not accepted responsibility or compensated the families of the victims.

At the same time, Qaddafi increasingly moved to cut Libya's ties to terrorism. Starting in 1999, Qaddafi expelled the Abu Nidal Organization, closed Libya's terrorist training camps, cut ties to Palestinian militants, and extradited suspected terrorists to Egypt, Yemen, and Jordan. In the 2002 edition of the state sponsors of terrorism list, the State Department said Qaddafi had "repeatedly denounced terrorism."

In August 2003, after protracted negotiations with UN, U.S., and UK representatives, Libya finally agreed to pay some $2.7 million in compensation to the victims of the Pan Am 103 bombing. Days later, Libya delivered a letter to the UN Security Council accepting responsibility for the attack.

On December 19, 2003, Tripoli announced it would give up its WMD programs. Backchannel communications with U.S. and UK intelligence agencies had begun in 2002, and secret negotiations continued until just hours before the announcement, as Judith Miller reported in the Wall Street Journal. Furthermore, Libya pledged to allow monitors to verify the destruction of the program.

Despite Libya's renunciation of terrorism, several issues give cause for concern. In November 2003, Saudi officials uncovered a plot to assassinate Crown Prince (now King) Abdullah. Human rights monitors continue to rate Libya's record as poor. Though Qaddafi has softened somewhat since the first two decades of his rule—marked by televised hangings and book burnings—those who criticize the national leadership are still jailed. It remains a serious crime to discuss national policy with a foreigner, though prosecutions for such actions have declined. The fate of five Bulgarian nurses charged with deliberately infecting some four-hundred children with HIV drew international censure until their eight-year imprisonment ended in July 2007.

Despite its leadership's insistence to the contrary, Libya is far from being a democracy. Qaddafi's son and likely successor, Seif, has denied political aspiration, saying hereditary succession would be undemocratic. But as A.M. Zlitni, Libya's chief economic planner, told the New Yorker's Andrew Solomon, "'Democracy' here [in Libya] is a word that means the leadership considers, discusses, and sometimes accepts other people's ideas." Though that may be the case now, experts say Libya could liberalize in the coming decade, and the resumption of U.S. ties could serve to accelerate that process.

Just as Libya's concessions came in stages, so too did the incentives it received. In February 2004, U.S. officials reopened a diplomatic mission in Tripoli and lifted the travel ban preventing Americans from visiting Libya. Two months later, the diplomatic mission was upgraded to a liaison office. Just over a year later came the announcement that the United States would lift its sanctions and restore full diplomatic relations with Libya.

In October 2007 Libya was voted onto the UN Security Council as a nonpermanent member. Though Washington did not endorse Libya's candidacy, it did not block it either, as it had with previous attempts by Libya to join the Security Council in 1995 and 2000.

While experts continue to debate Qaddafi’s true motivation for abandoning his WMD, security concerns were certainly a factor: abandoning its WMD program actually provided Libya more security than continued pursuit of chemical or nuclear weapons. Another motive was economic. Bruce Jentleson, a Duke University professor and former foreign policy advisor to presidential candidate Al Gore, says Libyan leaders are “gaining economic benefits to deliver to their people,” and “a greater chance at domestic stability.”

This is the subject of much debate in the foreign policy community. Some suggest Qaddafi feared the Bush administration would invade Libya under the preemption doctrine pursued after 9/11. In the 2004 vice presidential debate, U.S. Vice President Dick Cheney said a byproduct of U.S. military action in Iraq and Afghanistan “is that five days after we captured Saddam Hussein, Muammar Qaddafi in Libya came forward and announced that he was going to surrender all of his nuclear materials.” Others see this more as coincidence than cause and effect. Martin Indyk, for instance, points to Libya’s willingness to abandon its WMD in 1999 as evidence that social and economic factors were at the root of Qaddafi’s decision. “The economic benefits of being a part of globalization were increasing,” says Jentleson. Indeed, pro-Western elements have sprung up among the upper echelon of Libya’s leadership. Seif Qaddafi, who is known to have influence among his father’s inner circle, has gently urged reform while expressing a desire to lure foreign investment and revitalize the Libyan economy.

“The backdrop of force was a factor, but not nearly the factor Bush and Cheney have portrayed it to be,” Jentleson says. “The real story was the diplomacy.” Another factor was intelligence. In the first installment of her Wall Street Journal article, Judith Miller reports Qaddafi’s decision to abandon his WMD was reinforced after U.S. officials gave Libya a compact disc containing recorded conversations between the chief of the Libyan nuclear program and representatives of the Khan network.