The families of the 180 US victims of the bombing of Pan Am flight 103 over Lockerbie, Scotland, say they have received full compensation from Libya.
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Libya paid $1.8bn (Ј1.2bn) in October into a fund to compensate victims of the 1988 bombing - which killed 270 people - and other attacks.
The payment has cleared the last hurdle to restoring full diplomatic relations between the US and Libya.
"Today is historic because Libya has finally fulfilled 100% justice to the Pan Am 103 families," said Kara Weipz, whose brother was killed on the flight.
"We are now free to close this chapter in our nightmare."
Terrorism renounced
Earlier this week, President George W Bush said a "painful chapter" between the two countries was closing.
He made the remarks after speaking on the phone to Libyan leader Muammar Gaddafi.
From the fund, $1.5bn will be used to cover compensation claims for the 1988 Lockerbie bombing as well as the 1986 bombing of a German disco.
The Lockerbie bombing killed all 259 people on board the flight, as well as 11 people on the ground.
Three people died and more than 200 were wounded in the attack in Germany.
Another $300m from the fund will go to Libyan victims of US airstrikes ordered in retaliation for the disco bombing.
Mr Bush has already restored Libyan immunity from terror-related lawsuits and dismissed pending compensation cases in the US.
Libya's relations with Western countries have opened up since 2003, when Mr Gaddafi renounced international terrorism and efforts to develop weapons of mass destruction, ending decades of isolation.
Last week, a Scottish appeal court rejected a bail application from Abdelbaset Ali al-Megrahi, the Libyan man convicted of the Lockerbie bombing.
(BBC)
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