AT a Middle East economic conference in Casablanca earlier this month, Turkish Prime Minister Tansu Ciller received an unexpected call. Libyan leader Col. Muammar Qaddafi requested that she visit Libya on her way home to Ankara.
Two days later, in a late-night meeting in Libya, Colonel Qaddafi made an offer he asked Ms. Ciller to convey to Washington.
Qaddafi would ``accept'' the Middle East peace process and turn over two Libyans accused of planting the bomb that destroyed Pan American flight 103 over Lockerbie, Scotland, in 1988. In return, he wanted the United States to lift its economic sanctions on Libya and allow the two suspects - both Libyan intelligence agents - to be tried in a neutral country.
The meeting was not the first time Qaddafi made such an offer, which US officials regard as a complete nonstarter. But it provides new evidence that years of economic and political isolation have taken a significant toll on Libya and on its enigmatic leader, who has ruled his desert nation since 1969.
``He's in desperate shape,'' says Henry Schuler, director of the energy and natural security program at the Center for Strategic and International Studies (CSIS) in Washington. ``He's trying anything and everything to find a way out of the UN sanctions.''
US sanctions were imposed on Libya in 1973 and later strengthened in response to Qaddafi's support of terrorism. The sanctions were reinforced by the United Nations after Qaddafi refused to extradite the two bombing suspects for trial in Scotland, where 259 people, including 188 Americans, were killed four days before Christmas.
Even though the UN sanctions do not bar the export of oil and Qaddafi's far-flung international business interests are prospering, the sanctions, economic mismanagement, and corruption are taking a heavy toll on the Libyan people, according to Libya experts and media reports. Government, civilian, and military workers haven't been paid in months. Medical care has deteriorated. Water supplies are contaminated.
Libya's isolation has been deepened by the Middle East peace process and was underscored when Qaddafi was not invited to participate in the Morocco conference at which most other Arab nations were represented.
Six years after the Lockerbie incident, the families of the victims remain deeply angered that the Libyan leader has been spared justice for an event that claimed more American lives than the Gulf war.
Diplomatic analysts say the main reason is that each of several possible courses of action against him has an unacceptable downside:
* Unilateral military action against Libya would be enormously costly for the US and would be greeted with a storm of international protest.
* Stepped-up US pressure on the UN Security Council to add oil to the Libyan trade sanctions would jeopardize consensus among the five permanent members on other issues - notably Bosnia and Iraq - that the US considers more important.
* Appeals to European nations on a bilateral basis to embargo Libyan oil are of doubtful utility because of the substantial profits the Libyan connection provides to European businessmen.
The US is also reluctant to pressure Egypt, which has been a conduit of embargoed goods, including spare aircraft parts, to Libya.
Reluctance to press Egypt
Convinced that Egypt is his only bridge to the West, Qaddafi has come to rely on President Hosni Mubarak to make his case with the US for dropping sanctions and getting him off the hook for past acts of terrorism.
Mr. Mubarak also helped Qaddafi by ensuring that Libyan opposition figures are not allowed to operate on Egyptian territory. For example, Mubarak declined to conduct a serious investigation into the disappearance of Mansur Kikhiya, a leading Libyan dissident, who was abducted in Cairo last December.
In return, Qaddafi has provided generous rewards. He accepted hundreds of thousands of Egyptian guest workers into Libya, easing Egypt's severe unemployment problem. He also steered handsome profits to men close to Mubarak, who have been enlisted as agents of Libyan investment abroad, according to well-informed Libyan sources.
In an effort to win influence in the Mubarak government, these sources say, Qaddafi allowed state-controlled companies to give one of Mubarak's sons a lucrative monopoly over the import of construction steel.
``The relationship provides stability for both countries,'' says Mamoun Fandy, an expert on Egypt and Libya who teaches at Mount Mercy College in Iowa. ``If Mubarak can't have Egyptian workers in Libya, the Islamic threat to Egypt will increase considerably. If Qaddafi doesn't have an outlet through Mubarak, that will be the end of his regime.''
Mindful of the key role Mubarak has played in the Middle East peace process and of the pressure he is under from radical Islamists, the US is reluctant to lean harder on Mubarak to cut ties with the Qaddafi government.
``Egypt's message is, if you hurt Qaddafi you're hurting us, and if you hurt us, you're hurting US policy in the region,'' Dr. Fandy says.
The collapse of Qaddafi's regime could pinch in another way, Fandy says. What little opposition to Qaddafi inside Libya exists comes from Muslim extremists. An Islamic successor regime would not only support and provide sanctuary for Egyptian Islamists. It could also serve as a bridge for well-organized Islamic extremists in Algeria to provide money, training, and weapons to their Egyptian counterparts.
Clouds behind Qaddafi
``If Qaddafi falls, Libya's tremendous oil revenues could help fund Islamic revolutions,'' Fandy says. As much as Qaddafi would like to break out of the sanctions, he is unable to pay the asking price by extraditing the bombing suspects for trial in Scotland, where they would be accessible to questioning by US and British intelligence.
If Qaddafi turned over the two agents, he would almost certainly weaken the morale of the Libyan internal security forces at a time when he needs them most. Under threat of the death penalty if they did not cooperate, moreover, they would almost certainly point the finger at Qaddafi himself, who many experts believe directly ordered the terrorist attack.
``This is not state-supported terrorism,'' the CSIS's Henry Schuler says. ``It's state-perpetrated terrorism.''
``There can be no compromise on the need for trying the suspects in a Scottish court under Scottish law,'' says a senior State Department official, commenting on Qaddafi's latest offer.
``We are absolutely opposed to any alternative trial venue,'' he adds.