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"At this rate, [Libyan leader Muammar] Gadhafi will soon establish relations with Israel," a Libyan opposition activist living in Switzerland told Haaretz yesterday in response to the news that Libya and the United States had renewed diplomatic ties.

"I would also not be surprised if Israelis were behind this renewal of relations," he added.

But to judge from the comments made by David Welch, Assistant Secretary of State for Near Eastern Affairs, the foremost reason for renewing ties with Libya is because it serves American interests. "When states adhere to international norms, they reap benefits," he said, hinting at a message for Iran.

It is doubtful that this American diplomatic move would have taken place at this time were it not for the crisis with Iran. After all, it has been three years since Libya gave the United States boxes full of its plans for producing nuclear energy and purchasing nuclear weapons. Two years have passed since Washington lifted its embargo on Libya and permitted American firms to begin drilling in the country's derelict oil fields. In fact, the U.S. could have continued with the "test period" it imposed on Libya for another year or two, or expedited the renewal of ties by a similar period.

Libya, for its part, met Washington's conditions during this test period. Even when Gadhafi criticized American policy, he did so in low tones. He frequently scoffed at the Arab League for its criticism of the Iraq war, and he barked at other Arab leaders for failing to assist the Palestinians. Half jokingly, he suggested that Israel be invited to join the Arab League.

"Gadhafi has become the Arab threat to the Arab League's existence in a united form," a Jordanian analyst said. "In some cases, he nearly caused [league] summits to collapse. Arab leaders, who normally scoff at his shenanigans, know that Gadhafi can instantly put them to the test if he decides to pull out of the league."

He did this three years ago, and he threatened to do it again during the most recent Arab League summit in Khartoum. In each of these instances, Egypt's Hosni Mubarak had to convince his neighbor not to cause the breakup of the pan-Arab forum.

No wonder that as soon as the news broke that Libya and the U.S. had reestablished ties, the Arab League rushed to issue a statement supporting the development, and its spokesmen went so far as to say that Libya should be compensated for the long years of sanctions. Compensation will not be given, but the rehabilitation and development of its oil fields, estimated to hold the eighth largest petroleum reserves in the world, will certainly give it an enormous economic boost. This kind of growth may elevate it to the same stature as the other wealthy Arab states, and thus to the position of a diplomatically influential state.

Still, Gadhafi is the longest ruling Arab leader, and Libya continues to be ruled under a system that is far from democratic. On the face of it, Libya is a people's republic whose leader is first among equals, but in reality, it is one of the harshest dictatorships, where basic freedoms are near absent.

For years, American governments saw Gadhafi as another Saddam Hussein and the dismal condition of democracy in both countries as equivalent. Nevertheless, the U.S. complained about Gadhafi's support for terrorism and his nuclear plans, not his dictatorship. This attitude worries Libyan opposition groups, who consider the renewal of relations between Libya and the U.S. as a major blow to human rights.