US lifts Libya sanctions

US President George W Bush lifted the trade embargo on Libya Monday, which would permit direct flights between the two countries and unfreeze $ 1.3 billion in Libyan assets in the US, report agencies.

The step is seen as a reward for Libya's decision last year to abandon its nuclear, chemical and biological weapons programs. But Libya still remains on the US list of states that sponsor terrorism, which means Washington cannot open an embassy in Tripoli.

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"At the beginning of this process,

the president committed to respond to concrete Libyan actions in good faith," said White House spokesman Scott McClellan. The president had promised last year to work with Libya so that it could "regain a secure and respected place among the nations and, over time, better relations with the United States," he pointed out.

The lifting of the trade embargo would also provide "a level playing field for US businesses in Libya," he added. Libya has huge oil reserves.

Lauding Libyan leader Muammar Gaddafi's commitment to disarm, a State Department spokesman said Libya had also pledged "to halt military trade with countries of proliferation concern and increased our understanding of the global black market in the world's most dangerous technologies."