Al-Qaeda’s second in command, Ayman al-Zawahiri, announced Fighting Islamic Group in Libya joining al-Qaeda; called for holy war against North African leaders and their allies 3 November.

At least 10 killed in riots outside Italian consulate in Benghazi 17 February after Italian reform minister Roberto Calderoli appeared on television wearing t-shirt depicting Danish newspaper cartoons of Prophet Mohammed. Libyan Interior Minister Nasr al-Mabrouk suspended as investigation launched into police conduct during riots.

European Union lifted sanctions and eased arms embargo 11 October as part of ongoing improvement in relations. Germany and Italy expressed keenness to set up immigration “holding” camps in Libya. Tripoli hosted summit meeting on Darfur rejecting “international intervention” in Sudan. Libya claimed to have arrested 17 al-Qaeda-linked individuals 11 October.

U.S. lifted remaining trade sanctions 20 September and released $1.3 billion frozen assets; EU agreed 22 September to end arms embargo. In first high-level meeting in 25 years U.S. Secretary of State Colin Powell met Libyan foreign minister 23 September. Libya claimed deserved seat on UN Security Council.

Compensation deal agreed 10 August for 1986 Berlin disco bombing, further opening way for improved European- Libyan relations. IAEA report on Libyan nuclear disclosure praised Libyan cooperation while warning gaps remained.

U.S. announced 11 June investigation into reports Libya plotted to assassinate Crown Prince Abdullah of Saudi Arabia in 2003. U.S. nevertheless reopened liaison office in Tripoli following visit of Assistant Secretary of State William Burns. Negotiations continue on compensation for Libyan-sponsored 1986 Berlin disco bombing.

U.S. undersecretary of state for arms control John Bolton termed Muammar Qadaffi’s decision to ban military trade with Iran, North Korea and Syria an “important step forward”. IAEA reported evidence Libya received 2 tons of uranium from North Korea in 2001; denied by North Korea. IAEA said questions remained on Libya’s nuclear program. U.S. State Department kept Libya on list of non-cooperative states on terrorism, but hinted arms embargo could be eased.

U.S. lifted most sanctions against Libya following Tripoli's continued cooperation on WMD. Muammar Qaddafi made triumphant return to Europe, visiting Brussels 27-28 April.

High-level visits marked Libya’s return to international fold: U.S. Assistant Secretary of State William Burns met with Libyan leader Muammar Qaddafi 23 March, followed 2 days later by visit from UK PM Tony Blair. Earlier in month Libya signed nuclear protocol allowing snap inspections.

U.S. lifted travel restrictions on Libya as reward for continued cooperation with international weapons inspectors. IAEA report released 20 February said Libya imported enriched uranium, centrifuge parts, and bomb designs, and produced small amounts of plutonium as part of weapons program.