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From wikipedia:
On the May 15, 2006, David Welch, US Assistant Secretary of State announced that the US had decided to, after a 45 day comment period, renew full diplomatic relations with Libya and remove Libya off the US list of countries that foster terrorism. During this announcement, it was also said that the US has the intention of upgrading the US liaison office in Tripoli into an embassy. This has been product of a gradual normalization of international relations since Libya accepted responsibility for the Pan Am 103 bombing. Libya's dismantling of its weapons of mass destruction was a major step towards this announcement, and it is seen as an incentive for Iran to do likewise. [1]
http://en.wikipedia.org/wiki/Foreign_relations_of_Libya
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