Italy agreed Saturday to pay Libya US$5 billion as compensation for its 30-year occupation of the country, which ended in 1943.
Italian Prime Minister Silvio Berlusconi and Libyan leader Moammar Gadhafi signed a memorandum pledging a US$5 billion compensation package involving construction projects, student grants and pensions for Libyan soldiers who served with the Italians during World War II.
"It is a material and emotional recognition of the mistakes that our country has done to yours during the colonial era," Berlusconi told reporters at the airport on his arrival. "This agreement opens the path to further cooperation."
In return, Italy wants Libya to crack down on the thousands of illegal migrants smuggled across the Mediterranean to Italian shores. Libya largely hasn't delivered on pledges over the last few years to eliminate the problem.
Italy will fund US$500 million worth of electronic monitoring devices on the Libyan coastline.
With the agreement, there should be "fewer clandestine migrants leaving Libyan shores for Italian" coastlines, Berlusconi told reporters in Libya in comments carried on Italian state TV.
Rome is also keen on increasing its already long-consolidated energy ties with Tripoli. Libya is a big supplier of natural gas and oil to Italy.
Berlusconi said the agreement helps open the way to more "gas possibilities, possibilities for Libyan oil, which is of the best quality."
Gadhafi received Berlusconi under a big tent in Benghazi where they discussed the agreement over lunch. The Italian leader said US$200 million of the package would be for infrastructure projects over the next 25 years, including a coastal highway stretching across the country from Tunisia to Egypt.
The two leaders exchanged gifts, with Berlusconi giving Gadhafi a silver inkstand, sculpted in the form of a lion's head, with two pens inside to sign the agreement. The Libyan leader gave Berlusconi a linen suit.
Berlusconi's office said in a statement that the premier would hand over to Gadhafi the Venus of Cyrene, an ancient Roman statue taken in 1913 by Italian troops from the ruins of the Greek and Roman settlement of Cyrene, on the Libyan coast.
Relations between the two countries have warmed over the last few years, with Italian leaders meeting Gadhafi several times. However, it has taken years of negotiations for the two sides to reach a deal on compensation for Italy's rule over Libya from 1911 to 1943.
Berlusconi said the accord follows "those tragic and dramatic moments of the Italian occupation of your country."
"In the name of the Italian people, as head of government, I feel it is my duty to offer an apology and make plain our sorrow for that which happened so many years ago, and which affected so many of your families," the Italian premier said.
Libya named Aug. 30 Libyan-Italian Friendship Day.
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