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Thank you. I know that the organizers didn't realize when they were scheduling this event just how exquisitely timed it would be, but I'm sure they're pleased with the different political context for today's conference. Big changes are happening in our relationship with Libya and I'm glad I have the chance to talk about them during this conference. I especially want to thank our hosts, the Middle East Institute and the U.S. Libya Business Association, especially Ambassador David Mack and David Goldwyn for their leadership in putting this event together. I want to extend a special welcome to Minister Jahaimy. Visits of high-level Libyan officials to Washington haven't always been possible, but that's now changing and I hope we'll see more such visits in the coming months. Finally, I want to thank Congressman Lantos, who has been so supportive of our efforts to bring Libya back in to the international community while never forgetting that our first responsibility is to our own citizens.

Of course you're all well-aware of the events of May 15, when President Bush certified to the Congress that Libya had met the statutory requirements for the rescission of its designation as a state sponsor of terrorism and Secretary Rice announced her intention to upgrade our diplomatic presence in Tripoli to an embassy. Secretary Rice also announced on that day that we were not including Libya on the annual list of countries not fully cooperating with U.S. anti-terrorism efforts.

I know that many of you here today wanted us to take these steps much earlier. I think we all need to recognize, though, what a remarkable distance we've traveled in the two and a half years since Libya's historic 2003 decisions to renounce terrorism and to abandon weapons of mass destruction. When Secretary Rice met Foreign Minister Shalgam last year in New York, she told him that she would never have dreamed that she would be sitting and talking to him. But there she was, and here we all are, trying to expand and strengthen this unexpected but welcome relationship.

A few weeks ago, on May 31, we followed through on the first of the May 15 announcements when we upgraded the U.S. liaison office in Tripoli to the U.S. embassy. During a quiet ceremony in Tripoli, Greg Berry, our chief of mission, signed the diplomatic notes that established the embassy, and our staff put up on the wall the Great Seal of the United States surrounded by the words "U.S. Embassy Tripoli." I'm particularly glad that this happened on Greg's watch; many of you know Greg and have worked with him in Libya. He's been in Tripoli since nearly the very beginning of our renewed relationship, and it's no exaggeration to say that I'm not sure this would have happened without him.

On that same day, May 31, the Libyan Liaison Office here in Washington became the Libyan Embassy. The next step in this upgrade of our relations is to name ambassadors to our respective countries. This will be an important decision for both governments, as it will be something of a signal about how seriously we take each other’s concerns. We, the United States, will be looking to nominate someone with significant diplomatic experience, regional expertise, and personal probity. We will look to the Libyan government to do the same with its nominee.

I'm convinced that this new, full diplomatic relationship with Libya means that our two countries will work better and more closely with each other, and that it gives the U.S. another, very effective tool to use in talking to the Libyan government about all the issues that concern us.

We also expect to be able to rescind Libya's designation as a state sponsor next week, at the end of the mandatory 45-day notification period to Congress. I've been up to the Hill a number of times to brief Senators and Congressmen on how we reached our decision. I've gone over with them the history of some fifteen years of concerted U.S. diplomatic effort and monitoring of Libyan behavior. There are two requirements for rescinding Libya's state sponsorship designation, for that matter for rescinding anyone state sponsorship designation. The two requirements are: That Libya has not provided any support for acts of international terrorism during the preceding six-month period; and that Libya has provided assurances that it will not provide support for acts of international terrorism in the future.

On that first requirement, I can tell you that the final assessments leading up to the May 15 announcement were painstakingly thorough. We wanted to be absolutely sure our decision was the right one. As I explained to in a meeting one time to Leader Qaddafi, the word of the United States and President Bush is attached to his certification. So we wanted to be, as I said, absolutely sure of this decision. Given Libya's demonstrated record of supporting certain terrorist organizations in the 1970s and 1980s, we reviewed Libya's actions not only over the past six months but over the last several years. We wanted to be certain that the courageous change in course by the Libyan government was a genuine, long-term change in behavior. On the second requirement, we obtained formal, unequivocal assurances from senior levels of the Libyan government of Libya's commitment to the renunciation of international terrorism.

So, how has all of this been received on Capitol Hill? Overall, I believe Congress supports our message that when countries decide to follow international norms of behavior, we can in turn change our isolation of them, offering a chance to reap concrete benefits. I think many people see that what we've been able to do with Libya can be used to encourage changes in policy by other countries such as Iran and North Korea. In the end, these decisions were the right ones because Libya did what was asked in terms of renouncing terrorism. That doesn't mean that we don't still have many points of disagreement with Libya; but the terrorism designation addresses states' behavior on terrorism, not other issues.

Understandably, however, many want to know what happens next. In particular, how do we ensure that other issues, such as our human rights concerns, are addressed? Or that Libya addresses in good faith claims brought in U.S. courts by American victims of past Libyan terrorist activities?

I can reassure everyone that our commitment to our citizens, to human rights, and to the President's Freedom Agenda, is unwavering. The May 15 announcement doesn't absolve Libya of responsibility for its past actions, nor does it mean that Libya is being given a pass on behaving like a responsible member of the international community. A maturing bilateral relationship doesn't mean that issues disappear. Rather, it opens a door to a broader relationship that will give us a stronger position from which to discuss problems of critical importance to our foreign policy agenda. Naturally, that applies on a reciprocal basis and I expect Libya will address its issues with us as well.

I believe that Libya wants a positive relationship with the United States, but for that to happen, government officials like myself aren't the only ones who need to be convinced that Libya has changed its course. The American people and Congress need to see that Libya is addressing past grievances in good faith. A number of lawsuits against Libya are waiting for final resolution in U.S. courts. Libya has recently taken concrete steps to resolve some of these cases, but we will continue to push for final resolution of all the remaining ones, just as we will continue to hold Libya to its pledge to cooperate in good faith with any further requests for information in connection with the Pan Am 103 investigation.

We will also call upon Libya to improve its human rights record. We remain very concerned about the case of the Bulgarian and Palestinian medics imprisoned in Libya on charges of intentionally infecting children with HIV/AIDS. We have great sympathy for the suffering of these children and of their families and we in the United States are supporting efforts to help them, but this does not change our position on the medics. We believe a way should be found to allow them to return home, and we are committed to helping resolve this situation as soon as possible.

We have also discussed with Libya at length the continued imprisonment of Fathi al-Jahmi, an opposition leader who has called for more freedoms in Libya. In meetings with Libyan officials, I will continue to reiterate our position that Fathi al-Jahmi should be released.

We are also committed to working with Libya, as with all countries in the region, to realize President Bush's goal of increasing democracy and freedom throughout the Broader Middle East and North Africa.

We know, and I in particular know, that the exchange of views between countries, sometimes not easy, sometimes even difficult. For three decades, and in our most recent history, the U.S. and Libya have been on opposite sides of the fence. That's changed, and now we have to figure out how to deal with each other in a new and different environment. A normal relationship means being able to sit down and discuss issues, some of which are tough, such as human rights and the nature of democracy. But this is the key to further transforming our relationship.

At the same time, we expect normalization of our bilateral relationship to bring about immediate, positive, tangible results. Libya is a country of tremendous potential and opportunity. If we manage this transition correctly, both the U.S. and Libya will benefit. I think that's especially true for U.S. businesses. Licensing procedures for companies wanting to do businesses in Libya are going to be eased; we're working with the Department of Commerce now to finalize the new regulations. The American Export-Import Bank and our Overseas Private Investment Corporation (OPIC) are eager to begin working in Libya as soon as they receive the go-ahead from the Libyan government.

If Libya wants to capitalize on these changes, it should create a strong, modern, transparent investment climate that supports the rule of law. We’re anxious to help them do this, particularly through our Middle East Partnership Initiative. Once Libya is no longer designated as a state sponsor of terrorism, we'll be able to consider a much wider range of assistance. We're looking forward to providing advice and assistance on a range of economic reform issues as we have done in Morocco, Tunisia, Algeria, and Egypt. We'll move quickly to offer technical assistance, especially as Libya starts implementing its National Economic Strategy. Over time, we also hope to work with Libya on its WTO accession bid and on formally strengthening our bilateral trade ties.

We're looking forward to this new era of partnership. We've already worked together in areas like counter-terrorism and trying to resolve crises in Africa were we have some common interest and concerns. Our diplomatic dialogue on those matters has been informative to the United States and productive to us, and I hope my Libyan colleagues would agree that it has also been informative and productive for them. Economic and commercial cooperation will benefit both countries, and we look forward to working with Libya on it.

I hope to visit Libya shortly after the rescission of Libya's designation as a state sponsor, and my purpose will be to lay the groundwork for the new relationship. Then, in the coming months, I hope we'll see a greater number than we've seen in the past of senior-level delegations traveling both directions. That kind of involvement is a good way for both countries to get familiar with each other again. But an even better way is to expand the visits of ordinary people, through exchange programs and tourism. We ask our Libyan colleagues to continue to facilitate that, and we're repeating our offers to include Libya in educational and cultural programs such as the Fulbright Fellowships, Fulbright Scholars, and the English Language Fellows program, and we hope Libya will decide to participate in these programs. To make that happen, though, we have to work together to find a solution to our visa problems.

We are ushering in a new era in the history of U.S.-Libya relations. Establishing an embassy and rescinding Libya's designation as a state sponsor of terrorism are actions that let us start managing our relationship with Libya the way we manage our relationships with other countries. This is going to be a challenge, no question; we still have a lot to learn about each other after 25 years of not talking. We're in the process of taking momentous and historic steps that are going to fundamentally change how our countries interact. I think this is actually a very lucky moment for all of us that we have the chance to be part of shaping this new future.

Thank you all very much.