Juan Cole has an excellent commentary on the new agreement with Libya over "weapons of mass destruction." He recounts the history of the international sanctions instituted against Libya in 1992 because of Libyan involvement in the Lockerbie aircraft bombing. He explains why the economic sanctions in fact imposed very significant costs on Libya. "The embargo from all accounts deeply hurt Libya's economy, and it produced a stark pull-back from support of terrorism on [Libyan leader Muammar] Qadhafi's part."
He notes that Qadhafi, himself once a kind of radical Islamic leader, became a target of a "top al-Qaeda operative," Anas al-Libi. "After September 11, Qadhafi associated himself with the US war on terror, in hopes of seeing al-Libi killed and the Libyan branch of radical Islamism devastated." From Cole's commentary:
So, Qadhafi's regime had been brought to the brink of possible extinction by the sanctions and by Soviet style economic sclerosis. The stars had suddenly aligned him with the US in a desperate struggle against radical Islamism and his old foe Anas al-Libi. Qadhafi apologized for Lockerbie and reportedly offered the victims $1.7 billion in compensation.
The one thing standing between Qadhafi and a return to stability for his dictatorial regime (and efflorescence for his potentially rich economy) was Washington's new campaign against weapons of mass destruction. Libya didn't have much of that sort of thing, though it had dabbled, and it wasn't important to Qadhafi any more. The conflict in Chad (in which Libya is accused of using chemical weapons) had died down. Washington was making it a quid pro quo that Tripoli give these lackluster and small programs up in order for Libya to reenter the world economic system on a favorable footing. It was an easy decision.
Cole also makes the important point that Libya's new cooperation on WMDs does not involve democratization of Libya: "The Bush administration, despite its rhetoric of democratization, still has to choose in the Middle East between having malleable, known strongmen in power, or having unpredictable democracies that might elect radical Islamists or others odious to Washington."
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