U.S., Britain Demand Libya Extradite 2 in Pan Am Case : Terrorism: They set no deadline or penalty if Tripoli fails to turn over its intelligence agents.

The United States and Britain on Wednesday formally demanded that Libya turn over two of its intelligence agents for the 1988 bombing of Pan Am Flight 103 and pay compensation to the families of victims in the Christmastime terrorism.

The joint ultimatum called for Libya to accept full responsibility for the terrorist act and provide unrestricted access to evidence in the case. However, it set no deadline and gave no indication of what may happen if Libya refuses to comply.

“We expect Libya to comply promptly and in full,” said the statement issued by the governments.

The Libyan mission to the United Nations dismissed the demand as “yet another orchestrated crusade against Libya” and said that blaming Libya “for such despicable acts against humanity is completely unacceptable.”

Bush Administration officials conceded that the statement is a half-step, prompted by the inability of the allies to agree on punishment for Libya for the bombing over Lockerbie, Scotland, that killed 270 on the London-New York flight.

Although the White House has said the United States is not ruling out any options, including the use of force, an Administration official said there is “a lot of sentiment” against military action because of potential backlash among Arab nations.

Instead, Administration officials said, discussions among the United States, Britain and France have focused on economic sanctions, including a possible embargo on Libyan oil. So far, no common course has been set. The French are seeking four Libyans, including the brother-in-law of Libyan leader Moammar Kadafi, for the 1989 bombing of a French UTA airliner over the Sahara that killed 171 passengers and crew.

The United States maintains some economic sanctions against Libya, but U.S. companies have been permitted since 1989 to buy Libyan oil through third parties. U.S. allies and most of the rest of the world remain free to trade with Libya.

In a separate statement Wednesday, France joined the United States and Britain in demanding that Libya comply with the demands for surrender of the suspects and evidence in the bombings of Pan Am 103 and UTA 772. The statement called for Libya to “commit itself concretely and definitively to cease all forms of terrorist action and all assistance to terrorist groups.”

Libya, in its response, renewed its offer “to work with either an impartial committee or the International Court of Justice” to determine the facts behind the bombings.

On Nov. 14, the United States and Britain announced the indictments of two Libyan intelligence operatives for the Dec. 21, 1988, bombing of the Pan Am flight. Although the 193-count indictment did not list Libya or its intelligence service as defendants, the federal grand jury’s charges indicated that both allegedly played central roles in the terrorist mission.

The U.S. and British charges named as defendants Abdel Basset Ali Megrahi, chief of the intelligence unit that oversaw covert operations under the cover of Libya’s national airline, and Lamen Khalifa Fhimah, Malta station manager for the airline.

Britain and the United States Wednesday asked specifically for “all the remaining timers”--a reference to 20 bombing devices that the indictment alleged that the Libyan intelligence service ordered from a Swiss firm in 1985. One timer was allegedly attached to powerful explosives concealed in baggage on Pan Am Flight 103.

A U.S. official, describing sometimes contentious negotiations with allies about what actions to take against Libya, said France appeared “a bit more reluctant” than others to impose economic sanctions against Libya and said this was the chief obstacle to agreement. “It’s always a lot harder to persuade other countries to stop selling goods to a country than it is to stop buying from them,” the U.S. official said.

One Administration source said the United States now intends to expand the consultations in the hope of mustering agreement from other nations for some form of economic retaliation. Other U.S. officials, however, noted that it is far from certain that the U.N. Security Council would approve economic measures that might be plagued by violations.

“If the sanctions are put in place, and they don’t work,” one official said, “that weakens the whole basis for sanctions.”

With the United States determined to maintain economic sanctions against Iraq, the official said, the Administration is having second thoughts about proposing new sanctions “that might not set the right precedent.”