Libya Might Let Suspects Go on Trial in Scotland : Sanctions: The United Nations continues its air and military embargo against Kadafi’s regime.

CAIRO — Libya, seeking to avert the threat of escalated sanctions in the case of two suspects wanted in the bombing of an American airliner, has indicated it might consider releasing the two men for trial in Scotland with the presence of observers from neutral countries, according to Arab diplomatic sources.

But Egyptian President Hosni Mubarak returned Wednesday from talks in Libya without any commitment, and Arab League officials said that there was only “a very limited possibility” of a breakthrough in the case soon.

The U.N. Security Council, shortly after Mubarak’s return, declared that it will continue the four-month-old air and military embargo against Libya, imposed along with the demand that Libya hand over the suspects in the 1988 bombing of a Pan Am jet over Lockerbie, Scotland, which killed 270, and a bombing of a French airliner over Africa a year later that killed 171.

Security Council President Li Daoyu, China’s U.N. ambassador, read a statement following closed-door consultations saying that there was “no agreement that the necessary conditions existed for modification of the measures of sanctions.”

U.N. special envoy Vladimir Petrovsky is scheduled to arrive in Tripoli, the Libyan capital, on Monday in a last attempt to resolve the crisis before the council makes the next move--which, according to foreign diplomats, could result in stepped-up sanctions against the North African nation.

The issue has been at a standoff, since the United Nations, seeking an end to Libyan aid to terrorist organizations and a hand-over of the two suspects for trial in the West, imposed a civil aviation and military aid embargo on Libya on April 15.

Despite Libya’s moves to close at least three terrorist training camps last month and its release of information on its support of the Irish Republican Army, diplomatic sources said that there had been no substantial movement to justify declaring Libya in compliance with U.N. resolutions.

Aiming to resolve the crisis before the United Nations acted again, U.N., Arab League and Egyptian officials launched urgent talks with Libyan representatives over the past several days, and Libya’s Arab League ambassador, Ali Trieki, has toured Persian Gulf Arab states with a message from Libya’s leader, Col. Moammar Kadafi, seeking the Gulf nations’ backing.

Egyptian officials, speaking on condition of anonymity, said they had received indications during their talks that Libya would refuse to hand over the suspects for trial in the United States but might consider delivering them for trial in Scotland with certain conditions, such as the presence of courtroom observers from neutral countries.

However, Libya has been adamant in seeking assurances that no other members of Kadafi’s regime would be sought for prosecution in the two bombing cases, a pledge that the United States, Britain and France--three leading members of the Security Council--have refused to make.

“It is premature to tell whether there will be an agreement. The possibility is there, and we have to wait and see,” an Egyptian diplomat said Wednesday.

Other diplomatic sources said it was likely that Libya was simply launching last-minute moves to avert U.N. action.

Egypt’s official newspaper Al Gomhouriya reported from Mubarak’s visit that “Libya did not respond to the surrender request, and instead made an offer to turn the suspects over to a third party.” The United States and Britain have previously rejected similar offers on Libya’s part.

Options available to the Security Council, according to diplomatic sources, could include a commercial shipping embargo, a ban on travel to and from Libya, closing of Libya’s land borders with its neighbors or, less likely, a full trade and oil embargo, which would quickly strangle a country that imports most of its basic necessities and depends on oil for 95% of its foreign earnings.

Although the prospects for an immediate breakthrough in the crisis appeared dim, there has been a growing sense in recent months that Libya eventually will succumb to the U.N. demands.

Mubarak has sought not to be confrontational with Kadafi, but in his talks with the Libyan leader he conveyed the message that the West is not likely to compromise in its demands, diplomatic sources said.

The compliance of neighboring Arab states with the existing sanctions has contributed to a growing sense of isolation on Libya’s part, and a realization that Egypt and Tunisia would likely be forced to participate, however reluctantly, in stepped-up sanctions such as a trade embargo or border closings, foreign diplomats said.

At the same time, they said, Kadafi is facing continued opposition from his own security services--which provide the underpinnings of his regime--to the idea of handing over men believed to be agents of Libyan security for trial in foreign lands. “I think the problem Kadafi’s got is: Can he comply and stay in power?” said one envoy.

Although Kadafi reportedly closed at least three terrorist training camps last month in an attempt to comply with the sanctions, there is widespread belief that many camps remain and that the ones ordered closed could be reopened on short notice.

Kadafi has offered to allow a U.N. inspection team to verify the closure of all the training camps, an option that the United States, Britain and France have agreed to consider.