WASHINGTON, Aug 20: Libya on Wednesday began transferring 2.7 billion dollars into an escrow account at the Swiss-based Bank for International Settlements (BIS) that will be used to compensate the families of those killed in the 1988 Lockerbie bombing, the US State Department said.

“We understand that Libya has begun the transfer of the 2.7 billion dollars into the escrow account,” spokesman Richard Boucher said.

He could not say how long the transfer would take but said the bank expected it to be finished by Friday at the latest.

“This is a very large sum of money, the transfer is not just one push of the button and it will probably take until Thursday and perhaps even Friday to complete,” Boucher said.

A week ago Libya agreed to a compensation deal under which it will pay up to 10 million dollars to each of the Lockerbie families, with the first payment of four million dollars to be released once UN sanctions against it are lifted.

On Friday, Libya accepted responsibility for the December 21, 1988, bombing of Pan Am Flight 103 over Lockerbie, Scotland, in a letter to the UN Security Council, paving the way for the sanctions to be lifted.

Britain then proposed a Security Council resolution that would remove the sanctions, which could be voted on as soon as Libya finishes transferring the money.

Boucher said the United States, Britain and others were discussing the timing of the vote at UN headquarters in New York with an eye toward overcoming French resistance to the resolution.

The timing has also been complicated by the need for the council to deal with the more pressing matter of the UN headquarters bombing in Baghdad but US officials said they did not expect a lengthy delay in the vote.

“We still expect that vote to occur soon,” one official said.

US Secretary of State Colin Powell meanwhile spoke to his French counterpart Dominique de Villepin to ask Paris — which vehemently opposed the Iraq war — to give its full backing to the UN mission in Baghdad, Boucher said.

In an effort to secure that support, US officials said they would not immediately launch a campaign criticizing France for its threat to block the lifting of the Libya sanctions.

“One consequence of the bombing in Baghdad is that it buys the French a little more time on Libya,” one official said.

France has threatened to veto the Lockerbie resolution unless Libya boosts the amount of compensation it is paying to the families of the 170 people killed in the 1989 bombing of a French UTA airliner over Niger.

The French foreign ministry has said repeatedly that Tripoli must offer equivalent compensation for both bombings, despite France’s 1999 deal with Libya for a total of 33 million dollars to go to the UTA families.

The United States has reacted angrily to the French threats.

Boucher lashed out Tuesday at France’s objections, calling them “last-minute” and “extraneous” and though he did not repeat those remarks Wednesday he did reiterate suggestions of French hypocrisy in the matter.

For the second day in a row he noted that France had informed the United Nations in 1999 that with regard to the UTA bombing, Libya had met the requirements for the UN sanctions to be lifted.

France is now in negotiations with Libya to raise the amount of the UTA compensation and has asked for more time before a vote on the sanctions to reach a deal.

DELAY IN UN VOTE: The bombing of UN offices in Baghdad, a time-consuming transfer of Libyan funds and the usual slow pace of diplomacy could well drag a Security Council vote on lifting UN sanctions on Libya into next week, diplomats said on Wednesday.