Italy and Libya's deal on colonial compensation ''sets the seal on the past,'' Italian Premier Silvio Berlusconi said Monday.
Berlusconi noted that he and Libyan leader Muammar Gaddafi signed the $5 billion deal in Benghazi on Saturday ''in front of almost 1,000 descendants of the victims of colonisation''.
The premier said the ''bloody'' pre-WWI colonisation had left ''a wound'' in Libya.
Replying to claims that the deal is too costly, Berlusconi said critics ''aren't considering the advantages that will come to our firms''.
He noted, among other things, that the friendship accord gives Italy easier access to Libyan gas which is ''among the best in the world''.
Gaddafi said earlier on Monday that Italy would have ''priority over oil and gas and other forms of investment''.
In a speech marking the 39th anniversary of the Libyan revolution, he said the deal sets a precedent for other former colonial states to seek compensation.
Under the deal, Italy will pay its former colony $200 million over 25 years to fund various projects including the Italian construction of a coastal highway linking Libya with Egypt and Tunisia.
Rome will also clear Libya of landmines left from the colonial period.
The deal was signed Saturday in the palace which once housed the Italian colonial HQ. As a goodwill gesture, Italy returned an ancient statue of Venus, the headless Venus of Cyrene, taken to Rome in colonial times.
Berlusconi said the deal ended ''40 years of misunderstanding''. Italy occupied Libya in 1911 and she became a colony in the 1930s.
The former Ottoman territory gained independence in 1951 and Gaddafi claimed power in a 1969 coup.
He expelled some 20,000 Italians in 1970, whose claims are also addressed in the accord.
The accord is also dependent on Libya putting into effect measures already agreed with the Italian government to combat illegal immigration to Italy from the shores of the North African country, including joint patrols of the Libyan coast.
Italy receives thousands of African migrants each year, repeatedly straining facilities on the stepping-stone island of Lampedusa to breaking point.
The Italian government said last month that immigrant landings had doubled to more than 15,000 in the first seven months of the year.
Saturday's visit was Berlusconi's second to Libya in two months. In June, immigration topped the agenda. The friendship accord was almost sealed last year by the Romano Prodi government but then Gaddafi decided against it.
Italy is Libya's biggest trade partner and 25% of Italian oil imports come from there.
Libya has come in from the diplomatic cold since 2003 when it renounced efforts to get weapons of mass destruction.
Libya and the United States signed a deal last months to compensate victims of attacks including the 1988 Lockerbie bombing and US raids on Libya.
US Secretary of State Condoleezza Rice will make the first high-ranking visit to Libya since 1953 this week.
Gaddafi said in his speech Monday that ''the conflict with the US has been definitively filed away''.
