Foreign Minister Tonio Borg said today that Malta has nothing to fear from Libya as an "Islamic democracy".

Addressing a meeting of MEUSAC - the Malta-EU Steering Action Committee - Dr Borg referred to comments by the new Libyan leadership that the future of Libya would be based on moderate Sharia law.

He said Malta should be happy that three of its North Africa neighbours - Tunisia, Libya and Egypt - would have some form of democracy, but he cautioned that at this stage, one should not expect the fully-fledged democracies which the West was used too.

However, there was nothing wrong with having an Islamic democracy, in the same way as there was Christian democracy. What was important was that basic rights were observed.

Dr Borg said that he could not see people who shed their blood for freedom allowing a return of dictatorship.

Malta, Dr Borg said, had good historic links with all three countries and it intended to exploit them as much as possible.

Apart from trade exchanges, Dr Borg said priority areas in relations between the Maltese and Libyan governments included oil exploration, migration, fishing rights and pending payments to Maltese companies.

Malta still planned to send a large delegation to Libya, headed by the prime minister and including businesses, but it was awaiting the formal setting up of a Libyan government, Dr Borg said. Malta, he said did not want photo opportunities but substantive talks and it would therefore wait until the new governemnt was in saddle.

Dr Borg hailed the progress being made in Libya and argued that moderates of the former regime should also be included in the new government. 42 years of recent history could not be simply ignored, he said. The minister said he did not condemn anyone who had had contacts with the Gaddafi regime, because not having had such contacts would have met simply ignoring a major country which was Malta's neighbour.

The minister admitted, however, that Malta was disappointed at the measures taken by Libya against Maltese citizens during the dispute between Libya, Switzerland  and Schengen area countries some months ago, saying that in view of Malta's mediation efforts, one would have expected better treatment.

Asked about Gaddafi family funds frozen in Malta - estimated at €87m - Dr Borg said it was not clear yet what was to become of these funds. But €366m belonging to the Libyan government would be released in line with UN and EU sanctions. He ruled out that any Libyan funds would be held up pending the settlement of funds owed to Maltese companies.

Today's meeting was held at the request of Arnold Cassola, the foreign affairs spokesman of Alternattiva Demokratika. It was requested some four months ago.