The foreign ministers of Libya and Switzerland signed an agreement on their relations on Sunday as the Swiss businessman whose detention was at the centre of the row can go home, the Swiss foreign minister said on Sunday.

The agreement was signed by Swiss Foreign Minister Micheline Calmy-Rey and her Libyan counterpart Moussa Koussa. Spanish Foreign Minister Miguel Angel Moratinos was also present.

Libya and Switzerland have agreed to draw a line under their fierce diplomatic dispute and the Swiss businessman whose detention was at the centre of the row can go home, the Swiss foreign minister said on Sunday.

"Max Goeldi will leave the country today," she told reporters in the Libyan capital. "Goeldi will return to Switzerland and this is the start of the normalisation of relations between the two countries."

Goeldi was barred from leaving Libya in July 2008, days after Swiss police arrested Hannibal Gaddafi, a son of Libyan leader Muammar Gaddafi, on charges, later dropped, of abusing two domestic employees.

"Swiss apology"

Calmy-Rey said Switzerland had apologised for the publication of photographs of Hannibal Gaddafi after he was arrested in Geneva in July 2008.

The Swiss foreign minister was speaking after hours of talks that ended in the signing of an agreement on relations with her Libyan opposite number, Moussa Koussa.

Libyan officials deny any link between the two cases but supporters of Goeldi, who works for engineering firm ABB, have said they believe he was caught up in the diplomatic fallout from Hannibal Gaddafi's arrest.

Goeldi was released from a Libyan prison last week where he had been serving a four month sentence for violating immigration rules. Before he was jailed he had not been held in detention but was unable to move freely or leave the country.

Libya reacted to Hannibal Gaddafi's arrest at a luxury lakeside hotel in Geneva by stopping oil exports to Switzerland and withdrawing assets from Swiss banks.

Libya briefly barred entry to citizens of most European countries in retaliation for a Swiss travel ban on senior Libyans, including members of the Gaddafi family.

Tripoli also warned U.S. energy companies operating in Libya their interests could be hurt after a U.S. official made disparaging remarks about Gaddafi's stance on Switzerland. The U.S. official later apologised.


Agencies