The United States rescinded Libya's designation as a state sponsor of terrorism in June 2006. Libya renounced terrorism and weapons of mass destruction in 2003 and has continued to cooperate with the United States and the international community to combat terrorism and terrorist financing.

On July 20, Malian President Amadou Toumani Toure confirmed to the Malian press that Libya, Algeria, and Mali planned to coordinate military and intelligence efforts to fight security threats linked to al-Qa'ida in the Islamic Maghreb (AQIM) in the Trans-Sahara region.

In November 2007, al-Qa'ida (AQ) leader Ayman al-Zawahiri announced a merger between AQ and the Libyan Islamic Fighting Group (LIFG). In an audiotape, al-Zawahiri urged AQ fighters to topple the Government of Libya, describing Muammar al-Qadhafi as an "enemy of Islam" and criticizing the 2003 decision to renounce WMD and terrorism.

In late September, six leading members of the Libyan Islamic Fighting Group, being held in the Abu Salim prison, issued a document renouncing violence and claiming to adhere to a more sound Islamic theology than that of AQ and other jihadist organizations. The 417-page, Arabic-language document, entitled "Revisionist Studies of the Concepts of Jihad, Verification, and Judgment of People," was the product of a two-year reconciliation project between the Government of Libya and the LIFG, facilitated by the Qadhafi Development Foundation. The authors state that "The lack of religious knowledge, whether it was a result of an absence of 'ulama' (religious scholars) or the neglect of people in receiving it and attaining it, or due to the absence of its sources, is the biggest cause of errors and religious violations."

In the text, the authors directly challenged AQ, addressing the recantation to "anyone who we might have once had organizational or brotherly ties with." The document gave detailed interpretations of the "ethics and morals to jihad," which included the rejection of violence as a means to change political situations in Muslim majority countries whose leader is a Muslim and condemned "the killing of women, children, the elderly, monks/priests, wage earners, messengers, merchants and the like." It claimed that "the reduction of jihad to fighting with the sword is an error and shortcoming." According to press and government sources, at least 144 former LIFG members and 60 members of other jihadist groups have been released from prison after completing this rehabilitation effort.

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