CAIRO, Egypt (AP) – The release of six foreign medics raised expectations in Libya for a breakthrough in relations with the West after the European Union promised stepped up economic and political cooperation with Moammar Gadhafi’s regime.

Although questions remained about the concessions made during secretive negotiations, the release of the five Bulgarian nurses and a Palestinian Arab doctor on Tuesday cleared a key obstacle in Libya’s efforts to ends its isolation.

The medics were Mr. Gadhafi’s “last bargaining chip and he used them very well,” said Rachid Khshana, a Tunisian analyst who follows Libyan affairs. “Now he expects the doors to open for him to rejoin the international community, as a full member.”

On Wednesday, Bulgarian Prime Minister Stanishev said his government may write off Libya’s $54 million debt to the country.

He insisted the measure should not be seen “as paying ransom, or admitting (the medical workers’) guilt, but rather as a humanitarian gesture.”

Libya had accused the six medics of deliberately infecting more than 400 Libyan children with the virus that causes AIDS; 50 of the children died. The medics, jailed since 1999 with most of those years passed under a death sentence, deny knowingly infecting the children and say their confessions were extracted under torture.

The six medics arrived in Bulgaria to tears and jubilation Tuesday, their release secured during a three-day trip to Libya by French first lady Cecilia Sarkozy and the European Union’s commissioner for foreign affairs, Benita Ferrero-Waldner.

French President Sarkozy was heading to Libya on Wednesday.

“We are renewing, renovating our relations with Libya and restarting diplomatic relations,” Mr. Sarkozy’s spokesman, David Martinon, told France-2 television.

Libyan Foreign Minister Abdul-Rahman Shalqam said Libya and the EU agreed to develop a “full partnership.” He did not reveal how much aid was involved, but said the EU promised “lifelong treatment” for the infected children, as well as improvements to Benghazi hospital, where they were infected.

Ms. Ferrero-Waldner said Tripoli was offered a package of better economic and political ties, including the opening of markets for Libyan imports and help restoring archaeological sites and curbing the flow of illegal migrants who use Libya as a transit country to Europe.

Libyan officials said European countries have promised millions of dollars to a fund created to compensate families of infected children.

“There was only $4 million in the fund, but after negotiations with Ferrero-Waldner, the amount … became $400 million, extended by the EU,” said Saleh Abdul-Salam, director of the Gadhafi International Foundation for Charity Associations, which manages the fund headed by Mr. Gadhafi’s son, Seif al Islam.

Although America was not directly involved in the negotiations, the release of the medics also removed a key source of friction between Libya and Washington.

President Bush’s counterterrorism adviser, Frances Fragos Townsend, met with Mr. Gadhafi on July 10 and conveyed the “importance of resolving outstanding issues,” including that of the medics.

The following day, in an apparent gesture of encouragement, Bush nominated an ambassador to Tripoli, where America reopened its embassy in May 2006.

In talks with the Europeans over the medics, Libya tried to secure the release of Abdel Basset Ali al-Megrahi, a Libya agent serving a life sentence in Scotland for the 1988 bombing of Pan Am Flight 103 over Lockerbie, said an Arab diplomat familiar with the talks. The Europeans rejected the swap, the diplomat said, speaking on condition of anonymity in return for revealing the internal discussions.

Still, Mr. Gadhafi emerged from the crisis able to claim that Libya had a clean slate with the world as the country seeks aid for its struggling economy.

“This is a historic milestone in the relations between Libya and the West,” said Mohammad Ba’you, a Libyan political analyst with close ties to the Tripoli government. “The West can no longer claim to have unclosed files.”

Mr. Gadhafi first began moving to end Libya’s long isolation with the handover of al-Megrahi, who was convicted in 2001.

Two years later, Libya accepted responsibility for the Lockerbie bombing, which killed 270 people, and agreed to pay restitution to the victims. Gadhafi also announced he was dismantling his nuclear weapons program, a major breakthrough in American-Libyan ties. The steps brought a lifting of U.S. and European sanctions on Libya.

Libya is still pushing for a visit by Secretary of State Rice, but there is a lingering dispute over the final Libyan payment on the $270 million it promised to families of the Lockerbie victims.

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Associated Press Writer Khaled el-Deeb in Tripoli, Libya, contributed to this report.