Here is the real story on Libya, corroborated by multiple sources. Kaddafi cut his deal in 2003 only after the British and Americans assured him that Bush would settle for "policy change"-that is, giving up his nukes-rather than regime change.

Here is the official story on Libya, which Washington removed from its list of terror-sponsoring states this week. As the Bush administration likes to tell it, Muammar Kaddafi was scared straight by the U.S. invasion of Iraq. On Dec, 19, 2003, just six days after Saddam Hussein was hauled from his spider hole, Kaddafi gave up his life's work as an international terrorist, renouncing both his weapons of mass destruction program and his terror tactics. Shocked by the fall of his fellow dictator, Kaddafi turned into as much of a quivering stoolie as any doomed character on "The Sopranos." In a matter of months he exposed the global black market created by Pakistani nuclear scientist AQ Khan, and he began passing on intelligence about Al Qaeda and insurgent-linked groups. Now the autocrat whom Ronald Reagan once called a "mad dog" has become, in the words of Secretary of State Condoleezza Rice, "an important model as nations around the world press for changes in behavior by the Iranian and North Korean regimes.'' And Kaddafi's about-face is considered by Bush hard-liners to be a sweet vindication of its policy of confronting bad guys without quarter.

Here is the real story on Libya, corroborated by multiple sources. Kaddafi cut his deal in 2003 only after the British and Americans assured him that Bush would settle for "policy change"-that is, giving up his nukes-rather than regime change. Significantly, the agreement went forward only after the British, who took the real lead in the negotiations, insisted to the White House that Bush administration hard-liner John Bolton be barred from the talks. Bolton, who was then U.S. under secretary of State for arms control, had wanted to add Libya to the "axis of evil," but Jack Straw, British foreign secretary at the time, and David Manning, a top adviser to Prime Minister Tony Blair, prevailed on Rice and Secretary of State Colin Powell not to do so. Bolton also refused to reassure Tripoli that the United States did not intend regime change-in other words, he sought to take essentially the same uncompromising tack the administration is now pursuing with Iran and North Korea. The British again resisted, and the White House, which was then (as now) consumed with Iraq, didn't care enough to defy Blair on this one. Reason, for once, prevailed over ideology.

Only in one respect does the official story align with the real story. While Libya remains an antidemocratic and backward regime, it appears to have genuinely turned away from terror and WMD. Kaddafi, the terrorist poster boy from the 1980s, is cooperating fully in the fight against terrorism, according to Hank Crumpton, the unacknowledged CIA hero of the 2001 Afghanistan war and now the State Department's counterterrorism chief. So Libya is, for the moment, out of the headlines and out of our hair. Did the invasion of Iraq frighten Kaddafi into signing on the dotted line? Probably. But well before then America was negotiating with the self-admitted murderer of 189 Americans, who died together with 81 others when Libyan agents downed Pan Am Flight 103 over the Scottish town of Lockerbie in 1988. The talks with Libya also long predated the invasion of Iraq, and they began long before Tripoli gave up either its terrorist or WMD aspirations.

All of which raises an interesting question: just what kind of "model" is Libya really? It's certainly not a model for Bush's global democracy campaign; quite the opposite, in fact, although the administration is now touting the idea that diplomatic relations with Libya will give Washington more leverage in pressing for internal reform. (This is blatant nonsense: the Kaddafi clan, led by the leader's heir-to-be, his son Seif Kaddafi, will now become richer, and more powerful.) It is also a stretch to think that the Iranians or even the North Koreans are going to emulate the strategy followed by Kaddafi, who is mocked as a barmy Bedouin even by his fellow Arabs.

No, the real model that the Bush administration ought to be paying attention to is the British one for dealing with international rogues like Kaddafi. Rule one of this model is: if you can't destroy regimes-and we can't, not anymore, not after Iraq-then you try to turn them. You flip them. You hold your nose and negotiate, preferably from a position of strength. You have no other choice, unless you want to attack. And we really don't want to attack: even Defense Secretary Donald Rumsfeld, faced with a rebellion from inside his own Pentagon, has been publicly skeptical about the military options in recent days.

Yet the Bush administration has still not learned the lesson of its greatest diplomatic success. The most distinctive thing about this administration-and the source of so many of its troubles-is its seeming inability to alter its fixed ideas even in face of new realities. Hence the administration, still romantically harking back to Ronald Reagan's rejection of d�tente with the Soviet Union, continues to cling to the fiction that one doesn't negotiate terms with evil regimes. Seldom does the Bush team note that Reagan, Bush's own putative model, actually did come around to negotiating an understanding with the "evil empire" in his second term, helping to lead to a peaceful end to the cold war.

This uncompromising stance is still, in effect, the president's policy toward both North Korean and Iran. In both cases the administration is pretending to negotiate through proxies-through the Europeans in the case of Iran; through the Chinese in the case of North Korea-while in practice Washington is essentially issuing ultimatums as an opening bargaining position. Bush is maintaining his insistence that these regimes give up the store-agree to surrender their WMD programs-before Washington will even come to the table. In other words, the president continues to follow the old John Bolton line.

No one is suggesting there will ever be an easy way out of the Iran and North Korea problems. But there is ample evidence that, for several years, both Iran and North Korea have been seeking assurances similar to what Kaddafi got before they will negotiate. Flynt Leverett, who served on Bush's National Security Council in the first term, revealed last week that the president has squandered previous openings with Tehran. Leverett says Bush snubbed an offer to talk from Tehran in 2003-passed on by the Swiss through a "back channel"-mainly because he didn't want to deal with an "illegitimate regime." In November 2002, according to The Washington Post, North Korean leader Kim Jong Il sent a similar message asking for a basic recognition of his right to survive, offering to resume talks if the United States "recognizes our sovereignty and assures non-aggression." In September 2005, after much prodding from China, Washington did finally agree to a statement of principles in the six-party format (which also includes Japan, South Korea and Russia, as well as the United States and North Korea) that contained an assurance that America has "no intention to attack or invade" North Korea. But Bush has refused to build on this promise in bilateral talks, which may be what Pyongyang really wants.

Morally, the restoration of Libya's diplomatic status, and the rehabilitation of Khaddafi, are pretty hard to stomach. Strategically, however, these moves were probably necessary. Even Bush must see that America can't pursue a Michael Corleone foreign policy-we can't just kill off all our enemies. The president has but two and a half years left to work things out with Iran and North Korea. It's time to stop pretending.