(Reuters) – Swiss businessman Max Goeldi arrived back in Switzerland Monday after nearly two years stranded in Libya, drawing a line under a diplomatic row that had threatened to poison ties between Tripoli and Europe.

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Goeldi, accompanied on the flight by Swiss Foreign Minister Micheline Calmy-Rey and Spanish Foreign Minister Miguel Angel Moratinos, was greeted by his family at Zurich airport when he landed after a stop in Tunis on the way from Tripoli.

The spat began two years ago when Swiss police briefly arrested Hannibal Gaddafi, a son of Libyan leader Muammar Gaddafi, and it later escalated into a conflict that drew in the European Union, the United States and major energy firms.

Libyan officials deny the Swiss man’s case had anything to do with Hannibal Gaddafi’s arrest, but Goeldi’s supporters say he was an innocent pawn caught up in Libya’s retaliation against Switzerland.

Goeldi, who worked in Libya for engineering firm ABB, was given clearance to return home after Calmy-Rey arrived in the Libyan capital and signed a deal both sides said was aimed at ending their diplomatic dispute.

“We are relieved and happy along with Max Goeldi and his family,” Calmy-Rey said in a statement.

Moratinos, whose country holds the European Union’s presidency, had been in Tripoli to help negotiate the Swiss-Libyan deal — a sign of the importance the EU attaches to its business ties with oil exporter Libya.

Goeldi had been serving a four-month prison sentence for violating immigration rules until he was released last week, clearing the way for talks on his return home. Before he was jailed he had been barred from leaving Libya since July 2008.

The price for Goeldi’s return home appeared to be a Swiss apology for the publication of a leaked police photo of Hannibal Gaddafi taken while he was under arrest. Libya says the leak was an invasion of his privacy and damaged his reputation.

The Swiss foreign minister said her country acknowledged the publication was unlawful, apologized, and promised to pay Hannibal Gaddafi compensation if a criminal investigation failed to find who was responsible for the leak.

Swiss French-language television said it had unconfirmed reports that the Geneva authorities were paying 1.5 million euros ($1.8 million) in compensation to Hannibal Gaddafi.

FORGIVENESS

The apology was in a “plan of action” signed by Calmy-Rey and her Libyan counterpart Moussa Koussa which they said would act as a blueprint for ending the row.

The Swiss foreign minister told reporters after a signing ceremony that Goeldi’s homecoming “is the start of the normalization of relations between the two countries.”

Koussa said Libya too wanted to move on. “I would like the Libyan people to forgive the Swiss people who committed this mistake against Hannibal Gaddafi,” he said.

Goeldi’s problems began days after Hannibal Gaddafi was arrested at a luxury lakeside hotel in Geneva on charges — which were later dropped — of abusing two domestic employees.

Libya reacted angrily, stopping oil exports to Switzerland and withdrawing assets from Swiss banks. Muammar Gaddafi declared a “jihad” on Switzerland, although his officials said he had meant a trade embargo, not a holy war.

Libya was under international sanctions until 2004 when its leader renounced banned weapons programs.

During the row with Switzerland, it briefly barred entry to citizens of most European countries in retaliation for a Swiss travel ban on some senior Libyans.

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

(Additional reporting by Ali Shuaib and Salah Sarrar in Tripoli, Stephanie Nebehay in Geneva, Arnd Wiegmann in Zurich; Writing by Christian Lowe; Editing by Ralph Gowling)