The U.S. government's policy of "normalizing" relations with Muammar Kaddafi─once touted as one of President Bush's major foreign-policy achievements and continued by President Obama─looked more embarrassing than ever on Wednesday when the erratic Libyan leader delivered a bizarre talk to the United Nations defending the Taliban and suggesting Israel was behind the assassination of President John F. Kennedy.

"Why are we against the Taliban? Why are we against Afghanistan?" Kaddafi asked the leaders of more than 120 nations attending the annual General Assembly debate. "If the Taliban wants to make a religious state, OK, like the Vatican. Does the Vatican constitute a danger against us?"

Even before the talk, two of President Obama's chief foreign-policy aides told families of the victims of the 1988 Pan Am 103 bombing that the White House was taking painstaking precautions to prevent any presidential interaction with Kaddafi, according to two of those who attended the session and described it to NEWSWEEK.

The two presidential aides who addressed the families─John Brennan, who oversees counterterrorism policy at the National Security Council, and deputy national-security adviser Denis McDonough─also promised to work toward the release of U.S. government files that would clearly establish Libyan complicity in the Lockerbie bombing, said Frank Duggan, president of the Victims of Pan Am 103, and Kathy Tedeschi, whose husband was among the 189 Americans killed on the Pan Am flight and who serves as vice president of the group.

The release of FBI, CIA, and other files is being sought by the families to help counter stories emanating in the British press and some American publications in recent weeks suggesting that Abdelbaset al-Megrahi, the former Libyan intelligence officer convicted of the bombing who was recently released by the Scottish government, was wrongly convicted, said Duggan.

The White House aides told the group, "The government would take an active role in combating a lot of these phony stories saying that the guy was innocent," according to Duggan. A White House spokesman confirmed that Brennan and McDonough spoke to the group Tuesday night but did not comment on details of the discussion.

The prospect of a controversy over Kaddafi's presence in New York has been building for months, especially after the Libyan government─as NEWSWEEK reported last month─asked for permission to pitch his trademark Bedouin tent in Central Park.

But furor over Kaddafi's first-ever trip to the United States erupted when Megrahi flew back to Tripoli and received a hero's welcome. The release of the convicted terrorist─on humanitarian grounds, according to the Scots (Megrahi is suffering from terminal prostate cancer)─infuriated U.S. law-enforcement officials and raised new questions about U.S. policy to move toward closer relations with the Libyan regime. That policy was pushed in part by U.S. oil companies and other business interests.

The policy of "normalizing" relations began under President Bush after Kaddafi renounced his nuclear-weapons program, prompting the Bush administration to declare that Libya, long an international pariah,  "can be a source of stability in Africa and the Middle East."

By last year, after it agreed to pay full compensation to the Lockerbie families, Libya was removed from the State Department list of "state sponsors" of terrorism, and the U.S. reopened an embassy in Tripoli. That policy continued under Obama: in July, Acting Assistant Secretary of State Jeffrey Feltman flew to Tripoli and said the U.S. wanted greater military cooperation with Libya in order to fight terrorism in northern Africa.

But that and other moves to strengthen U.S.-Libyan ties are now called into doubt as a result of the uproar over Megrahi, an event that reminded some U.S. officials and the Lockerbie families about Kaddafi's long ties to terrorism.

In Tuesday night's meeting with the Lockerbie family members, Brennan, a veteran former senior CIA official, reminded them that he had a personal connection to the Pan Am case: a longtime friend and colleague from the agency, Matthew Gannon, was killed on the flight. Brennan assured the group that the Obama White House had no "heads up" that Megrahi would be released. More important, he said the White House was taking elaborate steps to make sure that Obama (who spoke to the U.N. immediately before Kaddafi) never crossed paths with the Libyan leader, according to Duggan. The White House was going to make sure that Obama and Kaddafi "never got anywhere near each other," he said. (That alone is a change from last July when Obama, finding himself next to the Libyan leader at the G8 summit in Rome, was photographed shaking Kaddafi's hand.)

The distancing was readily apparent at the U.N. today when top U.S. officials─including Secretary of State Hillary Clinton and U.S. Ambassador to the U.N. Susan Rice─left the hall as Kaddafi approached the podium to speak.

In his talk,  Kaddafi, wearing a long, flowing, brown robe and speaking in rapid-fire Arabic, denounced the Security Council ("It should not be called the Security Council. It should be called the Terror Council") and at one point seemed to suggest the Israelis were behind the 1963 Kennedy assassination. His apparent reasoning: Jack Ruby, the killer of Kennedy assassin Lee Harvey Oswald, was an "Israeli" agent. (Ruby was Jewish but had no known tie to Israel.)

"He portrayed himself as the bumbling idiot that he is," said Tedeschi, the vice president of the Lockerbie group, after the speech. "He ranted about everybody else's wrongdoing in the world except his own."