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Books on Libya
REPUBLICAN REFERENCE
Area (sq.km)
1,759,540
Population
5,499,074
Capital
Tripoli
Currency
Libyan dinar
Leader
Col Mu'amar al-Qadhafi
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Update No: 031 - (30/05/06)
Full Speed Ahead
American Secretary of State, Condoleezza Rice announced that the United
States would resume full diplomatic relations with Libya and remove it from the
list of nations that sponsor terrorism. The move formally ends 25 years of
animosity between the government of Mu'ammar al-Qadhafi and the United States.
Ms Rice said, "We are taking these actions in recognition of Libya's
continued commitment to its renunciation of terrorism and the excellent
cooperation Libya has provided to the United States and other members of the
international community in response to common global threats faced by the
civilized world since September 11, 2001". Predictably, given the spin that
Washington has given to the process of diplomatic normalization with Libya that
formally started in December 2003, Rice suggested that North Korea and Iran
might also benefit from similar advantages should they decide to give up their
weapons programs. Nevertheless, while the US official spin presents the
normalization of Libya as a reward for good behavior, implying Libya will draw
more benefit from this than Washington, the fact remains that the United States
needs Libya's 'friendship' even more. Indeed, as oil resources become more
expensive and rare, there is increased competition European, Asian (Taiwan's CPC
has recently expressed interested in exploring two sites in Libya), and South
American oil companies…, and their governments. While, much of the mainstream
press appeared surprised over the normalization announcement, the real surprise
is that the process took so long. It is possible that the alleged plot by Libya
to murder Crown Prince Abdullah of Saudi Arabia in the summer of 2004 added a
hurdle, even though the issue has been resolved and allegations were never
"proven". Perhaps, of greater significance was the lobbying by
survivors of the victims of the Pan Am 103 crash in Lockerbie. In 2003, Libya
accepted responsibility for the 1988 bombing and agreed to pay $2.7 billion to
the families of the 270 victims ($536 million). Libya has paid the bulk of the
sum, while a final $2 million installment to each family remains outstanding.
Libya said it would pay the final amount upon being removed from the terror
list. The representative for the Lockerbie families has already demanded that
Libya pay the amount. Senators and Representatives from New York and New Jersey,
where many of the victims' families reside, were not pleased by the
normalization announcement, suggesting they would oppose the establishment of
U.S. diplomatic ties with Libya until it completed restitution to the victims'
families. The senators and representatives said they would push resolutions
calling on President George W. Bush not to restore full relations with Libya
until it makes a final $536 million payment called for under a legal settlement
with the families.
The announcement of normalized relations between the United States and Libya -
apart from whatever diplomatic and internal popularity benefits the US may gain
on its own - will no doubt contribute to increasing Libya's oil production. The
country currently produces 1.6 million bpd (less than it produced in the
1970's). Normalized relations mean that it will be much easier for the US and
other countries to give Libya the necessary technology to increase production
such that Libya may achieve its goal of producing some 3 million bpd by 2015.
Some of this technology, according to industry analysts includes steam injection
into underground reservoirs and horizontal drilling techniques (though the
Spanish Repsol had already pioneered this technique in Libya at its Murzuq field
in 1996). While US oil companies earned the legal right to resume exploration in
Libya after an absence of almost 20 years, they did not have the same freedom of
action and technological advantages of European and Asian companies (some of
which won important concessions in the 2005 bidding) whose countries have
maintained diplomatic relations with Libya throughout the sanctions period. The
full diplomatic relationship means that American oil companies will be able to
deploy all technological means at their disposal. It also means that in the near
future transport links will be facilitated, with more flights to and from
Tripoli and Benghazi not to mention the basic diplomatic hurdles of visas; US
business people will be able to obtain them directly in Washington. Companies
like Marathon Oil Corp., ConocoPhillips and Amerada Hess Corp. which returned to
Libya in 2004-2005, will also face less diplomatic 'red tape' in delivering the
equipment they need for exploration to Libya.
Many had expected the normalization of relations to come sooner. Libyans seemed
surprised by the decision last March to maintain Libya on the list of terror
sponsoring states. The possible 'incriminating' motivations had been resolved.
In April, the US State Department confirmed that Libya would not be removed from
its list of state sponsors of terrorism. The United States praised Libya for the
progress made so far and their growing cooperation, but stopped short of
offering an explanation as to why Libya had not been 'promoted'. Cuba, Iran,
North Korea, Sudan and Syria are on the current list. Libya was not pleased with
the move, which was widely perceived as hostile as the decision almost coincided
with the 20th anniversary of the US bombing of Tripoli and Benghazi on April 15,
1986. Libya complained that the United States has not yet apologized for that
action, hindering trust between the two countries. While unstated, the retention
of Libya in the state sponsors of terror list is likely due to the pressure of
the families of survivors of the December 1988 bombing of Pan Am 103 over
Lockerbie, Scotland - even as Libya has been paying compensation to those
families. In addition, the alleged attempt by Libyan agents to assassinate then
Saudi Crown Prince Abdullah in 2004 also found a resolution, when he became king
last summer dissolving the dispute with Libya and re-establishing full
diplomatic relations.
Once again, as was likely the case for the initial diplomatic openings since
December 2003, when Col. Qadhafi announced his famous renunciation of WMD's; oil
companies such as Occidental and ConocoPhillips likely played considerable
influence on the administration to reverse its initial decision (expected by
some Washington analysts) to maintain Libya on the 'terror' list. As the price
of oil continues to hover around $70/barrel, the US administration would have
hurt some of the main beneficiaries of its policies (the oil companies) by
maintaining the status-quo on Libya. To a secondary degree, there may even have
been fears that Libyan disappointment at the last April's 'terror list' decision
could have reversed the Libyan economic reform and international opening
process, promoting a return to the idiosyncratic international relations policy
of the past, which could have further undermined US diplomatic efforts in the
Middle East. The cabinet shuffle that saw the replacement of the reform minded
Shukry Ghanem with the somewhat more conservative Baghdadi al-Mahmoudi last
March was also a signal that the United States had to give Libya more 'carrot
and less stick' in order to perpetuate policy changes that are not popular at
all levels of Libyan society and power circles.
News of the normalization of Libyan-American diplomacy overshadowed an important
announcement concerning the opening of the Tripoli stock exchange. For the time
being, the exchange will feature listings from the recently privatized companies
in the fields of steel, cement and milling as well as the stock of the Sahari
Bank and other financial institutions.
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