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Books on Libya

Update No: 081 - (31/08/10)

BP’s Continued Fallout from Lockerbie
The release of Abdelmaset al-Megrahi, the sole convicted perpetrator of the bombing of Pan Am 103 over Lockerbie, Scotland in August of 2009 continues to generate controversy. The case may not have prompted such renewed media interest, were it not for the BP oil spill in the Gulf of Mexico, which drew negative attention into BP’s activities by US politicians. Having become a symbol of the ‘evil oil company,’ conveniently not a US business, BP’s activity in Libya has become an easy target for eager congressional representatives and senators, who want to show their voters that they care. It was only too convenient that BP secured an exclusive deal with the Libyan government to drill off the Libyan coast and to attribute this special arrangement as part of an exchange for the release of al-Megrahi. Newnations has already discussed the background of the al-Megrahi release, suggesting that the Scottish (and British) governments had little choice in the matter, given the risks that an appeal trial for the Lockerbie case, which was being pursued, could have reversed the entire conviction and case. Nevertheless, whether or not al-Megrahi’s release was released in exchange for BP’s benefit, the British oil giant has re-discovered the meaning of ‘political risk’ because of its involvement in Libya. Even while the US has removed Libya from the list of ‘state sponsors of terror’ (and this was prompted at the behest of the neo-con Bush administration in 2006), its leader’s temperamental eccentricities and history, cast a suspicious shadow not just on him, but over anyone doing business with that country.

Libya may have gotten off the infamous ‘terror list’, but its name can still conjure up the very essence of what and who Americans consider to be a terrorist, such was the anti-Libyan rhetoric of the 1980’s and 90’s, when Qadhafi was portrayed in a manner not unlike Osama bin-Laden of the recent decade. Therefore, it was not surprising that BP has announced in August that it would postpone its drilling project off the Libyan coast. The company did not cite environmental risks; even though there is no doubt that the new management wants to avoid another public relations disaster as it still has to confront the fallout of the Gulf of Mexico incident. Indeed, in late July the ‘Financial Times’ said that BP was ready to start the explorations in August as established in the accord that former CEO Browne signed with the Libyan leadership in 2007, which allotted five wells at over 1.7 km. below sea level – deeper than the wells in Louisiana.

So What Happened?
Some Mediterranean countries, in fact, have complained about environmental concerns; Italy has suggested enforcing a moratorium on potentially dangerous exploration in light of the Deepwater Horizon experience. These concerns are not new and they focus on the fact that the currents in the Mediterranean would take far longer to dissipate any pollution resulting from a mishap during the exploration phase. Nevertheless, the timing of BP’s decision to postpone drilling - which may well be due to technical concerns and additional precautions – is suspect and will fuel further speculation on the Lockerbie bomber release and BP’s alleged role in this episode. Meanwhile, former BP CEO Tony Hayward’s – or that of the Scottish officials concerned- continued reluctance to testify before a Congressional hearing will not help resolve the issue. It is now likely that Mr. Hayward will be subpoenaed seeing as the US government has decided to play the Libya card to rally the public against BP. Riding on the populist environmentalist wave, the US senate has also launched an investigation into US companies’ dealings with Libya and any related lobbying.

Senators are under pressure to investigate US companies’ involvement in the ‘Lockerbie bomber’ case, seeing as the same pressure that enabled Libya to be removed from the list of terror sponsoring states (while Syria is still in it, even if diplomatic relations are at a deeper level) was responsible for Libya having been exempted from legislation enabling American victims of state terrorism to sue Libya or any company operating in Libya. Such companies include Occidental and ConocoPhillips, among the first US companies to return to Libya after the 2004 WMD ‘renunciation’ by the Libyan leader. Oddly, one of the senators, leading the accusations against BP and Libya was one of the lead lobbyists in favour of getting Libya exempt from the above stated legislation.

BP says that it still plans to start drilling off the Libyan coast before the end of the year. However, the US senator who is leading the charge against the British oil company, Robert Menendez (D), is using this offshore deal as the principal evidence of collusion between BP and the British government over the al-Megrahi release. President Obama and Secretary of State Hillary Clinton are also maintaining pressure on BP ‘complaining’ that Abdel Baset Al-Megrahi has not died and that if he is still alive, he should live in prison. The US government is clearly out to punish BP and they are putting pressure on the British government. The new British government has in fact asked Libya to avoid lavish celebrations to mark the first anniversary of al-Megrahi’s release. The US-British argument over al-Megrahi has overshadowed the fact that many – and not just in Libya – have never been convinced of the Libyan’s guilt in the Lockerbie case. Libyans consider him a patriot for having sacrificed his freedom in order for the UN Security Council to withdraw sanctions, not to mention the fact that Libya has also paid almost USD two billion in compensation. The extent of the US reaction has actually prompted more than a few suspicions that Lockerbie is still an unresolved case, which demands a new inquiry, one that could have many embarrassments that are more serious in store. Megrahi continues to claim that he is innocent.

Libya’s Italian Trojan Horse
Libya has not launched any special celebrations to mark the anniversary of the release. This is not necessarily, because the leader, Qadhafi, has decided to be reasonable in the face of British prime minister Cameron’s request to avoid celebrations. It may be that it places great importance on the BP exploration project. The chair of the National Oil Company, Shokry Ghanem, was very adamant for BP to start drilling as soon as possible, while BP itself is looking at Libya to revive its fortunes in a huge offshore area. Shell, Exxon-Mobil, Chevron have already tried offshore drilling off Libya, they have failed to find hydrocarbons, and only the Italian ENI has had success in this area in wells drilled in the 1970’s at 200 meters depth (one fifth of the BP project). However, BP’s plans are the most ambitious to date and if oil is found, it could prove to be very significant for BP’s future and for Libya’s plans to increase oil production; the Libyan leadership is wise enough to know that now is not the time to be staging ‘celebrations’ that could compromise BP even further. Lest he be tempted, the Libyan leader will be in Italy for the last days of August to mark the second anniversary of the Italy-Libya cooperation deal. Italy is all the more important, as Libya is now a major shareholder in one of Italy’s largest banks, Unicredit (it second largest shareholder after Mediobanca), which now gives Libya an additional platform in which to invest abroad. Certainly, they will have access to large share quotas in Italy’s largest corporations including defense major Finmeccanica and even a movie production company co-owned by Italian prime minister and businessman Silvio Berlusconi . There are rumors that Libya could even take over the majority of the shares in Unicredit. 

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