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  2003 2002 2001 Ranking(2003)
Millions of US $ 19,131     71
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 US $ n/a n/a
Ranking is given out of 208 nations - (data from the World Bank)

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Col Mu'amar al-Qadhafi

Update No: 032 - (03/07/06)

Normalization at a Pric
The decision by the US administration to restore full diplomatic relations with Libya after a 26 year hiatus has stumbled across a legal obstacle just as the new diplomatic relationship was to take effect. The US embassy re-opened in Tripoli on May 31 in a quiet ceremony, and both countries are planning to appoint ambassadors in the near future. The issue, predictably, revolves around a legal dispute between Libya and the families of the victims of the 1988 bombing of Pan Am 103 over Lockerbie, Scotland attributed to Libya. On June 29, the US House of Representatives tried to vote legislation preventing Washington from sending an ambassador to Libya until it pays the remaining $540m in compensation still claimed by survivors of the Lockerbie victims as part of the original $2.7 billion compensation agreement reached in 2002. The families fear reasonably enough that the end of US sanctions, lawyers trickery and the removal of Libya from the terrorism-sponsoring list would somehow preclude Tripoli from having to pay the final instalment. Libya is in fact suggesting that, as it has refused to make the final payment because, it argues, the US did not remove it from the list before a deadline stipulated in the agreement. Libyan lawyers said told the US that there was no longer any legal obligation on Libya to make the final payments of $2 million to each family, because the agreement to keep the final portion of the compensation package expired in December 2004, by which time Libya was to have been removed from the 'list'.
The lawyer for the Lockerbie families say that the delay in removing Libya from the terror list was only due to Libya's continuing dubious conduct, which still showed a tendency for violent actions such as the very convincing allegations of a plot to assassinate the then crown prince, now King Abdallah of Saudi Arabia in 2004, which we have reported in past issues (archives).
The US administration has anyway been criticized for removing Libya off the list of terror-sponsoring nations but the 45-day congressional review period is ending, leading to official removal from the list. To avert worse criticism and a flat-out crisis, Libya will likely have to concede to the families' reasonable demands, in order not to any further compromise its position and that of the administration that has favoured it. Defending its decision to remove Libya from the 'List' - barely weeks after upholding the terrorism sponsoring status - the US leadership counterattacked, saying that Congress' protests are suggesting to such countries as Iran and North Korea that the United States does not abide by its word, when it offers diplomatic advantages to countries that renounce weapons of mass destruction (WMD). Libya is still being played as a diplomatic success card by the United States leadership. As the Bush administration continues to face a barrage of criticism over the Iraq war, Guantanamo Bay prison, the various military cover-ups, telecommunications and the financial records scandal, it wants to promote Libya as one of its - few - diplomatic successes, which plays in Libya's favour. Perhaps, not surprisingly, other powers involved in the Iraq and WMD controversy are also doing their best to show off the Libya rapprochement as a success. The British Government said it would protect and defend Libya in the case of a nuclear, chemical or biological weapon attack, signing a deal on this on June 26. To silence critics that would - rightly - point to the fact that oil was a more likely motivating factor in removing Libya from the Terror List, the State Department also suggested the rather oblique motivation that that a US embassy in Tripoli is necessary to promote peace in the Darfur region of Sudan, and encourage economic and human rights reforms in Libya. 
Nevertheless, the diplomatic trapeze act may not be necessary, as Libya will surely try to capitalize politically by paying the remainder of the compensation. If the United States wants access to Libya's untapped oil reserves, Libya needs that US exploration effort to expand. Libya also needs to upgrade infrastructure and military equipment, and does not need to risk losing that opportunity, one which comes upon achieving a full diplomatic relationship. Libya also needs added diplomatic prestige as it carves out a new role for itself in the North African region itself, where it has somehow encroached on the pretensions of some of its neighbours, such as Algeria. Libya has been expanding its African policies since the mid-1990's, when it abandoned plans to rally the Arab world under a single nationalist banner to focus on Africa. 

Libya has played an important role in bringing the parties together to agree on a peace plan for Darfur, but it also has shown interest in Mali, where the Touareg rebellion has recently resumed. Tripoli, although it has no shared border with Mali has been 'competing' with Algiers (which does), to act as the neutral mediator, both seeking recognition to present themselves as the main regional diplomatic players. Algeria has also gained significant US favour in recent years, because Algeria has also helped the United States in its 'war on terror'. Clearly, a good relationship with Washington would add credibility to Tripoli's ambitions. Tripoli's intervention in Mali would serve to increase its influence in the Sahel region and boost its position as a regional power. The ambitions of regional powers often become the opportunities for major powers as the strengthening of security that is often entailed as the excuse for diplomatic intervention, often lead to contracts with defence companies of major powers, who are happy to sell billions of dollars of military hardware. Russia has been particularly active in this regard, and after dealing with Algeria, Vladmir Putin is preparing to visit Morocco in September, with likely ambitions to secure some defence contracts. The diplomatic opening to the United States would make Libya a legitimate candidate for such contracts from the EU, Russia and of course the United States.

A recent deal between Gazprom and Libya's NOC suggests more cooperation with Russia is also in the works. Gazprom OJSC and Libya will soon sign a Memorandum of Cooperation in the gas field, as agreed during a meeting between Alexander Medvedev, Deputy Chairman of Gazprom, and Shukri Ghanem, now Chairman of NOC and until recently the prime minister. Under the agreement, Gazprom is to participate in developing Libya's gas infrastructure, production, transportation and processing of hydrocarbons. For its part, Gazprom would be able to explore Libyan fields in accordance with the agreement on assets exchange with the German BASF, which owns Wintershall oil. Libya's proven natural gas reserves total some 1.49 trillion cubic meters, making it the fourth largest in Africa after Algeria, Nigeria, and Egypt, but gas has been neglected compared to oil, given that only 17% of resources are exported and there may yet remain much more to be discovered. 

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Tatneft to start exploration drilling in Libya in 2007 

Russian oil company Tatneft plans to start exploration drilling at the N82-4 contract zone in Libya next year, Tatneft deputy director general for foreign economic activity, Khamit Kaveev, said, Interfax News Agency reported.
He said that a few days ago the country's government approved a program for Tatneft to work at the block.
Tatneft and the National Oil Corporation of Libya signed a contract last December for the exploration of the N82-4 block. Work will be carried out under a production sharing agreement according to which the volume of oil to be split amounts to 12 per cent of production.
The block is located in the central part of the country and covers an area of 2,000 square kilometres. Minimum exploration obligations require 2D and 3D exploration work to be carried out, and also two exploration wells to be drilled. Two exploration wells were previously drilled at the block, indicating the presence of hydrocarbons.


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