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LIBYA

 
  
  

 

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

Books on Libya



Update No: 044 - (02/07/07)

Friends (and defendants) of Convenience 
If any further confirmation were needed that Libya has shunned its ideological approach to its international role, events of the last few weeks should quell any remaining doubts. The high profile visit by outgoing British Prime Minister Tony Blair to Tripoli heralded the return of BP to Libya. Meanwhile, the Libyan leadership also strengthened ties with Algeria over mutual security concerns. Meanwhile, concerns over evidence presented to convict Abdelbasset Ali Mohmed al-Megrahi for the bombing of Pan Am 103 over Lockerbie, Scotland could lead to an overturning of the case, raising a number of foreign policy issues and more, including great embarrassment for the Scottish legal system.

The BP Deal
Tony Blair's inclusion of Libya in his farewell tour served to draw attention to one of his foreign policy successes. While the Iraq mess has no doubt deflated, in the public eye, the impression that Blair and president Bush were endorsing that the ouster of the dictatorship of Saddam Hussein prompted leaders in the Middle East and North Africa to change their 'behaviour', Libya and the UK have no doubt enjoyed better relations. Britain now considers Libya as a partner to help promote greater international security. Blair, who often talked about resolving Africa's crises and alleviating its poverty, also appreciated Qadhafi's efforts to act as a peace broker in Africa's conflicts - most recently mediated a deal between Chad and Sudan (even if the Colonel then challenged further attempts to secure peace brokered by Saudi Arabia last May). The Darfur crisis was also another item of mutual interest for Blair and Qadhafi. Nevertheless, Libya is a small country and without its precious crude oil, it would wield little influence; so it is not a surprise that as Blair was one of the architects of the deal for Libyan reconciliation with the international community, it was only a matter of time before BP would benefit from the political thaw. Just weeks before Blair's departure from Downing Street, BP announced that is returning to Libya more than three decades after it was thrown out, having been granted (and perhaps on more advantageous terms, as it bypassed the bidding rounds), the right to explore for gas in offshore and onshore fields in an initial USD 900m deal, which could easily see further investment in the next ten years. BP has been granted rights to explore offshore areas in the Gulf of Sirte and onshore in the highly fertile Ghadames basin, near the Algerian border. Libyan oil fields have typically been located in areas that are uninhabited and distant from urban centres, reducing the risk of damage to communities, while its position in the middle Mediterranean also offers lower political risks and transport costs. Moreover, Libyan oil is in high demand due to its extremely low sulphur content, reducing refining costs and environmental concerns. 

The timing for BP's Libya deal is propitious, as it allows the company to offset the potential loss of its Kovykta field in Russia. BP's deal in Libya comes as the culmination of efforts by the former CEO, Lord Browne, to return to the North African country since 2005. Lord Browne had held meetings directly with Col. Qadhafi to secure exploration rights. Shell had pre-empted BP, signing a deal to explore for gas in the Sirte basin in 2005. Indeed, Libya's oil reserves are believed to be extensive, with 70% remaining unexplored, largely because of the decades of sanctions; Libya also has very significant gas reserves, which the government wants to develop for domestic use as well as export. Libya expects to double its current production of about 1.5 million bpd by the end of the decade. The country also offers the advantage of relatively low political risk as it has endured relatively less intense islamist activity and terror attacks, than its neighbours. Even if is not immune to the social ills that affect the region as a whole, Libya has been able to overcome some of the consequences of neglect through the distributive largesse afforded by the oil wealth and low population. Other Maghreb countries, rich in natural resources such as Algeria (where BP has significant interests) have seen a resurgence of terror attacks in the past few months. In April, a French oil company worker was killed in Algeria by apparent salafist groups, and there were two bombings in Algiers killing at least 20 people, raising security concerns in the region. Blair had already visited Libya in March 2004, highlighting Tripoli's restoration in the 'international community' after the years of being considered a pariah state and almost a decade of UN sanctions. 

The Lockerbie Trial
London had restored diplomatic ties with the Jamahiriya in July 1999 after the Libyan leader agreed to send two former intelligence officers accused of downing Pan Am 103 over Lockerbie in December 1988. One was cleared, the other, Abdelbasset Ali Mohmed al-Megrahi was jailed for life. 

Nevertheless, the conviction and detention of Mr. al-Megrahi has not been without controversy and in June, more evidence has transpired to cast doubt on the guilt of the former Libyan agent. A Scottish police officer had already suggested the arrest was based on flimsy and circumstantial evidence two years ago and in June, a Scottish police chief has confirmed the rumours. Blair's visit to Libya is also rumoured to have included talks that would result in Ali al-Megrahi serving the remainder of his life sentence in Libya, as reported in the Guardian and The Herald. It has been announced that there will be a formal appeal process for the release of al-Megrahi, one which the Herald suggest could be "highly embarrassing for the Scottish judicial system". Although the appeals procedure is intended to do exactly this should it be the case, to rectify errors and se that justice is done. The re-opening of the trial will inevitably also fuel the anger of the victims' families, while raising doubts on the entire notion of Libyan involvement in the Lockerbie bombing. The spectre of an appeal also suggests that the case of the 6 Bulgarians held on charges of infecting children with AIDS in Benghazi (the Palestinian MD took Bulgarian citizenship in June) is not unconnected and that all the waffling on the case really aimed to achieve the re-opening of the case against al-Megrahi. 

While it is still too early to reach any conclusion, should al-Megrahi win an appeal, the implications are sobering. It would not only provoke questions about Libya's billion dollar compensation package for the families of Lockerbie victims, but would stir uncomfortable prospects for the Western governments and the UN that pushed for international sanctions against Libya. Indeed, this would imply that Libya, the one success of recent Anglo-American foreign policy in the Arab world, and which pivoted around the surrender of the two Libyan agents suspected of the Lockerbie bombing and Libya's renunciation of terror (and WMD's), may have relied on flimsy evidence and false convictions. The al-Megrahi file has been studied by the Scottish Criminal Cases Review Commission, which said that evidence gathered at the scene of the Pan Am flight 103 crash was lost or destroyed, implying that the evidence that was then given to support the incrimination was not conclusive - such that the available evidence was made to fit the guilty thesis - of Abdelbaset Ali Mohmed al-Megrahi, for the crime, at his trial in The Hague in 2001. The defence has argued that the case against al-Megrahi relied almost entirely on a doctored identification of al-Megrahi by a Maltese shopkeeper, (such that a police officer showed Gauci a photograph of Megrahi in a magazine shortly before he was asked to identify the Libyan at his trial) and the quality of evidence concerning a circuit board, used to trigger the explosive, which was said to have been found at the crash site. Should al-Megrahi's appeal, in fact convince judges that he is innocent or that the evidence brought forth against him is flimsy, the Lockerbie case would have to be re-opened to follow the alternative route of the Syrian/Iranian backed PFLP. It is said that at the time of the Lockerbie investigation, Syrian support was needed by the White House to support the US led coalition against Iraq in the First Gulf War. 

Iran was suspected in the early stages of the investigation simply because they had the motive of revenge, as a US warship in the Gulf had in a terrible error, shot down an Iranian civilian airliner, killing all the passengers. 

Of course, now, evidence of Syrian and Iranian backed terror operations would be expedient, raising questions about the timing of the appeal. But whatever evidence there may be, it must have been considered before the police and investigators opted for the Libyan hypothesis. Meanwhile, in the United States, the family members of Lockerbie victims joined House Rep. Steve Israel (D-Huntington) at a news conference, urging the Senate to vote on the House bill to force Libya to pay more than US$500 million owed to victims' families. Libya owes US$2.7 billion in compensation. As of 2004, Libya has paid US$8 million (out of the total 10 million) it owes each family. 

North Africa and Security
Meanwhile, there is growing evidence that North African governments are increasingly concerned about the security situation. Not the best of friends, Algeria and Libya have agreed to cooperate on security matters both within their territories and beyond in the Sahel region. Both countries want to exercise greater control in the vast Sahel region to limit the risk of islamist groups in the wake of the wave of attacks in Algeria and Morocco last spring. Tripoli is concerned by the Libyan Islamic Fighting Group (LIFG), which is targeting al-Qadhafi himself. The group is said to have been established by Libyan dissidents in the mid-90s in Afghanistan. Even though they have been ineffective in Libya, the fact that three Libyan nationals seeking to join Algeria's Salafist Group for Preaching and Combat (GSPC) were arrested, has suggested that militants are interested in cross-border operations. The GSPC, therefore, is not considered to be a mere Algerian problem; it is increasingly viewed as a regional one. It is also believed that the GSPC could have members in Algeria, Libya, Mali, Niger, Tunisia, Morocco and Mauritania. Although Libya has not experienced the kind of terror witnessed in Algeria - and occasionally in Morocco and Tunisia, the changing and pro-western outlook of recent Libyan foreign policy could prompt anti-regime momentum in Libya among dormant opposition groups. Interestingly, North African governments have recently rejected the opportunity to host the US proposed African Command Centre (AFRICOM) in order to lessen the perception of their having close relations with the United States. Algeria, which has dealt with organized islamist opposition, could offer Libya advice on counter-terror management as well as increased cooperation on cross border movements. As for the Sahel, and the need to cooperate there, it is a vast and uncontrolled area, offering the very environment that facilitates militants to organize and expand. Countries around the Sahel have porous borders, which make it easier to smuggle weapons and militants.

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ENERGY

BP announces US$900m gas exploration deal with Libya


BP, the global energy group, last night announced a US$900m ($455m) gas exploration deal with Libya, in a sign of Triploi's transformation from pariah to attractive investment destination for UK and US companies, the Financial Times reported.
Tony Hayward, BP's new chief executive, described the agreement as the group's "single biggest exploration commitment."
The deal coincides with a visit to Tripoli by Tony Blair, the outgoing prime minister.
Describing the planned contract as "unthinkable" only a decade ago, Mr Blair said after a meeting with Colonel Muammar Gadaffi, Libya's leader: "The relationship between Libya and Britain has completely transformed in the past three years."
He added that investment links were "going from strength to strength."
US and British energy companies have been scrambling to get back into Libya over the past two years to secure a share of the country's largely unexplored gas and oil reserves.
Their return follows the lifting of sanctions after Tripoli abandoned weapons of mass destruction and resolved the crisis over the 1988 Lockerbie bombing.
Some analysts said recently that BP was "a little behind the curve," returning to Libya after oil groups including Royal Dutch Shell and ConocoPhillips. BP will also have to vie with companies long established in the north African country, such as Italy's Eni and Spain's Respol.
Analysts said BP needed to expand in new areas especially as it faced the threat of losing its licence to exploit one of its main Russian assets, the Kovykta gas field.
"As Russia becomes more of a risk, BP's portfolio starts to look weaker compared with Shell's" said Oswald Clint, oil analyst at Sanford Bernstein. "Opportunities are few and far between and BP needs to grasp all the opportunities it can."
BP withdrew from Libya in 1974 when the country's oil industry was nationalised by Col Gadaffi. But early last year the company said it was in early stage talks about gas projects.
A delegation of BP executives, including Mr Hayward, were in the Libyan capital recently as Mr Blair arrived in Tripoli for the beginning of his trip, part of an international tour before standing down on June 27th.
Mr Blair can point to Libya's decision in 2003 to destroy its weapons arsenal voluntarily as a rare achievement in a foreign policy otherwise overshadowed by the war in Iraq.
Mr Gadaffi has complained that his country has yet to see the benefits of disarmament. But with large oil and gas reserves, and a more open investment policy than most Opec members, Libya has become highly desirable for foreign companies.
Libya's Sirte Basin is the largest oilfield in Africa, holding 22 per cent of the continent's 300bn barrels of reserves.
But venturing into Libya, where economic policy shifts depend on the mood of Mr Gadaffi, is challenging. Foreign companies operating in the country are finding that high taxes and royalties mean their profits margins are lower than they originally might have expected.

  

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