After almost two decades of political and economic isolation,
Libya is slowly regaining the space that it deserves in
the international scene. Western marginalization of the
North African giant has been left aside for a growing
interest in mutual economic cooperation and political
ice-breaking, thanks to a quiet but effective diplomatic
offensive led by Col. Muammar al Gaddafi and the tempting
benefits of the largest oil reserves in Africa.
Things started changing in April 1999 when the Libyan
authorities agreed to hand over the suspected co-authors
of the Lockerbie bombing to the Scottish Tribunal who
was appointed ad hoc in the Netherlands for this case.
Although the responsibilities in this action are less
than clear, this concession paved the way for the lifting
of the UN sanctions that hindered the Libyan economy
for a decade thus became the first step for Libya's
reintroduction in the international system. On April
5, 1999, more than 10 years after the 1988 bombing of
Pan Am flight 103 over Lockerbie, Scotland that killed
270 people, Libya extradited two men suspected in the
attack. One of them, Abdel-Basset Ali Mohammed al-Megrahi,
was found guilty at the initial trial. In response to
the gesture, the United Nations suspended economic and
other sanctions against Libya that had been in place
since April 1992. U.N. sanctions reportedly have cost
Libya billions of dollars in lost income, and have made
it more difficult for Libya to develop its energy sector.
A full lifting of sanctions can occur 90 days after
the U.N. certifies that Libya has met all requirements,
including renunciation of support for terrorist acts.
On July 9, 1999, the U.N. Security Council issued a
statement saying that while it "welcomed the significant
progress" which Libya had made in complying with
U.N. demands, at the same time Libya would need to do
more (i.e., cooperate with court proceedings, pay compensation
to families if the suspects are convicted) before sanctions
were lifted permanently.
Nevertheless, U.S. sanctions, including the Iran-Libya
Sanctions Act (ILSA) of 1996 (which covers foreign companies
that make new investments of $40 million or more over
a 12-month period in Libya's oil or gas sectors) remain
in effect. On July 27, 2001, the US Congress voted to
extend ILSA for five more years. Parallel to this, the
sympathetic response by Libya after the September 11th
attacks on New York, plus the promise from the Libyan
authorities to negotiate and pay compensations worth millions
to the Lockerbie victims and their families are signs
of good will that have been welcome in Washington. In
May 2002 a US law firm representing the victims' families
announced that Libya was ready to pay US$10m compensation
for each victim, a total of US$2.7bn, subject to three
conditions. According to the law firm, the Libyan offer
stipulated that 40% of the compensation will be released
when the now suspended UN sanctions against Libya are
lifted; another 40% when the US lifts its unilateral sanctions
against Libya; and the remaining 20% when the US removes
Libya from its list of state sponsors of terrorism. Frantic
unofficial meetings have been held between representatives
of both countries and it is clear that a final arrangement
concerning the compensations will lift automatically American
sanctions. American companies are strongly lobbying for
it, as their European counterparts benefit largely of
this Arab country's reserves. |
Considering
this handover decision as the milestone of the new foreign
policy, Libya's main political and business personalities
have carried out intensive diplomatic contacts with western
countries in Europe, like Italy, Germany, France, Spain,
Austria or more recently, Great Britain. The most notorious
outcome of these efforts was the visit in July 2002 by
the British Foreign Office Minister, Mr. Mike O'Brien,
to Col. Gaddafi in his Syrte-based desert camp. More recently,
the Italian president, Mr. Silvio Berlusconi paid the
same visit. At the same time, Libya has focused on the
most ambitious project in its history, the "renaissance"
of the African Unity, led by col. Gaddafi himself and
the South African President, Mr. Thabo Mbeki.
If we look more closely, apart from the political fireworks,
this dual strategy makes perfect sense business-wise:
"Due to Libya's geographic and strategic position,
we are looking forward seeing Libya play the most important
political and economic role in its history, by binding
European and African interests. We want to link two
huge markets in a process of cooperation and economic
exchange at all levels such as joint investments, knowledge
and technology transfers and modern management. Libya
is the meeting point for the markets of these two important
continents where there are immense interests and benefits
for both sides", comments Mr. Abdurrahman Shater,
chairman of the Libyan Union of Chambers of Commerce,
Industry and Agriculture.
This so-called "new diplomacy", in which the
Leader's sons, Eng. Seif el Islam and Mr. Saadi Gaddafi
play a dynamic role, has two main goals. In first place
Libya wants to normalize political relations with the
rest of the world, and that implies lifting the U.S. sanctions
that are still in force. In the second place, the country
looks forward linking its economy to the globalization
train, enhancing trade and investment relations between
them and the rest of the world. Dr.
Taher Jehaimi, Secretary of the General Planning Council
and ex-Governor of the Central Bank of Libya, states:
"We have good reserves, we are a rich country, but
what we want is to become part of the world economy, we
want to be involved in the World Trade Organization, and
we need to upgrade the function of our economy, in terms
of technology, training, management".
The Government is serious about this. Most of the high
rank officials are impregnated from the reformist speech.
Although there are many obstacles, the country is decided
on transforming a state-run economy, full of expensive
and inefficient factories, into a private-owned, flexible
and dynamic one. And this, without any doubt, involves
foreign participation, either through direct investment
or through trade bindings. These changes will face some
resistance, but the Government and the civil society
is pushing hard to make things happen.
As Dr.
Abd Al-Rahman Shalgam, Secretary for Foreign Affairs,
speaks: "Libya is now completely open to investment
and, in this regard, we have new legislation". Words
backed by Eng Seif el Islam Gaddafi, who thinks that "this
is the most interesting time to invest in Libya. It is
important to be the first entering the country. After,
it will be too late, they will face more competition and
it will be harder to enter the market. Now is the best
time, and it is secure to invest in Libya." |
