Courting Libya, at a cost
By Dominic Moran for ISN
US President George W Bush signed a bill mandating the restart of compensation payments for alleged Libyan terror victims this week, paving the way for the full resumption of US-Libyan bilateral ties.
The US has had a temporary mission in Tripoli since 2004, established in the wake of a US and UK-brokered deal in December 2003 in which Libya agreed to dismantle its nuclear, WMD and ballistic missile programs.
The agreement was seen at the time as a possible precursor of future nuclear deals with North Korea and Iran - though the relevance of the Libyan talks with Pyongyang and Tehran appears tangential at best.
Two million of the US$10 million per family Lockerbie compensation package held in an escrow account had reverted to Libya after the country's scheduled removal from the US' list of state sponsors of terror was held up by the discovery of an alleged Libyan plot to assassinate Saudi Arabia's King Abdullah.
US Secretary of State Condoleezza Rice was forced to postpone an announced visit to Libya last year after Congress refused to pass a funding bill for the establishment of an embassy or to move ahead with confirmation hearings for the ambassador-designate in lieu of a new compensation deal.
Libyan leader Colonel Muammar Gaddafi in a Tuesday statement clearly timed to coincide with the passage of the bill, provided a conciliatory gesture to Washington in openly criticizing Iranian nuclear intransigence, external pagewarning Tehran that it would "suffer the same fate as Iraq" if it ignored a US-backed incentives package.
The US decision is important in that it provides diplomatic clout to US companies in their competition with international rivals in tapping the gas and oil bonanza sparked by the opening of the Libyan economy and the Libyan decision to boost oil production by 40 percent to 3 million barrels per day by 2013.
Here, the US is not alone. Italian President Silvio Berlusconi has moved rapidly in recent weeks to conclude a bilateral friendship and cooperation pact with Libya. Six Italian patrol boats are reportedly ready for delivery, while the Libyan leader's son and international go-between, Saif el-Islam Gaddafi, has told reporters that a multi-billion compensation package for Italy's pre-WWII occupation of Libya had been agreed.
This after French President Nicolas Sarkozy signed a raft of economic and military pacts with Gaddafi in 2007 - including a purported reactor deal, quickly denied by Paris, though a memorandum on atomic cooperation was signed.
In Libya's first military deal with a European state in decades, France agreed to provide US$402 million in anti-tank weapons and communications systems, while Libyan officials reported that the agreement also involves cooperation on the establishment of an arms factory.
Gaddafi's five-day visit to Paris in December, his first visit to France since 1973, saw further pacts and was a major embarrassment for the hosts, but signaled the determination of the government to push forward its ties with Tripoli in the face of significant domestic opposition.
The Libyan leader has made clear his resistance to Sarkozy's Union of the Mediterranean, decrying the move as an "imperial design" that will promote Islamic militancy.
Russia is also moving to strengthen relations, with Libya releasing a detained Russian oil executive ahead of talks on 31 July that look set to result in significant defense purchases and, possibly, nuclear cooperation.
Russia's Gazprom signed an oil and gas cooperation pact with Libya last year in a deal seen by some analysts as intended to gain a major and even dominant stake in Libyan gas supplies to Europe, negating EU member states' efforts at supply diversification.
The prominent role played by Saif al-Islam in international negotiations on a swathe of issues is seen as an indicator that he is being groomed for the leadership by his father. Domestically, he is presented as the state's public face of reform in a manner not dissimilar to the progressive advancement of Gamal Mubarak in Egypt and Syrian President Bashar al-Assad's initial period in office.
He has acted as titular head of the National Consultancy for state project planning but it remains unclear what actual authority he enjoys within the diffuse Jamhariya system, despite his ongoing diplomatic role. He denies harboring leadership aspirations.
Saif al-Islam has made clear his preference for democratic reforms and the establishment of independent courts, media outlets and a central bank. However, In a 2007 Benghazi address he made it clear that security issues, Sharia and his father's ongoing rule should not be part of any new civil-political discourse.
Should he eventually succeed his aging father, pre-existing structures - and vested interests therein - and the advanced state of decay of state institutions are likely to present similar challenges to those that curtailed al-Assad's tentative reform push.
Regime stability is likely to be bolstered in future by high oil and gas prices. And the fact that Libya's plentiful oil and gas reserves will likely emerge as a key factor securing regime stability while promoting endemic corruption in a manner likely to hobble efforts to promote the rehabilitation of Libya's dilapidated welfare, health and educational institutions.
Libya has made it clear that energy development will be on its terms and that future security of energy supplies will be linked to maintaining the good graces of the Gaddafi administration.
The country has leveraged the current hike in oil prices to force major European oil companies to renegotiate their contracts with the government in recent weeks and months.
A consortium involving energy companies StatoilHydro, Total, Repsol and OMV agreed in late July to pay a US$1 billion signing bonus for a contract extension until 2032 in a southern oil field. This after Italian energy company Eni was forced in June to renegotiate all its Libyan contracts.
Libya's willingness to politicize energy supply was made abundantly clear through the suspension of Libyan oil shipments to Switzerland in mid-July after another of Gaddafi's sons, Hannibal, was briefly held with his wife by Swiss police after an alleged assault. Libyan flights to Switzerland were canceled, some Swiss businesses in Libya shuttered, diplomats withdrawn and two Swiss nationals detained in Libya amid the short-lived crisis.
Ultimately, the precipitous rush for carbon contracts has come at the expense of efforts to pressure Libya on its human rights record or lack of genuine civil and democratic reform, which remains minimal despite recent regional polls.
Libya's experiment in diffuse revolutionary governance has created chaos and a vacuum that has allowed the development and extension of dictatorial powers and criminalization of dissent.
Despite rhetorical commitments, the prospects for substantive change appear bleak.