Uncle Sam Goes to Libya: Two Years after Libya Reached an Historic Agreement with the US to Abandon Its Terrorist Activities, Trade between the Two Countries Is Finally Picking Up. Mutual Interests May Drive It Much Higher Still

By Martin, Josh | The Middle East, April 2006 | Go to article overview

Uncle Sam Goes to Libya: Two Years after Libya Reached an Historic Agreement with the US to Abandon Its Terrorist Activities, Trade between the Two Countries Is Finally Picking Up. Mutual Interests May Drive It Much Higher Still


Martin, Josh, The Middle East


IN EARLY APRIL, A DELEGATION OF 20 American businessmen will visit Libya, and be given the full red-carpet treatment. They will not be there as casual tourists seeking some pre-summer fun on the beach. Rather, they will man booths at the Tripoli International Fair, showing their wares and negotiating the sale of everything from computers to healthcare products to sporting goods.

Trade Fair participation is largely symbolic. The Americans are after bigger stakes, such as a role in developing the country's oil and gas fields, or participation in mammoth engineering projects like the Great Man-made River Project and a new rail transport grid now being built.

For investors, there is also the prospect of participating in a major government privatisation programme, designed partly to staunch budget outflows caused by inefficient state-owned enterprises, but also to bring Libya into the network of global trade and investment.

Libya is now in the process of negotiating membership in the World Trade Organisation, and is also exploring a variety of bilateral and multilateral free trade agreements.

For members of the American delegation, these are heady times.

But commercial relations between the US and Libya have long been hostage to the sometimes stormy political relations between the two countries. True to that history, the most recent thaw is unlikely to result in a smooth stream of economic rewards.

The elaborate political dance began in 2003, when Libya announced to the UN that it agreed to pay $2.7bn for its role in the destruction of Pan Am Flight 203.

Tit for tat: since 2004, when most economic sanctions were dropped, and diplomatic relations between the two countries resumed, bilateral trade has grown exponentially. American exports doubled in the past 12 months, and are expected to top $100m this year. But Libya has been the biggest benefactor, selling $1.5bn worth of petroleum to energy-addicted Americans.

No one should be surprised by this lopsided trade. Prior to the sanctions imposed in 1986, American companies had played a significant role in the development of Libya's oil industry. The notorious Hunt brothers made billions in the early 1970s by winning contracts from the then-new and unpopular Gaddafi regime. The four American oil companies active in Libya when Ronald Reagan signed his embargo order in 1986--Occidental Petroleum, Conoco, Marathon Oil, and Amerada Hess--are all now negotiating with the Libyan government to reclaim their positions.

The most savvy operator of them all, engineering giant Bechtel Corp, is also keen to resume its operations (it was awarded its first contracts there from King Idriss in the 1960s), seeking a chunk of the $30bn Libya is expected to invest in oil and gas development over the next 15 years.

The Bush administration--which has strong links to both Bechtel and the oil companies--has welcomed these efforts.

Trade in computers and hi-tech products is also being encouraged. When IBM recently contracted a representative in Libya, it was widely seen as a symbolic gesture which could only happen if it was tacitly approved in Washington.

Indeed, both the US and Libyan governments appear keen to see such commercial relations develop. Colonel Gaddafi has tactfully encouraged Libyan businesses to reach out, especially through the person of Mohammed Kanoun, chair of the Federation of Libyan Chambers of Commerce.

On the American side, both the CIA and the Commerce Department have carefully upgraded their databases. Trade organisations like the National US Arab Chamber of Commerce (NUSACC), and the Corporate Council on Africa report significant government encouragement from both sides.

"Nations have a way of forgiving past hatreds," observes Hooshang Amirahmadi, director of the Centre for Middle Eastern Studies at Rutgers University. "Trade has a way of melting misperceptions. …

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Uncle Sam Goes to Libya: Two Years after Libya Reached an Historic Agreement with the US to Abandon Its Terrorist Activities, Trade between the Two Countries Is Finally Picking Up. Mutual Interests May Drive It Much Higher Still
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