August 5, 2008

Turning Gadhafi into a Good Guy

MOSCOW _ It was a surprise the like of which we have not seen since the exchange of dissidents for spies in the Soviet era.

Arriving in Moscow for talks with Vladimir Putin on July 31, Libyan Prime Minister al-Baghdadi Ali al-Mahmoudi brought on his plane Alexander Tsygankov, the head of LUKoil Overseas in Libya, who had been imprisoned 8 months ago in that country on charges of industrial espionage.

What makes it more remarkable is that Prime Minister Putin had tried to clear up this misunderstanding during a meeting with Moammar Gadhafi in Tripoli in April, but apparently in vain.

After receiving such a "present," there was nothing left to do but discuss the details of a whole range of Libyan-Russian large-scale cooperation projects _ from producing, processing and exporting oil and gas and laying pipelines on the Mediterranean sea bed, to selling arms to Tripoli, and building railroads and nuclear power plants.

Not all the financial details are known, but it is clear that the deals run into billions of dollars. It is enough to mention the 320 mile-long railroad Russian Railways will build in Libya for $2.2 billion, or the shopping list of weapons Libya would like to buy (90 percent of its arms are Soviet-made).

Russia has joined a long list of countries that have been standing in line to do business with the largely desert, but oil and gas rich, country since the miraculous transformation of its leader Col. Moammar Gadhafi. Russia is not the first in line, but nor is it the last, which is a good thing. At this point it would be appropriate to recall that for 17 years (from 1986 to 2003), Libya was considered one of the worst "rogue states" by those who use that classification.

The United States imposed trade sanctions on Libya in 1986, after an explosion in a Berlin disco popular with American soldiers that killed three and injured over two hundred men (Washington had already severed diplomatic relations with Libya in 1980). President Reagan even sanctioned the bombing of Gadhafi's residences, and the Libyan leader had a narrow escape.

The United Nations and the European Union introduced sanctions against Libya in 1991, after it was proved that Libya's intelligence services had been involved in the 1988 mid-air explosion of Pan Am Flight 103 over the Scottish village of Lockerbie, killing 270 people.

In 1993, the sanctions were toughened. In 2003, they were lifted. In 2004, the United States eased its sanctions and in 2005 cancelled them completely. It removed Libya from its list of sponsors of international terrorism, and voiced its readiness to restore diplomatic relations with it in 2006. This is the history of Tripoli's sins and absolution.

The Americans have already dubbed this transformation the "Libyan model," and strongly recommend that Iran follow its example. They are trying to show to Iran that it can receive all the benefits Libya has (investment, technical aid, and removal of sanctions) if it meets their demand to suspend its nuclear program.

As it often happens in diplomacy, especially, in American diplomacy, all this is actually misleading. In reality, the situation is the reverse.

Paradoxical though it may seem, Gadhafi's miraculous transformation was made possible as a result of direct talks between the White House and his emissaries. This is precisely what Washington denies Iran. Edward Walker, president of the Middle East Institute and former U.S. assistant secretary of state for Middle Eastern affairs made this comment: "Some say it is supposed to send a message to the Iranians. As far as I can see, the message is that it worked because they had direct talks with the Libyans."

Gadhafi's decision to denounce terrorism, and shut down Libya's programs to develop nuclear, chemical, and biological weapons in 2003 is presented as a sudden conversion, although Washington started talks with him under Bill Clinton's presidency (1993-2001). The reason is almost too embarrassing to tell. By Clinton's second term he was coming under very strong pressure from American oil firms. Italy's ENI, France's Total, and Spain's Pepsol were already operating in Libya on a large scale in defiance of U.N. and E.U. sanctions. They were merely trying to keep a low profile. By 2003, when Gadhafi made his miraculous transformation from pariah to citizen, more than a hundred foreign companies were producing and processing oil, or providing equipment for wells and oil production, but none of them were American. That was doubly irritating because it was the Standard Oil of New Jersey (previously Exxon) that had discovered oil in Libya in 1959.

Libya abounds in oil and natural gas. Thanks to Western sanctions, and lack of equipment its oil industry was for a long time in hibernation. There was no exploration, production, or research, and its hydrocarbons were saved for posterity. Libya is different from other OPEC countries. It is the only major oil country in the Middle East that does not ban foreign investment in its oil industry. In Western estimates, it costs it one dollar to produce one barrel of high quality oil. Libya is believed to be Africa's first and OPEC's fifth in oil reserves, which amount to some 5.1 billion tons, and it is quite possible that it has even more oil.

The situation with gas is even more radiant. Today, Libya supplies Europe with 8 billion cubic meters of gas via the Green Stream pipeline every year. Libya's gas reserves had been estimated at 1.47 trillion cubic meters. Now they are believed to be double that figure.

In principle, Russia is close to signing an agreement with Libya for the purchase of large qualities of gas and liquefied natural gas (LNG) for re-export. The question is how much gas Russia will buy. Many West European countries dread to think what the answer could be, because they had hoped to keep the Russian gas monopoly Gazprom away from its southern flanks. Russia is bound to encounter strong, if indirect, resistance from Europe.

But we have our own trump card. During his visit to Libya last April, Vladimir Putin voiced Moscow's readiness to write off $4.5 billion of Libya's debt. With this gesture Russia has good reason to hope for understanding in business talks.



Andrei Fedyashin is a political commentator for the Russian News and Information Agency Novosti; Web site: The Washington Bureau of RIA Novosti can be reached by phone at (202) 328-3238, fax (202) 328-0137, or e-mail: [email protected]

The opinions expressed in this article are those of the author and may not necessarily represent those of RIA Novosti.


(c) 2008, RIA Novosti

Distributed by McClatchy-Tribune Information Services.


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