July 27, 2007

Unseemly scramble for Libyan oil

The release of six foreign medical staff sparks a renewed rush for Libyan energy contracts, with profound implications for domestic social cohesion and the regional power balance.

Commentary by Dominic Moran in Tel Aviv for ISN Security Watch (27/07/07)

France has beaten potential competitors to the punch in the race to secure lucrative Libyan carbon and nuclear contracts, as Tripoli continues to maintain the guilt of five Bulgarian nurses and Palestinian doctor convicted of infecting hundreds of children with HIV.

French President Nicolas Sarkozy signed a raft of partnership deals with Libyan leader Muammar Gaddafi on Wednesday covering a range of issues including cooperation on atomic development.

Worryingly, the groundbreaking nuclear agreement will likely see French energy conglomerate Areva provide Libya with a nuclear reactor only four years after Gaddafi announced the scrapping of Libyan programs of weapons of mass destruction.

Thursday's deals were a Libyan reward to France for its leading role in pushing through last-minute negotiations for the release of the six prisoners, through which the Gaddafi government has won initial promises of partnership relations with the EU.

The six foreign medical personnel were transferred to Bulgarian custody on Tuesday, receiving an immediate pardon from Bulgarian President Georgi Parvanov.

Relating to the negotiated settlement, an unnamed Libyan government official quoted by Al Jazeera, said, "The pardon granted to the medics by the Bulgarian authorities is a clear violation of the agreement reached on July 23."

The group spent over eight years in Libyan prisons during which confessions were allegedly extracted under torture, involving savage beatings, death threats, electrocutions, sexual assaults, rape and the setting of police dogs on the prisoners.

According to the charges, the medical personnel, in coordination with Israeli intelligence, knowingly infected 426 children in a Benghazi hospital with the HIV virus. Investigating medical personnel refuted the charges.

The case was brought in an effort to deflect blame for the failure of Libyan authorities to implement standard medical safety practices that would have prevented the tragedy.

US and EU relations with Libya have warmed considerably since the lifting of UN sanctions in 2003 in the wake of the Libyan decision to end its WMD programs and to pay victims of the Lockerbie bombing. Full normalization has been held up by the incarceration of the foreign medics.

In comments carried by the Associated Press, US Secretary of State Condoleezza Rice on Wednesday said she "sincerely" hoped to visit Tripoli shortly, noting that a US ambassador to Tripoli had already been nominated and that " American companies are very interested in working in Libya."

It is unclear who paid the estimated US$1 million per child to the families of the infected children, 56 of whom have already died, but it is likely that the EU and the US provided significant sums to a fund run by Gaddafi's son, Seif al-Islam.

Many analysts have noted the symmetry between the US$2.7 billion payment forced on Libya in 2002 over the Lockerbie bombing and the case of the six medics, with this week's deal allowing Gaddafi to save face after the humiliation of this back down. Libya is withholding 20 percent of the Lockerbie settlement, provoking calls in the US Congress for the White House to freeze the current thaw in relations.

This week's agreement comes as Western nations and companies compete for lucrative Libyan oil and gas concessions. Around 30 international companies are already playing a role in the deregulated Libyan carbon energy sector.

Libya has the world's 8th largest proven oil reserves and has ambitious plans to expand production by 2012 from 1.6 million barrels per day (bpd) to 3 million bpd.

With Europe dominating trade with Libya, the EU is expected to foster a series of partnership agreements with Tripoli in coming months that would cement the role of member states in the Libyan oil and gas sector in return for investment in and aid for banking, educational and health reforms.

This process has already started with BNP Paribas inking a deal earlier this month with the state-run Sahara Bank in the first partial privatization of a Libyan financial institution, Reuters reports.

A current economic reorganization is raising considerable fears in Libya, where economic isolation and the related virtual collapse of state institutions has impacted severely on the maintenance of the country's comprehensive welfare system.

This system has been the greatest patrimony of Gaddafi's Green Revolution, maintaining social cohesion while effectively preventing significant challenges to the regime from arising despite the lack of political and civil freedoms and years of international isolation.

Under Libyan "Islamic socialism," small businesses remained in private hands while large holdings were state-run.

The current, gradual neo-liberal economic transformation, championed by the head of the Economic Development Board Seif el-Islam Gaddafi, threatens the social pact built following the 1969 revolution.

The halting reform process is slowly divesting the state of its ability to control the key levers of the economy and threatens to marginalize the grassroots representational system built in the 1969 revolution, and the key role in national priorities of the welfare state.

Libyan officials have confirmed that up to 120,000 government workers will lose their jobs in the coming restructuring process, the The New York Times reported in March.

The new economic path promises a dangerous situation in coming years where the injection of carbon wealth through foreign investor-fuelled growth will be directed primarily to the Gaddafi family and associates. While securing the future of the regime this promises to encourage corruption and the spread of radical Islamic sentiment from neighboring countries among the newly-impoverished.

Once competing Western states secure their spheres of influence over Libyan economic development - as France has through the nuclear deal - Gaddafi's current foreign policy independence will shrink exponentially.

On the nuclear issue, the argument expressed by Sarkozy that Libyan nuclear development should be encouraged in order to prevent a "war of civilizations" is bizarre.

Libya's mothballing of its nuclear program provided significant evidence of an illicit trade in nuclear bomb-making equipment.

While the country's declared nuclear technologies have been dismantled, its established atomic knowledge base and history of secretive nuclear development, combined with the weakness of current non-proliferation safeguards, raise significant questions as to the wisdom of providing the country with the nuclear capacity required for further nuclear experimentation.

Libya announced in February that it would partner with Areva in uranium exploration and mining work, signaling its intent to premise future nuclear development on indigenous fuel supplies - the main point at issue in the Iranian nuclear crisis. With the development of an autonomous enrichment and reprocessing capacity, the path to nuclear weapons development is short.

While realpolitik and economic imperatives impel Western nations to seize the opportunity to stake a claim to the largest privatization of a major oil sector in recent years, the haste with which the EU and US have shed the mask of political and civil reform advocacy is at best unseemly and is a profound disservice to cowed Libyan rights activists.

At worst, the French decision to forego its heretofore critical attitude towards Mahgreb nuclear development may presage a wave of sub-regional nuclear proliferation, with profound implications for the wider regional geo-strategic power balance.

Dr Dominic Moran is ISN Security Watch's senior correspondent in the Middle East

The views and opinions expressed herein are those of the author only, not the International Relations and Security Network (ISN).

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