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The Wall Street Journal
Monday, 14 January, 2002

WSJ: Sept. 11 helps Libya try to improve US relations

PETROLEUM WORLD
Caracas, Jan. 14

From The Wall Street Journal

As Osama bin Laden continues to elude U.S. capture, one of his predecessors as the nation's most-wanted terrorist, Libya's Col. Moammar Gadhafi, is attempting a rehabilitation.

Top U.S. and Libyan officials have held several unpublicized meetings in England and Switzerland in recent years to discuss improving ties. Public-relations campaigns and lobbying efforts on Libya's behalf are under way, funded in part by oil money and driven by a desire to cash in on future deals or resume business interrupted by sanctions. The Libyan leader himself has been taking steps and sending signals that suggest he may want to get out of the terrorism business, U.S. officials say.

The Gadhafi makeover could be reaching a critical moment. Last week, a top U.S. official and a Libyan intelligence operative met near London in another attempt to talk about the steps Libya must take before ties can be resumed. Later this month, a Scottish court is scheduled to hear the appeal of a Libyan intelligence agent found guilty in the 1988 bombing of Pan Am 103, over Lockerbie, Scotland, which killed 270 people, including 189 Americans. Libya has signaled to U.S. officials directly and through intermediaries that when the legal process ends, the Gadhafi government may compensate the victims' families and take responsibility for the bombing, U.S. officials say. Many U.S. officials believe Col. Gadhafi himself was involved in the Pan Am bombing, the bloodiest terrorist attack on Americans before Sept. 11.

In October, William Burns, the assistant secretary of state for the Middle East, who was at last week's meeting outside London, addressed a congressional committee about the purpose of U.S. diplomacy toward Libya. He said it was meant "to make clear that there are no shortcuts around Libya . . . accepting responsibility for what happened and also for paying appropriate compensation" for the Pan Am bombing.

There's a lot to be gained on both sides from rapprochement. Resolving the bombing could persuade Washington to lift the sanctions imposed in 1986. That would open the way for American companies to do business with the oil-rich country and for Libya to do some much-needed repair work on its economy.

Libya also could become the first nation in more than a decade to graduate from the State Department's list of state sponsors of terrorism, U.S. officials say. Some of Washington's diplomatic maneuvers in the current war on terrorism involve refuting Mr. bin Laden's charges that America is at war with Islam. Washington wants to show, particularly to Muslim states, that a place on the terrorist list isn't a life sentence. Of the seven states listed -- Iran, Iraq, Syria, Libya, Sudan, North Korea and Cuba, only the last two aren't Islamic. Iran and Syria are considered possible candidates for redemption.

But in its eagerness to win converts to the campaign against Mr. bin Laden's al Qaeda terrorist network, the U.S. could find itself setting a dangerously broad definition for what is acceptable behavior. With Mr. Gadhafi, for instance, Washington can't be certain that the mercurial strongman's latest change of heart is genuine. In an unclassified report released last week, the Central Intelligence Agency said Libya continues to have "biological and chemical weapons" programs and would like to acquire long-range ballistic missiles "to increase the number of U.S. and NATO targets it can hold at risk."

Still, the diplomatic dance between the U.S. and Libya has produced a stark change in Libya's previously sharp anti-American rhetoric. It began in secret more than two years before Sept. 11, in a series of meetings on the outskirts of London and in Geneva, Switzerland. Those meetings brought together senior officials of the Clinton administration, British officials and a top Libyan intelligence operative, Musa Kusa, according to U.S. officials.

The idea to meet emerged in February 1998, when the U.S. was embroiled in one of its periodic crises with Iraq. British Prime Minister Tony Blair telephoned President Clinton to discuss growing complaints by moderate Arab allies that the West was dealing unfairly with Arab states. Mr. Blair suggested it might be helpful to resolve the Libya issue in some way, a Clinton administration official recalls. The Saudi Arabian government, saying the U.S. needed to show it was prepared to believe a radical Arab state could mend its ways, made the same case privately. A Blair spokesman in London referred a request for comment to the British Embassy in Washington, where another press spokesman declined to comment on the phone call.

President Clinton didn't move until after Col. Gadhafi agreed in April 1999 to hand over two Libyan suspects in the Pan Am 103 bombing. The White House then sent Martin Indyk, the assistant secretary of state for the Middle East at the time, and Bruce Riedel, the top White House Middle East staffer, to meet with Mr. Kusa, who often handles delicate missions for Col. Gadhafi. Mr. Kusa has been associated for more than 20 years with Libyan intelligence, which has been connected to assassinations of Libyan dissidents abroad and the Pan Am bombing.

Libya has been implicated in other major terrorist actions. Last year, a German judge found that Libyan agents, aided by the Libyan embassy in East Germany, had organized the April 5, 1986, bombing of a Berlin discotheque frequented by U.S. soldiers. Two American soldiers were killed. Five days later, the Reagan administration bombed the Libyan capital, Tripoli, and the city of Benghazi. In March 1999, six Libyans, including Col. Gadhafi's brother-in-law, were found guilty in absentia by a French court for the 1989 bombing of a French airliner over Niger, which resulted in the deaths of 170 people on board. Throughout the 1980s, Libya ran terrorist training camps and supported terrorist groups.

In the highest-level contacts since President Reagan imposed sanctions in 1986, the U.S. held four meetings in which Clinton administration officials laid out the steps Col. Gadhafi must take to warm up relations with Washington. U.S. officials hammered away at one theme: Libya must compensate the families of Pan Am 103 victims and take responsibility for the terrorist bombing to make normal ties possible. A United Nations resolution also calls for Libya to compensate the victims' families and take responsibility for the bombing.

Then, the day after the Sept. 11 terrorist attacks, Col. Gadhafi condemned the actions publicly as "horrifying, destructive." In October, in a previously planned secret meeting, Mr. Kusa met in England with Mr. Burns. Mr. Kusa talked about what he called their common enemy, terrorism, according to a diplomat familiar with the session. Mr. Kusa offered information on the Libyan Islamic Fighting Group, which is believed to be linked to al Qaeda and which also targets Col. Gadhafi.

On Dec. 5, the U.S. included the group on an expanded list of terrorist organizations whose members will be automatically barred from the U.S. or expelled if found here. At last week's meeting outside London, Mr. Burns reiterated the American stance on Pan Am 103, according to a State Department official.

While the opening to Col. Gadhafi serves Washington's antiterrorist agenda, U.S. officials also believe political changes and economic pressures have forced the Libyan leader to change his tune in recent years. The handsome 27-year-old military officer who seized power in 1969 has become a tired dictator now trudging toward his 60th birthday. He has seen the fading of the brand of fiery Arab nationalism he once preached, which sought to establish a regional political bloc in the Middle East as a counterforce to the dominant Western powers and Israel. That goal was overtaken by the rise of Islamic extremism, a more dangerous movement driven by religious zealotry that seeks to confront the West with a global Muslim force built on Islamic fundamentalism.

Over the years, Libya's once oil-rich economy also has declined, battered by low oil prices, corruption and sanctions. The country is badly in need of U.S. technology, particularly in the energy sector. By the mid-1990s, Libya was beset with 50% inflation, 30% unemployment and shortages of consumer goods, notes Ray Takeyh, a specialist on North Africa at the Washington Institute for Near East policy.

By 1998, pragmatists in the regime, led by Energy Minister Abdallah Salim al-Badri, had persuaded Col. Gadhafi to open the centrally planned economy in order to attract foreign investment. At the same time, the Libyan dictator shifted his diplomatic focus toward Africa and away from the Middle East, where he had financed radical groups and had been a strong voice rejecting any Arab compromise with Israel. In 1999, according to the State Department's annual Terrorism Report, Libya expelled the Abu Nidal organization, a deadly Mideast terrorist group of an earlier era, and endorsed efforts by Yasser Arafat, the Palestinian leader, to negotiate peace with Israel.

"I have no time to lose talking with Arabs," Col. Gadhafi said in a March 1999 speech. "I now talk about Pan-Africanism and African unity." He tried to help resolve disputes involving Congo, Sudan and Sierra Leone, among others. Last November, the Gadhafi Foundation for Charitable Organizations, which is run by one of his sons, said it was involved in efforts to win freedom for eight foreign-aid workers held by the Taliban regime in Afghanistan.

The most significant step in laying the groundwork for the current warming was Col. Gadhafi's decision on April 5, 1999, to turn over two Libyan suspects in the Pan Am 103 bombing. Within hours, the United Nations suspended the sanctions it had imposed in 1992. A few weeks later, Col. Gadhafi was invited for the first time to attend a meeting of the 27-nation Euro-Mediterranean Forum, which promotes economic integration.

Turning over the terrorism suspects also bolstered a public-relations and lobbying campaign conducted by Libya and its supporters, with quiet help from American companies. Four days after Col. Gadhafi agreed to the hand-over, the U.S.-Libya Dialogue Group held its first meeting, in Maastricht, the Netherlands. Mustafa Fitouri, a Libyan who is an information-technology professor at the Maastricht School of Management, helped arrange the session. He says the nonprofit group was set up "to show people in both countries, away from government, that people can communicate, work with each other."

Among those invited to the event, which was hosted by Mr. Fitouri's school, were Asiddeg al-Jarani, a Libyan who lives in the Washington area, and six of his colleagues at the Libyan-American Friendship Association, which he describes as a small group set up in 1995 to discuss bilateral issues.

Mr. Fitouri says some funds for the meeting were provided by U.S. and Libyan companies, which he won't name. He adds that he doesn't know where all the money comes from because it's handled by a person, whom he also won't name, at a Libyan university. Until the Pan Am 103 case is resolved and sanctions are lifted, U.S. companies don't want to be identified as being close to Tripoli.

In August 1999, Mr. Fitouri helped organize a second, all-expenses-paid meeting for the Dialogue Group, this time on Malta. Charles MacDonald, an international-relations professor at Florida International University, who attended the session, doesn't know who paid for his airfare, hotel, meals and even a tour of local ruins. He was told that the Netherlands and Malta meetings were videotaped and shown on Libyan television. "That told me that this had the blessing of the Libyan government," he says.

Three days after the terrorist attacks on the World Trade Center and Pentagon, Mr. Fitouri sent Mr. MacDonald an e-mail message: "As a friend and advocate of better understanding among peoples, I express my deepest condolences to you and your fellow citizens. . . . I was overwhelmed by the expressions of solidarities and offers of help coming from people like Col. Gadhafi."

Herman Cohen, a U.S. assistant secretary of state for Africa from 1989 to 1993, also was at the Malta meeting. Now a business consultant, Mr. Cohen has been promoting rapprochement with Libya in the U.S. Last November, he spoke at a business seminar in Philadelphia sponsored by the Corporate Council on Africa, which represents about 200 companies doing business there. He said it would be a mistake for the U.S. to continue the sanctions against Libya, which bar commercial transactions but not lobbying.

On April 17, 1999, Mr. Cohen flew to Libya on a private jet with Kamel Ghribi, a client of his who is a Tunisian businessman with interests in Italy and Switzerland. They were accompanied by Stephen Hayes, who now heads the Corporate Council on Africa, and at the time also was a consultant hired by Mr. Ghribi. The two consultants were granted a 45-minute meeting with Col. Gadhafi, according to a five-page memo of the trip written by Mr. Hayes.

The memo depicts the two consultants flattering the Libyan leader, telling him that it was "most impressive that so many African and Middle East leaders" sought his help to resolve conflicts. But Col. Gadhafi had business on his mind. He said he wanted to buy U.S. oil-industry technology, agricultural and medical supplies and airplanes. Mr. Cohen "stated that the U.S. businesses would like to see sanctions on Libya end," according to the memo.

Mr. Cohen says he doesn't know whether Mr. Ghribi does business in Libya. He declined to comment on Mr. Hayes's memo, and says he hasn't been in touch with Mr. Ghribi "in years." Mr. Hayes says he hasn't been in contact with Mr. Ghribi in some time. Efforts to reach Mr. Ghribi were unsuccessful.

The four American oil companies that were forced by U.S. sanctions to suspend operations in Libya -- Occidental Petroleum Corp., Amerada Hess Corp., Marathon Oil Co. and Conoco Inc. -- are eager to return to Libya. Tripoli hasn't awarded their properties to any competitors, but since the 1999 suspension of U.N. sanctions, several European companies have pressed Tripoli to do so. According to BP-Amoco's statistical review of world energy, at the end of 1999, Libya had proven oil reserves of 29.5 billion barrels, making it No. 8 in the world.

Three of the U.S. firms, Conoco, Marathon and Amerada Hess, have hired Kenneth Duberstein, former chief of staff in the Reagan White House, to lobby on "initiatives to protect U.S. companies' assets in Libya," according to recent lobbying registration forms.

The oil companies had been pressing Washington to let oil-industry engineers travel to Libya to inspect their oil fields. In January 2001, the administration issued the companies licenses for such an inspection trip. Mr. Duberstein didn't respond to calls requesting an interview.

A spokesman for Conoco said "considerable progress" has been made toward resuming more normal ties. But he noted that earlier this month the Bush administration routinely approved the annual renewal of the 1986 sanctions. Among the four oil companies, Conoco has been the most outspoken in calling for an end to unilateral U.S. sanctions.

Conoco estimates that since the company was forced to leave Libya in 1986, it has lost net production of 300 million barrels of crude oil, or more than $5 billion in revenue. A company spokesman called that a conservative estimate. Conoco declined to speculate on what the dropping of sanctions would mean for the company, or for the U.S. oil industry.

A spokesman for Occidental said the company was "encouraged" to see the two countries engaged in dialogue. A Marathon spokesman said it was "difficult to predict" how the efforts to improve ties would come out. Amerada Hess declined to comment.

The oil companies already had friends in high places. Conoco's chairman and chief executive officer, Archie Dunham, has longtime ties to Vice President Dick Cheney, who formerly headed Halliburton Co., an energy-equipment maker. During his business career, Mr. Cheney was a regular critic of U.S. unilateral economic sanctions, to no avail.

Alexei Barrionuevo contributed to this article.

The Wall Street Journal 14-01-02


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