U.S. Tightens the Screws on Libya

The U.S. is moving to tighten further trade restrictions against Libya which have already caused U.S. exports to that country to drop from $800 million in 1981 to less than $200 million during 1983.

A recent directive from President Reagan to the secretaries of state, commerce and defense is calling for a "sophisticated, discriminating and serious" approach on export controls to Libya, and one which should also be "multilateral."

State Department sources said the U.S. has tried to enlist the support of its European allies, whose companies do a booming trade and technology sales business with Libya, to join in an all-out trade boycott, but so far without success.

The U.S. campaign against Libya is officially described as a response to the Libyan government's "unacceptable activities," including, according to a State Department statement, its "illegal occupation of northern Chad," its "support for international terrorism" and its "subversion of governments friendly to the U.S."

Privately, some U.S. government officials are saying that the real reason for the measures is the desire to inflict some more punishment on a figure the Reagan Administration considers to be an enemy, Libyan leader Muammar Qadhafi.

The new controls, details of which are still being formulated, are expected to include a virtual ban on involvement by U.S. companies in the multibillion dollar petrochemicals complex which Libya is building at Ras Lanuf. Three American companies, Stone & Webster, Foster Wheeler, and Brown & Root, have been principal contractors (through their European subsidiaries) for key phases of this giant project, which is less than half-done. Industry sources say there normally would be much more work for U.S. firms in later phases.

The companies involved so far are unsure how a ban might affect them. The Washington Report was told that Ras Lanuf is unlikely to be mentioned by name in the new export regulations, which were still being drafted by Commerce Department legal experts as this publication went to press.

Export-license applications for Libya, which were "frozen" for several weeks during the policy review, are now being processed on a case-by-case basis. The Commerce Department handles most of them, although State gets involved in anything relating to aviation, high-technology or oil and gas equipment—sectors for which a "presumption of denial" policy applies. It is believed that the new regulations will tighten up still further the controls on "high-tech" exports to Libya. The only items for which export-license approval is normally given are agricultural and medical goods, but even these go through case-by-case.

Five U.S. oil companies, Occidental, Mobil, Conoco, Marathon and Amerada Hess, are still operating in Libya. An official of one of them said his firm had had more than 800 export-license applications—many for small items required in the company's day-to-day operations-on ice during the policy review. The oil companies are among those most worried about hints of a possible total embargo on trade with Libya in the future.

The companies have concessions, some of them dating back to 1956, to explore and operate Libya's oil fields. "Libya is sitting on 24 billion barrels of reserves, and we know where it all is," one oil company source told The Washington Report. "The U.S. can make approaches to Iran, with whom our trade is growing by leaps and bounds. We can talk about 'tilting' to Iraq. But when it comes to Libya, we're just trying to make Qadhafi a scapegoat. It's easy to attack him, and Libya is important enough that you can get the companies to pay attention."

In 1981, the U.S. imported $5.3 billion worth of oil from Libya—but all further imports of oil were banned in March, 1982.