Compensation dealings with Gaddafi have much to do with oil

New Zealand Herald

Monday Sep 15, 2008

By Gwynne Dyer

Libya has been at the diplomatic crossroads of the planet lately, with Condoleezza Rice making the first visit by a United States Secretary of State in 55 years.

(She was there to discuss a murky deal involving payments to American victims of terrorist attacks allegedly sponsored by Libya).

Radical Bolivian President Evo Morales showing up (to beg for money or cheap oil), and Italy's Prime Minister Silvio Berlusconi arriving to promise Libya US$5 billion ($7.5 billion) in compensation for the brutalities of Italian colonial rule.

But the US Congress wasn't impressed. On September 8 the Senate Foreign Relations Committee postponed hearings on the confirmation of Gene Cretz as the first US Ambassador to Libya since 1972.

What bothered the senators was Libya's delay in paying a promised US$1.8 billion in compensation to the families of 180 Americans who died when Pan Am Flight 103 was brought down by a terrorist bomb over Lockerbie, Scotland, in 1988, and of the American soldiers targeted in a 1986 attack on the West Berlin nightclub La Belle (one killed, scores injured).
Western intelligence services blamed both those attacks on Libya's leader, Colonel Muammar Gaddafi, and US aircraft bombed Libya after the 1986 attack, killing some 30 Libyans, including Gaddafi's adopted daughter. Yet the evidence for Libyan involvement is distinctly shaky, and Libya never officially admitted its responsibility.

Instead, it finally signed a "humanitarian" deal that gives the American families US$1.8 billion, but also includes an unstated amount for the Libyan victims of the American air attacks. How very curious.

The details of the deal have been deliberately left vague, and nobody will say where the money for the Libyan victims of US air strikes is coming from. If it is coming from the US Government, that would be an interesting precedent.

But everybody knows what is really at play here. The United States worries about the security of its oil supplies and Libya produces oil, so Washington has been seeking a way to end its quarrel with Gaddafi for a long time. Gaddafi wanted that too, because the UN sanctions imposed at Washington's request were hurting his regime.

But since neither Government ever apologises, it took a while.

Gaddafi's key move was to dismantle his fantasy "nuclear weapons programme" - he never really had more than bits and pieces - in 2003. This let President George W. Bush claim that his "war on terror" was scaring the bad guys into behaving better, so the mood music improved immediately.

Even before that, Libya sent a couple of low-level intelligence agents to face an international court over the Lockerbie bombing (one was acquitted, one was convicted and the Libyan regime was scarcely mentioned).

The final compensation deal was signed last month. Rice was in Libya last week partly to show that Gaddafi was no longer in the doghouse - and partly to ask where the money was. That is bothering the Senate Foreign Relations Committee, too, but they shouldn't worry. Libyan banks take more than a month to transfer even thousands of dollars abroad, let alone billions.
The history behind Silvio Berlusconi's deal with Gaddafi is much clearer, and so are the motives behind it. Italy conquered Libya, formerly part of the Ottoman empire, in 1911, and ruled it until 1943. Tens of thousands of Libyans who resisted were killed, many more had their land confiscated and given to Italian settlers, and the country was run for Italy's benefit.

Italy owes - but why is it paying now, half a century later? The answer is partly oil - a quarter of Italy's oil and a third of its gas come from Libya - but also illegal immigrants. Italy is the destination for a growing stream of economic migrants from Africa who use Libya as a jumping-off place for their trip across the Mediterranean, and Berlusconi needs Gaddafi's co-operation to stem the flow.

So Libya gets $5 billion of Italian money to compensate for all the wrongs of the colonial era (and Italy's compensation will come later, in apparently unrelated deals).

"It is my duty ... to express to you in the name of the Italian people our regret and apologies for the deep wounds that we have caused you," Berlusconi said in Benghazi.

It's a generous apology, too: US$200 million a year on infrastructure projects for 25 years, and if Berlusconi's cronies in the Italian construction business get the contracts, what's the harm in that? But we will probably not see him making a similar apology in Mogadishu or Addis Ababa any time soon.

Libya got off lightly. Ethiopia, Somalia and Eritrea, Italy's other African colonies, suffered far more from its rule and are owed far more in compensation. But they have no oil and they are not close to Italy.

If you calculate the amount owed by other former colonial powers at the same per capita rate as Italy did for Libya - around US$1000 a head of the ex-colony's current population - then France owes Algeria $30 billion, the United States owes the Philippines $75 billion, and Britain owes India $1.1 trillion. But the victims' heirs shouldn't hold their breaths while waiting.

* Gwynne Dyer's new book, Climate Wars, has just been published in New Zealand by Scribe.