The United States and Libya: Where Do We Go From Here?

Middle East Program

September 2008

The United States and Libya: Where Do We Go From Here?

By Michele Dunne

In making the first visit of a U.S. secretary of state to Libya in over half a century,Condoleezza Rice is taking something of a victory lap. With some of her other efforts inthe Middle East—notably the Israeli–Palestinian conflict—showing disappointing resultsas the Bush administration winds down, Rice can legitimately claim success in settlinglongstanding disputes with Libya via patient diplomacy instead of force. But she alsoshould beware, because the Libyan regime remains opaque, unpredictable, and entirelycapable of embarrassing the Bush administration one way or another. Where Libya isheaded is unclear. Muammar al-Qaddafi and son Saif al-Islam have hinted recently atextensive new economic reforms, but such promises have proved disappointing in thepast. The United States and Libya plan to sign a series of military, trade, and educationalagreements soon. But Washington should think beyond the immediate business ofreestablishing normal relations to explore how it can help Libya—and in particular theLibyan people as distinct from the government—to rejoin the world from which theyhave long been cut off and to reorient the country in a constructive direction.

A Rocky Road

The current sprint ahead in U.S.–Libyan relations began in spring 2008, when the U.S.and Libyan governments announced they were negotiating an agreement to settleoutstanding claims of victims of terrorism attributed to Libya, particularly the 1986 LaBelle disco bombing and the 1988 Pan Am Flight 103 bombing. The U.S. Congresspassed the Libya Claims Resolution Act on July 31, paving the way for an agreement bystating that victims’ families would drop all legal cases once the settlement was reached.The Department of State announced on August 14 that a comprehensive claimssettlement had been reached in Tripoli.

This agreement not only made Rice’s visit possible, but is expected to open the door totwo other important steps forward in U.S.–Libya relations, technically resumed in 2006but hamstrung by problems. Washington will probably send a U.S. ambassador to Libya(one was named in July 2007 but the Senate refused to confirm him) and beginconstruction on a new embassy soon.And yet, this is not the first time that U.S. officials have believed that they had cleared allobstacles to a full resumption of ties with Libya, only to find that old problems remainedor new ones cropped up. There were major breakthroughs in relations in 2003, includinga Libyan agreement with families of the Pan Am 103 bombing and renunciation ofweapons of mass destruction (WMD) programs. The United States lifted economicsanctions but was unable to take Libya off the Department of State’s list of state sponsorsof terrorism at that time because of new and lingering problems; Qaddafi was accused ofplanning the assassination of Saudi King Abdullah in November 2003. Moreover, U.S.officials decided that taking Libya off the list would prejudice ongoing legal cases relatedto the 1986 bombing and other incidents. The delay in taking Libya off the terrorism listled Tripoli to refuse to pay a final tranche of compensation to the Pan Am 103 families, amatter in which the Libyan government was technically in the right due to timelimitations in the original agreement, but which caused anger in the United States. In May2006, the United States removed Libya from the terrorism list and announced the fullrestoration of relations, only to have the Senate refuse to confirm an ambassador,appropriate funds to construct embassy, or allow any assistance to the Libyangovernment. As recently as earlier this year, the Senate inserted language into the 2008Defense Authorization Act that would have allowed victims of terrorism to sue forseizure of Libyan assets in the United States to satisfy their claims.

Countries other than the United States also have found out that dealings with Libya havea funny way of going sour, or at least of developing an unpleasant odor. In July 2007,French President Nicolas Sarkozy visited Tripoli after finalizing a long-negotiated deal tofree six Bulgarian nurses and a Palestinian doctor imprisoned since 1998 and sentencedto death for allegedly infecting over 400 Libyan children with the HIV virus. Sarkozyfaced criticism in Europe for several aspects of the deal, but that was nothing comparedto the public relations nightmare he faced when Qaddafi visited Paris in December 2007and caused an uproar in the French cabinet and parliament by suggesting that France’shuman rights record did not compare well to Libya’s. As the New York Times quipped,“Having waited so long [to visit Paris], Colonel Qaddafi seemed determined to spare nooffense.”

And so while the August 2008 deal between the United States and Libya might finallyclear away the final obstacles to normalizing relations, there are still old problems thatmight surface to embarrass Washington—or, if not, the Libyan regime is always capableof creating new ones, deliberately or not. One painful lingering dispute is the case ofFathi al-Jahmi, a liberal dissident who has been jailed without charge since 2002 forcalling for freedom and democracy in Libya. Al-Jahmi was released briefly in March2004 after U.S. Senator Joseph Biden intervened on his behalf, only to be detained againwithin weeks after renewing his public criticism of the regime. Al-Jahmi, aged 66 and inpoor health, was transferred to medical treatment in January 2008 but still is not free toleave. Rice is likely to be criticized by human rights organizations in the United States ifshe visits Libya without obtaining a genuine release for al-Jahmi, who has familymembers in the United States.

Lessons Learned

Having dealt closely with the Libyan regime in many areas over the past five years—resolving terrorism claims, dismantling WMD systems, combating al-Qaeda, resumingU.S. commercial investment in the petroleum and other sectors—the United States hasalready learned several lessons. It is possible to reach constructive agreements withLibya. But it is nearly always difficult and time-consuming, because decision making ishighly centralized and most Libyans are not accustomed to operating on the shortdeadlines familiar to the West. The Libyan regime is capable of some degree of change,as seen in legal and commercial reforms that have facilitated an opening to the West,primarily in the petroleum sector (which operates on different, more liberal rules than therest of the economy). Reforms have been modest so far, however, and occasionaldramatic announcements by Qaddafi and others have resulted in only modest economicchanges and virtually none in the realm of human or political rights.

Despite the presence of some reform-minded individuals and fixers in the circles aroundQaddafi, essentially the regime is the same as it has been for nearly forty years: opaque,unpredictable, and highly personalized. The most recent illustration of this fact was thefurious Libyan reaction to Switzerland’s arrest of Qaddafi’s notorious son Hannibal inJuly 2008 on charges of unruly behavior; Libya cut off oil shipments, arrested two Swisscitizens, shut down the offices of two Swiss corporations, and stopped issuing visas toSwiss citizens. The lesson to take from this: no matter how carefully you step in dealingwith Libya―expect a banana peel at some point.While the United States has been learning lessons from its own dealings with Libya andthose of others, so have the Libyans. And the most important lesson they have absorbedis that now they have leverage and can drive a harder bargain than they did in the past. In2003, Libya was economically and diplomatically isolated and had to accept the termsthat the United States and Great Britain dictated in order to come out of that isolation.Five years later, European and other powers are tripping over each other and themselvesto get their share of the country’s hydrocarbon wealth and other business opportunitieswhile the getting is good.

As deals have proliferated, it should not be a surprise that prices have risen. Recentagreements, including the 2007 EU-brokered deal over the Bulgarian nurses and August2008 U.S.–Libya compensation deal, tilt in Libya’s favor compared to the 2003 deal. Therecent European and U.S. agreements included compensation for Libyan victims(families of children infected with HIV in the first case, and victims of the 1986 U.S.bombing of Tripoli in the second) as well as Western victims, omitted any statement ofLibyan culpability, and obscured the sources of compensation funds, apparently to saveface for Libya. The most stunning example of these new agreements is an August 30,2008 deal in which Italian Prime Minister Silvio Berlusconi pledged to pay 2.5 billionEuros in compensation for his country’s colonial past in Libya, delivered in the form ofinvestments of about $200 million annually. While Italy (already Libya’s largest tradingpartner) clearly plans to derive benefits—extensive involvement in building Libya’sinfrastructure, and greater Libyan cooperation in stopping African illegal immigrants ontheir way to Italian shores—the deal has analysts scratching their heads over theimplications for other former colonial powers.


Libya’s Uncertain Direction

In addition to the changing nature of dealings with Libya, there are important questionsabout the direction of the country itself. While the shift in Libyan foreign policy isobvious and has been afoot for a decade or so, changes inside Libya are much lesscertain. Qaddafi and his son Saif al-Islam keep hinting at major changes to come, mostrecently in remarks by each in late August. Qaddafi appeared to promise a dismantling ofthe statist economy in his August 31 revolution anniversary speech, telling Libyans thathealth, education, and public utilities would soon be privatized and that oil revenueswould be placed directly in the hands of citizens to spend as they like. Promising that thisnew system would be in place by early 2009, Qaddafi predicted a situation of “creativechaos.” Saif al-Islam similarly suggested profound changes were coming, saying in anAugust 20 speech to Libyan youth that he would soon retire as a reformer because “Ihave achieved my program and have no more big battles to fight.”

Qaddafi and son also hinted that economic change would bring some political change aswell. Once privatization takes place, Qaddafi predicted that Libyan society would“reformulate itself in a new, free, and democratic way.” Saif al-Islam was a bit moreexplicit, claiming that “reforms will begin with a new administrative structure and endwith a popular contract that will keep the jamahiria system in place but with a new formthat is different from the bad initial one.” It is notable that this year, unlike some previousyears, Qaddafi’s annual speech seemed to support Saif’s reform agenda rather thanundermine it.

It is difficult to know how seriously to take such promises, and how significant comingchanges will be; the distance between words and action in Libya is often great. Qaddafihas promised in the recent past to sack thousands of redundant government workers andto dismantle the entire government system in order to distribute oil revenues to theLibyan people directly. His new remarks might indicate an attempt to translate suchextreme measures into an actual reform plan, or might be more empty promises.

Moving Ahead

How should the United States deal with an increasingly assertive and possibly reformistbut also eccentric and anachronistic Libyan regime? The two contending views are that 1)it is better to be in Libya than out (especially when other countries have a major presenceand a business advantage over the United States) or 2) it is better to stay clean than to getdirty, and the United States should hold aloof while the “mad dog of the Middle East”(late President Ronald Reagan’s moniker for Qaddafi) remains in power. The latter view,however, has gradually lost out in Washington as Libya has met more and more of theconditions the United States set out for its rehabilitation.

If the United States is going to increase its presence and level of activity in Libya,however, it is still not clear what its strategic goals will be. There is the absorbingimmediate business of building an embassy, getting the visa process working, etc.

Intelligence cooperation against terrorism apparently continues, and the United States isin the process of negotiating a military memorandum of understanding with Tripoli, butLibya has been cool to the idea of significant involvement in the new U.S. AfricanCommand (Africom). There may be some limited diplomatic cooperation on Africanissues, but in general the United States is likely to remain wary of Libyan intentions ineither African or Arab circles. Qaddafi himself, in his August 31 speech, voicedambivalence about the new relationship with the United States, describing it as “neitherfriendship nor enmity.”

The danger is that Washington will think about U.S.–Libyan relations too much alongtraditional normalization-of-relations lines, and end up strengthening and perpetuating thestatus quo in Libya. Libya and the United States plan to sign an educational and culturalprotocol as well as a Trade and Investment Framework agreement (they already signed ascientific cooperation agreement in January 2008), all of which can be positive steps butalso can end up merely putting more resources into the hands of regime insiders andcrony capitalists.

In each of these areas—trade, education, culture, and science—the United States shoulduse its admittedly limited but growing influence to reinforce nascent positive trends inLibya, particularly the development of non-governmental activity. The United Statesshould be persistent in raising human rights cases, particularly when it comes todetention, abuse, and harassment of peaceful dissidents. But it also needs to think aboutinvesting in woefully underdeveloped areas such as the ability to form truly independentcivil society organizations and media, in order to help Libyans increase their ability toraise such concerns on their own. While direct U.S. assistance to a petroleum-rich nationlike Libya is unlikely, assistance through institutions such as the National Endowment forDemocracy or the Department of State’s Middle East Partnership Initiative or Bureau ofDemocracy, Human Rights, and Labor is feasible. Education is a critical area where theUnited States can make a contribution and in fact has a recognized comparativeadvantage. The quality of education in the country suffered during a generation ofisolation from the West, but Libya now has the large hydrocarbon revenues and smallpopulation (about six million) that would enable it to undertake the sort of extensiveeducational reform seen recently in Gulf States, in which American educationalinstitutions have played major roles.

A more experimental trend that the United States should monitor and perhaps encouragequietly (primarily through American non-governmental institutions) is discussion of aLibyan constitution. Libya operates ostensibly according to the jamahiria political systemdesigned and promulgated by Qaddafi in 1977, which is called “direct democracy,”though in reality power remains in his hands and those of a few companions. But there iswidespread concern in the political elite that neither the formal nor informal system willoutlast the 66-year old Brother Leader. While he shows no sign of leaving power soon,there is a movement led by Saif al-Islam to replace the system with a written constitution.It is unclear to what extent a constitution would simply enshrine the current systemversus revise it, but the trend bears watching.In fact, current discussions of a constitution are like so many other trends in Libya—confusing and contradictory, needing careful watching and frequent reassessment todecide whether they are real or illusory, constructive or destructive. For the United Statesto avoid gaffes and take advantage of opportunities in its developing relations with Libya,it will be critical to avoid going on autopilot.

Michele Dunne is a senior associate at the Carnegie Endowment for InternationalPeace and editor of the Arab Reform Bulletin. A former specialist on the MiddleEast at the U.S. Department of State and White House, Dunne participated in U.S.negotiations with Libya in 2002–2003.