Libya's new leaders to review $150 bn in existing contracts

Libya’s new leaders will be re-evaluating about $150 billion in contracts with international companies that were under way when the conflict that led to Muammar Gaddafi’s ouster began, according to a US official.

Ambassador to Libya Gene Cretz said that, while the National Transitional Council (NTC) has said that it intends to honour many of the contracts, especially those with oil companies, the group “will have to go back, review them, see which ones are operative, see which ones have to be redone, see which ones have to be discarded completely.”

Cretz spoke yesterday at the National Press Club in Washington on challenges facing Libyans as they begin the work of remaking their country.

Before the conflict began, the business environment was “booming,” the ambassador said. “They needed everything from A to Z, from roads to airports, which tells you, in a sense, the deprivation under which this country suffered even with all this oil wealth.”

Those needs will now be compounded by the damage wrought by months of fighting and the bombing campaign by the North Atlantic Treaty Organization (Nato).

Cretz said he expects the international community will move quickly now to lift United Nations (UN) restrictions on businesses in Libya. “I think that you’ll see actions at the UN over the next several days,” he said.

LIFTING RESTRICTIONS
“We hope that will result in the lifting of the various sanctions and will kind of take off the restrictions on an international level,” he said, referring to other countries wanting to get back into Libya. “It’s not just us.”

The chairman of Libya’s National Oil Company, Nuri Berruien, said in a September 5 interview with the Financial Times that Libya will respect oil contracts entered into under the Gaddafi regime.

Still, the range of existing contracts “will have to be rationalised at one point or another,” Cretz said. “Some of them may be good, some of them may be continued, some of them may be ridiculous. There’s been a lot of incompetence, certainly, and there’s been a lot of corruption.”

Several countries are already angling to protect their companies’ interests.

Italy’s Foreign Minister Franco Frattini said yesterday that the NTC has guaranteed existing contracts with Italian companies. A Chinese foreign ministry spokesman said on September 6 that Beijing hopes Libya’s new government will honour their existing contracts and protect their interests.

TNC leaders said that day that relations with China would suffer if reports were confirmed that Chinese state companies offered to sell Gaddafi $200 million worth of arms during the rebellion.

Russian’s foreign ministry also expressed hopes on September 1 that the NTC would honour previously signed contracts.

Both China and Russia attended the first Friends of Libya group meeting in Paris on September 1, where members discussed how best to help the new leaders get Libya running again.