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http://www.time.com/time/magazine/article/0,9171,1013205,00.html
Sunday, Jan. 02, 2005
Libya's New Face
By VIVIENNE WALT | Tripoli
In the auditorium of Tripoli's Corinthia Hotel, a number of Libyan
officials sit onstage in dark suits and ties, addressing scores of
Western executives in flawless English about the country's new business
opportunities. A few feet away is a huge portrait of the most famous
face in Libya, Muammar Gaddafi, in his trademark African robe and
sunglasses, fist in the air, a defiant look on his face, as if to say to
the roomful of businessmen: I still run things around here. But the
businessmen don't seem to notice. Instead they are transfixed by a tall
young man with wire-rimmed spectacles and a fashionably shaved head.
When he talks about a new economic strategy for Libya, including private
enterprise, job creation and international financial institutions, the
audience hangs on his words. After decades of centralized state control,
he says, "we have a new reality in Libya."
The hip-looking speaker should know. He is Seif al-Islam Gaddafi, the
second son of Libya's leader. Seif says he spent most of 2003 coaxing
his father into transforming his 35-year-old revolution, which Gaddafi
has led since he waged a military coup in 1969. The aging revolutionary
has ruled over a centralized socialist system, repressing dissent and
supporting armed attacks against American targets. Seif, 32, is believed
by many analysts and diplomats to be Gaddafi's probable political heir.
He is a doctoral student at the London School of Economics, a skilled
artist and a keen tennis player who frequents the courts of Tripoli's
Regatta Club, a favorite beachside haunt for the city's resident
expatriates and Libyan élite. With no official role in government, Seif
heads the Gaddafi International Foundation, a quasi-independent
organization that has negotiated hostage releases and sent relief aid
around Africa. He finally persuaded his 62-year-old father to make peace
with the international community — thus opening the country to foreign
investment. "It took nine months — nine months!" Seif told TIME,
stretching his long legs out in front of the couch under another
portrait of his father.
Whether Seif is Libya's future and his father its past is still unclear.
But Gaddafi agreed to curtail Libya's nuclear-weapons program as well as
pay damages to the families of those killed in the 1988 Pan Am airline
bombing over Lockerbie, Scotland, and the non-American survivors of the
1986 bombing of a West Berlin discothèque. As a result, President Bush
announced he would begin lifting economic sanctions against Libya. The
European Union recently followed. "It was the right decision," says Seif
of his father's new Western-friendly stance, "the right initiative."
Since then investors and executives of all stripes have poured into
Libya — especially oil executives. Oil accounts for more than 90% of
Libya's revenues. At a time when world oil prices are over $40 per bbl.,
analysts estimate that Libya's known oil reserves hold 30 billion bbl. —
more than $1 trillion worth — enough to keep the pumps turning in Libya
for decades. What's more, only about 25% of the country has yet been
explored. Some 120 companies have joined Libya's first open bidding
process to dig for new oil in 15 areas; the bid results are expected at
the end of this month.
Oil companies regard Libya's crude as some of the best on the planet.
Relatively thin, it is among the easiest to refine. And tankers leaving
Libya need far less time to reach U.S. and European ports than those
leaving the Persian Gulf. Given the turmoil in Iraq, and the fact that
Washington is on chilly terms with Iran, many U.S. oil companies see
Libya as a dream prospect. "There's a huge amount of oil that hasn't
been discovered," says Michael Thomas, director of the London-based
Middle East Association, a trade-promotion group that organized the
business conference in Tripoli where Seif spoke. "The money is all
there. There is nothing like this in the world."
As one looks out on Tripoli, it is hard to grasp the potential. The
city's crumbling old Italian colonial buildings are set amid billboards
hailing Libya's socialist revolution. But Libya's fans insist the
possibilities are real. In the Corinthia — Libya's only luxury hotel,
boasting $300-a-night rooms — Western executives crowd the lobby.
American executives will need to catch up with European oil businesses,
which remained in Libya through decades of U.S. sanctions. Italy's Eni,
Spain's Repsol-YPF and France's Total have run Libyan subsidiaries with
no American competition. Virtually all of Libya's oil — about 1.5
million barrels a day — is exported to Europe, and since October,
millions of cubic meters of gas have flowed directly from Libya to
Sicily through Eni and Libya's National Oil Corp's new pipeline. But the
Americans are certainly trying. The U.S. liaison office, the prelude to
a real embassy, now operates out of bedrooms on an upper floor of the
Corinthia. Two sparsely furnished suites serve as the temporary digs for
Marathon Oil and ConocoPhillips, both of which suspended their large
Libyan oil operations when U.S. sanctions were imposed in 1986. "Nobody
really hates Americans here," says Abdullah Salim el-Badri, chairman of
the country's National Oil Corp., which runs the huge oil fields
abandoned by the Americans in 1986. "Oil started here with the
Americans. They trained us."
Libyans' friendliness to Americans is even clearer hundreds of miles
down the coast at the Essider Marine Terminal, from which oil is shipped
by the government-owned Waha Oil Co. The company took over the operation
from U.S. companies in 1986, when sanctions drove out the Oasis Group, a
combination of Amerada Hess, Marathon Oil and Conoco. But a handful of
American citizens are still at work in the facility and have been
throughout the decades of sanctions, in violation of U.S. laws.
"Basically, we never left," says Conrad B. Cazalas, 58, an electrician
from Corpus Christi, Texas, sitting in Essider's dining hall in blue
jeans and work boots. Days after U.S. officials ordered him out in 1986,
Cazalas says, he called his Libyan colleagues and talked his way back
into his old job. Darrell Livingston, 51, from Winter Haven, Florida,
who works on Essider's metering equipment, says he was once detained by
federal agents after arriving home and asked to inform for them in
Libya. Livingston says he rejected their offer but kept his job, even
filing yearly U.S. tax returns listing his overseas residence as Libya.
"The irs didn't seem to care," Livingston says.
Libya's oil industry will need many more such experts if it is to reach
its potential. "Everyone's waiting for the Americans to come back in
with huge amounts of money," says Livingston. "A lot of infrastructure
needs to be rebuilt." At the Waha oil field, hundreds of kilometers into
the Sahara from Essider's harbor, the production lines are monitored
from a computer room equipped with the defunct Data General's 1982
system. "I'd say we're at least 15 years behind in technology," explains
Gordon Snowdon, 55, a Briton in charge of production at the oil field's
biggest station. "Actually, we're frozen in the 1970s."
Over the past year, delegations of American oil executives have flown
regularly to the Essider terminal and to Waha's desert oil fields,
trying to discern how to re-enter Libya. Under a 1986 standstill
agreement, the fields are still partly the property of the American oil
companies, though they have been operated by the Libyan government.
Diplomats in Tripoli and Waha workers say negotiations have bogged down,
with the American oil companies demanding a controlling stake in the
operations in return for investing billions. That prospect is met in the
oil fields with a mixed response. "Before 1986 the Americans were the
bosses," says Snowdon, who has worked at Waha for decades. "Now that the
Libyans have run things themselves, I don't think they'll want to be
pushed aside."
It is a question facing businessmen across Libya as the prospect of a
full-force American return to the country builds. Back in Tripoli, Seif
Gaddafi says the conundrum is "very classic," faced by countless
developing countries. Then, as with most problems, he finds a reason to
dismiss this one. "The story of Libya is different," he says. "We have a
strong leadership — that is obvious." And thanks to $20 billion in
foreign reserves from the country's existing oil business, Seif goes on,
"we don't lack cash. We don't need capital." But Libya does need modern
technological know-how and experienced manpower — the kinds of resources
that big outside oil firms can provide. "We are strong enough to
bargain," says Seif, who knows how valuable his country's crude is to
the West. Who will have the upper hand in the negotiations remains to be
seen. But with both sides motivated to get the oil pumping, Libya's
importance to the world economy, and to America, will only grow.
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