Lockerbie collateral damage
The conviction of a Libyan agent for the bombing of Pan Am flight 103, far from laying to rest painful memories of the tragedy, has divided opinions on both sides of the Atlantic and left American oil companies caught in the middle of a political tug-of-war.
Any joy US oil companies must have felt in the wake of the Lockerbie court ruling has proved painfully short-lived. The verdict is shaping up as a major foreign policy headache both for the US and Libya, dashing hopes of an early resumption of business links that would allow the firms to regain a role in Libya's lucrative energy scene.
Analysts say the conviction of the Libyan security agent Abdelbasset al-Megrahi for the murder of the 270 people in the bombing of Pan Am flight 103 over Lockerbie is bound to embitter further bilateral ties as the verdict has triggered a spate of demands the maverick government of Muammar Gaddafi finds difficult to bow to.
Far from putting the case to rest, the verdict by a Scottish court in the Hague on 31 January is compounding the controversy by piling pressure on the new Bush administration to act tough.
George Joffe, an expert on Libya at London's School of Oriental and African Studies, says the Bush administration is being pulled in two opposite directions. Angry families of the victims and a hostile US Congress want Gaddafi punished for Libya's role in the bombing but on the other hand the business lobby group, USA Engage, is pushing for the resumption of trade and business links.
Joffe believes this tug-of-war will delay the removal of US sanctions in the foreseeable future. But Britain is likely to build on an improvement of diplomatic links restored in 1999 after 15 years of hostility. Britain believes a dialogue with Gaddafi can be more fruitful than the diplomatic isolation of his government, which has in recent years shown signs of moving away from its alleged support of terrorism.
The case has caused a split between London and Washington over the lifting of United Nations sanctions imposed on Libya after the Lockerbie bombing. Britain, which believes in engagement with countries once regarded as "rogue" states, is keen to end the economic measures as soon as possible. The Bush administration, facing pressure from families of the US victims, is in no such rush.
President George Bush has assured the victims' families that he would continue to pressure Libya to accept responsibility for the bombing and to pay compensation. Washington is also demanding that Libya reveal everything about the bombing and accept responsibility for the action of the convicted Libyan agent.
Tripoli insists al-Megrahi was not acting for the state. Libya's UN envoy Abuzed Omar Dorda said no link had been established with the government. "Libya had nothing to do with this tragedy at all. Libya as a state had nothing to with this case," the envoy said.
Libyan Foreign Minister Abd al-Rahman Shalgam said his country wanted to turn a new page in its relations with Britain and the US, but said Libya would never accept responsibility for the bombing.
These statements clearly demonstrate the difficulty ahead before the two sides can narrow their gaping differences. The omens, thus, for the return of US companies are not good. Carlton Adams, a spokesman for Conoco, one of the four American companies with interests in Libya, said he was pleased a verdict had been reached. "We hope the two countries can initiate discussions to resolve differences with the ultimate goal of normalising relations," he said.
But industry analysts say any optimism among US oil companies appears premature, given the depth of the hostilities and the tortuous road to possible compensation for the US victims.
For its part Libya is keen to welcome back the four companies -- Conoco, Marathon, Amerada Hess and Occidental -- after a 15-year absence. The four won special permission from the US government after the suspension of UN sanctions in 1999 to visit their old assets. Tripoli, though, is by no means desperate for US companies to help develop its key oil industry.
Libyan officials said every major non-US company has applied to explore for oil and gas in the country under a new licensing round. France's TotalFinaElf, Spanish-Argentinian Repsol-YPF and Italy's Eni are already active in Libya and are likely to be joined by more European companies once Libya tackles the latest licensing round.
Libya has been slow in developing its vast oil and gas resources, but not because of the UN or US sanctions; the country's stifling bureaucracy and the slow pace of decision-making is to blame. As the furore over the Lockerbie case continues, US oil companies continue to be the losers for their exclusion from Libya.
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