U.N. Libya move opens way for U.S. to lift oil sanctions
By Bernie Woodall
NEW YORK, April 5 (Reuters) - The suspension of United Nations sanctions against Libya on Monday opens the way for the U.S. to lift its unilateral sanctions, which have barred American oil companies from Libya's oil industry for a decade, diplomats and lobbyists said.
The U.N. on Monday suspended sanctions imposed in 1992 which banned air travel and the import of certain weapons and oil industry parts, while freezing Libya's foreign assets. The move followed the handing over of two Libyan suspects in the 1988 terrorist bombing of a PanAm passenger flight.
Though the State Department, through its spokesman, said on Monday that the U.S. would not lift its unilateral sanctions, which pre-date the U.N.'s, until its specific conditions were met, U.S. diplomatic sources said it was a move in the right direction.
''This is clearly the stone falling in the pond,'' said the U.S. official. ''This is what we've been waiting for for 10 years. This is the beginning of movement (by Libya) that we've been waiting for.''
Furthermore, Congress has been showing signs that it no longer fervently supports unilateral sanctions in general, which may help open the door for U.S. oil companies in Libya, the official said, speaking on the condition of anonymity.
U.S. oil companies ''have been lining up'' in increasing numbers since Libyan leader Muammar Gaddafi indicated willingness several months ago to hand over the two suspects. Enquies to Administration officials spiked again on Monday with the release of the two Libyan suspects, the official said.
But the companies can't start booking flights for Tripoli just yet.
''The (Clinton) administration is actively considering the issues involved,'' said one U.S. official, ''and there are many. And it will be a process. It will not be something that will change overnight.''
Erin Sugarman of National Foreign Trade Council, a group that lobbies for the lifting of sanctions that restrict U.S. companies, said there is momentum in Congress to loosen unilateral sanctions, but she said she couldn't predict when unilateral sanctions on Libya will be softened.
She said most of the bills introduced in the current Congress call for the loosening or repeal of existing unilateral sanctions in general, or at least give more power to the president to waive them, Sugarman said.
But the thinking in Washington is still entrenched regarding Libya as an international ''bad guy,'' she said. ''It probably will be quite a while before there is any change in U.S. sanctions'' on Libya, Sugarman said.
U.S. sanctions prohibit banks from financing or arranging transactions that ultimately benefit Libya, including brokering third-country sales of Libyan crude oil or transportation for Libyan cargo.
Separately, the U.S. Congress passed legislation in 1995 that penalizes foreign companies making new investments of more than $40 million a year in Libya's oil sector. The law also covers oil investments in Iran of $20 million annually.
Oil exports account for about 95 percent of Libya's hard currency earnings. Currently, the country has 12 oilfields with reserves of 1 billion barrels of crude or more, and two others with reserves of 500 million to 1 billion barrels.
The United States figures that Libya's oil industry has lost about $5 billion since 1992 when the U.N. sanctions were first levied.
U.S. oil companies Exxon and Mobil left Libya in 1982 following a U.S. trade embargo begun in 1981. Five other U.S. firms, Amarada Hess, Conoco, Grace Petroleum, Marathon and Occidental, remained active in Libya until 1986, when President Reagan ordered them to end all their business activities there.
The U.N.'s oil sanctions, which were imposed in November 1993 and now lifted, banned the sale to Libya of equipment for the country's oil and natural gas export terminals and refineries.
The U.N. Security Council now can vote within 90 days to permanently lift the organization's sanctions against Libya following a report from U.N. Secretary General Kofi Annan.
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