By OGJ editors
WASHINGTON, DC, Sept. 17 -- The United Nations has lifted sanctions against Libya, but US diplomats made clear that US-based multinational oil companies remain bound by existing unilateral sanctions that ban new investment.
Both the US and France abstained from the Sept. 12 UN Security Council's 13-0 vote, which formally ended 13 years of international sanctions.
"US sanctions on Libya are imposed for their own reasons, and there are a variety of different laws that apply and restrictions that apply, whether for terrorism or other laws," a US State Department spokesman said on the eve of the vote. " In order for the United States to lift our sanctions on Libya, we would want to be satisfied on all the fundamental points that we have raised that these laws apply."
The US, for example, still has concerns over "residual" Libyan support for terrorism, even though the US recognizes the Libyans have done a lot to distance themselves in recent years. US policymakers also worry about whether Libya has an active weapons of mass destruction program as well as Tripoli's relationships with its African neighbors.
The UN vote occurred in response to Libya agreeing to accept responsibility for the 1988 Pan Am 103 bombing over Lockerbie, Scotland. As part of the settlement, the Libyan government will pay the families of the 270 victims up to $10 million each, depending on how fast the US and the UN lift commercial sanctions (OGJ, Mar. 17, 2003, p. 33).
US politics
In the US, legal and political restraints have been put in place over the years by both past and present administrations and Congresses.
In August 2001, US President George W. Bush signed an updated law called the Iran Libya Sanctions Act that was designed to penalize foreign companies that invest $20 million in either country. But the measure also included a nonbinding provision that Congress consider rescinding the law before it officially sunsets in August 2006, pending the outcome of a White House sanctions report.
That White House report is due to Congress before March 2004. Since its original passage in 1996, no country ever has been sanctioned by the US although ILSA. Proponents say the legislation has cooled international investment because of the threat the US may take action.
Meanwhile, US companies want the White House to remove the US' own sanctions against Libya, saying it is counterproductive.
Several non-US oil companies have been undeterred by ILSA and have agreements with Libya's state-owned National Oil Co. The largest foreign producer in Libya is Italy's ENI SPA, which has been operating in the country since 1959.
Until the mid-1980s, US companies also had a long history in Libya. Occidental Petroleum Corp. made the first major oil discoveries in the country in the 1970s. Amerada Hess Corp., Conoco Inc. (now ConocoPhillips), and Marathon Oil Co. have been partners in the Libyan "Oasis" oil concession that began in the mid-1950s.
The Oasis group produced 850,000 b/d in 1986 before the US forced the companies to leave. Two other US oil companies, Exxon Corp. and Mobil Corp., (now ExxonMobil Corp.) left Libya in 1982 after the US imposed a trade embargo
Unlike ILSA, President Bush does not need action by Congress to remove existing US sanctions on either Libya or Iran. But as the presidential election season nears, the White House may grow reluctant to remove sanctions because it could trigger congressional ire.
