The United States intends to lift many economic sanctions on Libya soon, possibly this week, dramatically easing its embargo to allow U.S. companies to invest there and buy Libyan oil, U.S. officials said Monday.
The shift, which could slip to next week or beyond, would let U.S. companies resume most commercial activities in Libya and reflects Washington’s desire to reward Tripoli for giving up its weapons of mass destruction.
Libya’s surprise announcement Dec. 19 that it would abandon the pursuit of chemical, biological and nuclear weapons and its admission Aug. 15 of responsibility for the 1988 bombing of a Pan American jet over Lockerbie, Scotland, have ushered in a new era in U.S.-Libyan relations after decades in which Washington treated Tripoli as a pariah.
U.S. officials said the main sanctions that were imposed under the International Emergency Economic Powers Act and the Iran-Libya Sanctions Act were expected to be removed soon.
Asked what this would mean, one official said: “U.S. companies will be able to buy Libyan oil and products. U.S. commercial banks and other financial service providers will be able participate in and support these transactions.”
Among the biggest beneficiaries would be the U.S. oil companies in the Oasis Group of Marathon Oil Co., Amerada Hess and ConocoPhillips, which were forced out of Libya by U.S. sanctions in 1986.
“It’s a very big deal ... because it essentially removes the major roadblock that currently bars U.S. companies from engaging in investment and trade with Libya across the board,” said Wynn Segall, a lawyer with the prominent law firm Akin Gump Strauss Hauer & Feld.
No arms exports
The Iran-Libya Sanctions Act, which is detested by many European nations, allows the U.S. president to punish non-U.S. companies that invest more than $20 million a year in the energy sectors in Libya or Iran.
However, officials said Libya would remain on the U.S. list of “state sponsors of terrorism,” which bars it from receiving U.S. arms exports, controls sales of “dual-use” items with military and civilian purposes, and limits U.S. economic aid.
Although officials said the economic sanctions could be removed by Thursday — a deadline setting payments to families of the 270 people killed when Pan Am 103 was blown up over Lockerbie — they also said a decision might slip.
When it took responsibility for the bombing in August, Libya turned over $2.7 billion, or $10 million per victim, to be paid out to the victims’ families under a phased-in deal tied to the lifting of sanctions.
The families received $4 million last year after the U.N. Security Council ended its sanctions on Libya.
Under the deal, they can receive another $4 million if the United States lifts its own sanctions and $2 million more if it drops Libya from the U.S. list of state sponsors of terrorism.
If Washington does not take these steps within eight months of Libya’s payment of $2.7 billion into an escrow account — a deadline that falls Thursday — Libya would pay only $1 million more, bringing total compensation to $5 million per victim.
The main lawyer for the Lockerbie families said last week that he hoped to persuade the Libyans to extend the deadline because it might take a more time for Washington to end the sanctions.
Officials said their strategy was to lift parts of the embargo by Thursday, hoping Libya would pay the $4 million and extend the deadline to remove it from the state sponsors list.
It was unclear whether the U.S. move would persuade Libya to make the $4 million payment.
Among sanctions that would remain is a freeze on Libyan assets held in the United States or by U.S. banks, which one official estimated at hundreds of millions of dollars.