UK businesses fear collapse of £1.5bn trade links with Libya

London awaits the result of people’s revolt against the regime, after years spent building bridges with the Gaddafi family

By Mark Leftly, The Independent (UK)

Sunday, 27 February 2011

The collapse of the Gaddafi regime will set back British trade links by a decade and slow down Libya’s economic reconstruction, claim business leaders with ties to the country.

Although the businessmen do not condone the repressive regime, they do fear that it is inevitable that trade progress made since the turn of the millennium will be reversed. Libya started liberalising its economy in the late 1990s, and its return to the international fold was cemented when Tony Blair met Colonel Muammar Gaddafi in early 2004. Britain-Libya trade is now worth £1.5bn, of which the largest part is oil imported from the North African state.

Harry Legge-Bourke, director of specialist and heavy equipment provider Blaythorne, was leading a five-company consortium that was preparing to build a factory in Libya and has dealt with the country for nearly 10 years. He said: “It seems that there is going to be a power vacuum in the coming months. Companies had to deal with [Libyan] businesses that are from the Gaddafi tribal leadership.

“A number of companies, including us, will have to sit and wait to see who establish themselves, and then we’re going to have to start from scratch, go back to square one. All our Libyan business contacts keep talking about the need to provide jobs and infrastructure for the people.”

Oliver Miles, the former British ambassador to Libya who withdrew the British embassy from Tripoli following the 1984 shooting of PC Yvonne Fletcher, is now deputy chairman of the Libyan British Business Council.

He said: “If Gaddafi stays, there will be international sanctions which will mean that there is whole new ball game [in terms of trade links]. If he goes, there will be plenty of goodwill and Libya cannot trade as they’ve got nothing to eat. The problem is nobody knows what type of [trade and governmental] framework will be cobbled together.”

US President Barack Obama has already announced sanctions against the regime, freezing the assets of Col Gaddafi and his four children. The Treasury has set up a special unit to trace and freeze the regime’s estimated £20bn in the UK.

This seems likely to include the assets of the country’s sovereign wealth fund, the Libyan Investment Authority (LIA), which has a number of high-profile property investments in London and a 3 per cent stake in the owner of the Financial Times, Pearson. However, FM Capital Partners, a Knightsbridge-based hedge fund, majority owned by the Libyan Africa Investment Portfolio, is believed to have been investing as normal over the past week.

The EU is also set to announce sanctions, including a travel ban and arms embargo, early next week. Libya was negotiating a free trade agreement with the economic bloc which was to be a stepping stone to joining the World Trade Organisation. A source close to these negotiations pointed out that the EU’s motivation for a deal was to secure an alternative source of energy supply to Russia.

Despite the international pressure, the withdrawal of foreign workers and a UN estimate that at least 1,000 people were killed in the first 10 days of the revolt, figures around the Gaddafi family are telling British businesses existing contracts will be safe.

A UK businessman who spoke to his Libyan contact this weekend said: “He’s ever positive, telling us everything will be fine. He’s part of the clan and says that he gets the feeling the revolt will be short lived.”

How the Libyans spend their money

Libyan Investment Authority

A $70bn sovereign wealth fund set up in 2006

The world’s 12th biggest sovereign wealth fund

Wealth built on oil trade

Owns 2.6 per cent of Italian bank Unicredit

FM Capital Partners

London-based hedge fund set up in 2009

Run by former Bear Stearns trader Frederic Marino

55 per cent owned by Libyan Africa Investment Portfolio

Trains young Libyans in investment strategies

—————————————————————————–

// <![CDATA[// Uprising in Libya:

Revealed: Blair’s secret calls to Gaddafi

Ex-PM phones Libyan despot – and urges him to quit, while SAS mounts daring rescue of oil workers stranded in desert

By Donald Macintyre

Tony Blair with Muammar Gaddafi in 2007 afp/getty images 

Tony Blair with Muammar Gaddafi in 2007

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// <![CDATA[//

 

Tony Blair, widely criticised in recent days for offering Muammar Gaddafi “the hand of friendship” seven years ago, made an extraordinary personal intervention when he twice phoned the embattled Libyan dictator on Friday and asked him to stop killing protesters rising up against the regime.

Britain’s former prime minister made two unannounced calls to Colonel Gaddafi on Friday – the day the Libyan President appeared in public and exhorted a crowd of his hardcore supporters to “defend the nation” against the uprising and “crush the enemy” behind it. That defiant call to arms suggests that Col Gaddafi – who has rapidly returned to the international pariah status he had before the “deal in the desert” he negotiated with Mr Blair in 2004 – simply ignored the man who pioneered the dictator’s temporary rehabilitation by the West.

Reports from the Libyan capital yesterday suggested that the dictator was carrying out his threat to arm supporters to strike back against the uprising. As tensions rose, David Cameron ordered an SAS rescue mission to pick up 150 citizens stranded in the remote oil fields south of the port of Benghazi.

According to Whitehall sources, Mr Blair made an initial call to the Libyan President, who has ordered helicopter gunships to fire on protesters he described as “rats” and “cockroaches”. The Middle East envoy urged him to cease the attacks. The sources suggested that, after consultations with the British Foreign Office, Mr Blair was told that the UK Government would prefer the Libyan President to step down, and so he agreed to phone him again and transmit that message. There was no comment from Mr Blair’s office yesterday. Government sources could not say last night whether ministers knew in advance about the initial phone call.

The first oblique hint that Mr Blair might be in active contact with the Libyan regime came in a routine briefing on Friday in which US State Department spokesman P J Crowley said the former PM was among the international figures that Secretary of State Hillary Clinton had spoken to during the day. Asked why Mrs Clinton called Mr Blair and if it was because of “his dealings with Gaddafi over the Lockerbie bomber”, the spokesman said of Mr Blair: “He has very important and valuable contacts inside of Libya.”

Defenders of the “deal in the desert” – in which Col Gaddafi was to eschew global terror in return for having international oil companies help him extract Libya’s massive oil reserves – have argued that it enabled the West to determine that Libya would give up plans for weapons of mass destruction.

But critics argue that Western business, and oil interests, lay behind the rapprochement with Gaddafi and that it was a serious strategic mistake to rebuild relations with the man who had supported the IRA with weapons and instigated Lockerbie.

Mr Blair has always said he never had any commercial relationship with anyone in the Gaddafi family or the Libyan government, but since leaving office he is understood to have travelled to Tripoli on business for the US bank JP Morgan Chase. He also met Gaddafi in Tripoli as recently as last summer.

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