Sanctions pain doubted

Press, 3 February 1986, Page 6

Sanctions pain doubted

NZPA-AP Tripoli Ronald Reagan’s economic sanctions against Libya began at the weekend but Western diplomatic and industrial analysts said the world oil glut was far more damaging to Libya’s economy than any American measures.

Western diplomats in Tripoli, the Libyan capital, agree that the sanctions, far from hurting Colonel Muammar Gadaffi, strengthened his faltering domestic popularity.

It is a United States criminal offence for American citizens not married to Libyans to live or travel in Libya or engage in any. commercial transaction with Libyans. In Washington a State Department spokesman, Bernard Kalb, said that at least half the estimated 1000 to 1500 Americans working in Libya had left before the embargo was applied. Despite the abrupt departures, Libya’s shipments of oil — its only significant export — re-

main virtually unaffected, running at a daily rate of one million barrels, say reliable and authoritative European oil specialists. Libya’s oil income has fallen about 20 per cent from the previous annual rate of about SUSB billion ($15.2 billion). But that, say the specialists, is because oil prices have fallen about 20 per cent since mid-December. The sanctions, intended mainly to damage the Libyan oil industry, were ordered by Mr Reagan in reprisal for the Palestinian terrorist attacks at Rome and Vienna airports on December 27.

The United States says that Libya actively supported the raids.

Colonel Gadaffi denies that. He at first praised the attacks. The United States 6th Fleet conducted a week of air exercises off Libya. That ended on Friday without American planes exchanging one shot with Colonel Gadaffi’s Air Force and Navy.

Colonel Gadaffi used the sanctions and the 6th

Fleet manoeuvres to conduct a prolonged antiAmerican news media campaign and boost his own prestige as “the saviour of the Libyan people.” Western diplomats said that many of their Libyan contacts who have long expressed secret opposition to Colonel Gadaffi now suggest the sanctions paradoxically have prolonged his 16-year-old rule.

Dissension had been growing among tribes and in the military because of severe shortages caused by import cuts and because of Colonel Gadaffi’s programme of sending "revolutionary committees” of armed youths to supervise Army barracks. Another source said that Mr Reagan’s freeze on Libyan assets in American banks also had been a partial failure. “The Libyans apparently had an advance warning or premonition and managed to withdraw more than SUSI billion ($1.9 billion) of their total SUSI. 4 billion ($2.66 billion) before Reagan an-

nounced the freeze,” said a senior European banking consultant.

One oil executive said that Mr Reagan’s sanctions had caused some short term inconvenience to the Libyans. “American-made equipment and spare parts have to be obtained in roundabout ways,” he said.

“European technicians have been brought in at premium salaries, to replace Americans, and Libya’s oil storage capacity — equivalent to less than one month’s normal output — is strained to the utmost.”-

The sanctions also had come at the worst possible moment for the Libyans because the sharp fall in oil prices had made it harder to sell on the spotmarket oil that normally would have been exported by the big American companies. Although hundreds of Americans could be seen leaving Tripoli’s airport in recent days* many told reporters that after getting a Libyan exit stamp

in their passports they }>lanned to return to their obs rather than face unemployment in the United States. Many other Americans simply ignored the presidential order. The Libyan National Oil Company, which has overall control of the entire Libyan industry, offered departing Americans two additional months’ pay and promised to hold their jobs open during that period. Many American companies in Libya sacked Libyan staff and shut down their local offices. . But diplomats and European oil people said the American companies were finding legal loopholes in the sanctions, such as transferring their business to non-American subsidiaries. The State Department has yet to decide whether to authorise this evasion of the spirit of the sanctions, or to force the companies to abandon their multlbillion-dollar assets to the Libyans with no hope of compensation.