LIBYAN SANCTIONS UPDATE #4

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000404170001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: March 7, 2011
• Sequence Number: 1
• Publication Date: August 6, 1986
• Content Type: REPORT

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LIBYAN SANCTIONS UPDATE #4 25X1
6 August 1986
This report contains information relevant to the US effort to
impose sanctions on Libya:' It covers the month of July and
includes all West European countries plus Argentina, Brazil,
Canada, Japan, and South Korea.
This report was prepared by the West European Division,
Office of European Analysis, with contributions from other
offices. uestions and comments are welcome and may be addr
to Chief, West Europeai,pivision,
Copy of ,~
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Summary
While there were no major changes on the sanctions front in
July, some positive developments did occur. In particular, Tokyo
apparently has increased its resolve to limit economic ties with
Libya;
vigorous a orts to lock the transfer of two Airbus aircraft to
Libya and is amending its export regulations to stop..,the sale of
Optica aircraft--which can have quasi-military uses such as
reconnaissance. Even Greece seems to be uietl r
contacts with Libya
The Europeans clearly are unenthusiastic about the proposed
US ban on imports of oil products refined from Libyan crude but
appear resigned to it and most seem ready to cooperate. There is
also continuing sympathy for the goal of making Libya a residual
oil supplier and last month both Brussels and The Hague conveyed
their disapproval to importers of Libyan oil.
Among the countries covered in this report, only India moved
to strengthen economic ties with Libya last month. The desire to
maintain the flow of worker remittances and other hard currency
income from Libya probably was the deciding factor. Malta's
strong rhetorical support of Libya meanwhile continues unabated
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In Europe, London is continuing its
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ARGENTINA
Overview
Argentina's relations with Libya remain cordial, but cool.
Buenos Aires feels obligated to Libya for its materiel and
diplomatic support during the Falklands War, but has made it
clear that it does not wish to be seen as sympathetic to Qadhafi.
Actions Supporting US Sanctions
Argentine firms allegedly have continued to hold discussions
with Libyan businessmen, but we believe that the government
monitors these dealings closely and maintains a strict
non-approval policy on actual exports to Tripoli.
AUSTRIA
Overview
Vienna has responded unofficially to the US demarche on
Libyan oil imports by restating Austria's long-standing
objections toward non-UN mandated sanctions. The Embassy is
encouraged, however, that Austria did not categorically rule out
some form of cooperation, and argues that ~g~owing Austrian
disenchantment with the Qadhafi government is likely to
discourage future trade.
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BELGIUM
Overview
Belgium continues to have reduced economic ties with Libya
although the government remains opposed to formal sanctions. ~
Actions Supporting US Sanctions
In late June a government official--while disclaiming legal
authority to ban Libyan oil imports--said that Brussels would
inform importers that it takes a dim view of refining Libyan
crude in Belgium. This applies particularly to the South Korean
firm Daewoo which recently purchased a 65,000 b/d refinery in
Antwerp with the apparent intention of processing Libyan and
Iranian crude.
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CANADA
Overview
Ottawa has done nothing new concerning Libya in recent
months, and the issue of Libyan sanctions has faded into the
background. In addition, Prime Minister Mulroney almost certainly
remains unwilling to impose further sanctions without being
joined by key NATO allies. The government, however, will probably
remain cooperative in attempting to persuade Canadian firms not
to fill in for departing US companies.
DENMARK
Overview
Denmark has said its economic ties with Libya are limited and
that it will only support sanctions mandated by the EC--even
though Copenhagen is willing to apply a total trade embargo
FINLAND
Overview
Helsinki has not altered its position that it
of economic sanctions against terrorism, and that
reconsider only if a wide international consensus
the UN Security Council recommends sanctions.
Overview
FRANCE
rejects the use
it would
developed or if
France continues to be quietly supportive of US efforts to
clamp down on Qadhafi, while the French media have all but
dropped the Libyan issue.
Actions Supporting US Sanctions
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Diplomatic reporting indicates that the French are
cooperating with US efforts to reduce Libyan oil revenues through
a certification arrangement. The Embassy also reports that the
US decision to terminate the operations of American oil companies
in Libya has boosted our political capital with the French and
made them more willing to cooperate on the certification issue.
GREECE
Overview
Athens remains unwilling to condemn Libyra publicly for its
involvement in international terrorism, but seems to be quietly
curtailing official contacts. Greek firms tinue to enjoy
access to Libyan oil and markets.
Actions Supporting US Sanctions
The Greek government has officially confirmed that the size
of the Libyan People's Bureau will be reduced by one-third with
the departure of 15-20 Libyan diplomats.
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ICELAND
Overview
The government has not commented further on its policy not to
INDIA
Overview
India has offered to cooperate with Libya in new areas of
industry, trade, and commerce. At the end of the Indo-Libyan
Joint Commission meeting in New Delhi in early July, the two
countries signed a protocol reiterating their commitment to
strengthen relations. We believe India's participation was
mainly prompted by New Delhi's interest in maintaining hard
currency income from Libya. About 15 Indian companies are
working on 62 projects in Libya valued at $1.3 billion and the
40,000 Indians emoloved there send home about $200 million
annually.
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IRELAND
Overview
Dublin continues to allow Irish firms to pursue lucrative
beef export deals with Libya.
ITALY
Overview
The Italian government remains determined to slowly reduce
economic ties with Libya, although several companies are
beginning to agitate for a return to normal relations to improve
their chances of being paid the $800 million in debt owed to them
by Tripoli. Rome has not protested US intentions to ban imports
of refined petroleum products made from Libyan crude, but is not
likely to favor the move because several Italian refineries
import Libyan oil and would no longer be able to export their
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Actions Undermining US Sanctions
The Italian firm Siai Marchetti will resume training Libyan
pilots for the SF-260 turboprop trainer aircraft, according to US
military reporting. The first of three instructors will return
to Libya around 1 August, with the others following within a
If Siai Marchetti's actions draw no protest from Rome,
Aeritalia is planning to resume training Libyans in the use of
its G-222 transport aircraft. Aeritalia also wants to release
Libyan assets that have been held by the company since Italy
strengthened its arms embargo last January. The company holds
three aircraft and a barge number of spare parts, and reportedly
fears that Tripoli will refuse to pay the large debt owed the
company if it continues to hold these items.
JAPAN
Overview
Tokyo continues to assure the United States it will tightly
control Japanese economic ties with Libya. Although the
government still claims it has limited power to prevent firms
from dealing with Libya, it appears to have tightened up,
advising trading companies interested in large construction
projects to cease their activities. Tokyo is also likely to
support US efforts to ban imports of oil products refined from
Libyan crude.
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LUXEMBOURG
Overview
Luxembourg continues to have negligible economic relations
with Libya.
MALTA
Malta has been sharply critical of US actions against Libya
from the beginning, accusing the United States of irresponsibly
Actions Undermining US Sanctions
A private Maltese organization run by ex-Prime Minister
Mintoff's brother hosted a symposium on "peace in the
Mediterranean" on 5-6 July which, according to US Embassy
officials, was probably sponsored by the, Libyan government. The
final communique condemned US and NATO hvSt.~lities against Libya
and also the economic boycott. Maltese Foreign Minister
Sceberras Trigona spoke at the conference, calling for the
removal of all foreign military bases and fleets from the
The Maltese Minister of Industry led a trade delegation to
Libya on 20 July to try to boost trade between the two countries.
Maltese exports to Libya have dropped sharply over the past year
because of poor economic conditions in Libya.
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Valletta continues to act as an intermediary for Tripoli,
although with little success. Most recently Malta tried to
arrange a meeting between Libyan officals and Italian F r n
Minister Andreotti, but .was rebuffed by Rome.
At the 24-25 July Malta Labor Party General Conference,
Foreign Minister Sceberras Trigona reaffirmed the Maltese
government's belief that its Treaty of Friendship with Libya does
not violate Malta's non-aligned status.
NETHERLANDS
Overview
The Hague continues to encourage Dutch firms not to undermine
US sanctions and Dutch economic relations with Libya are small.
The government still believes, however, that it would be
impossible to certify that oil products exported from the
Netherlands contain no Libyan crude.
Actions Supporting US Sanctions
A Ministry of Economic Affairs official informed our Embassy
that the government told British Petroleum it does not want Dutch
trade figures "dirtied up" with Libyan oil. This occurred in
response to a large shipment of oil BP accepted at Rotterdam.
The Embassy reported that this was the first admission that the
Dutch government talked to oil companies about purchasing Libyan
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NORWAY
Overview
There has been no indication of whether Oslo has attempted to
persuade Norwegian businesses and technicians not to replace
Americans leaving Libya, as it has told US officials it would do.
Oslo has a long-standing ban on military sales to Libya that it
says it will continue, but still doubts the effectiveness of
PORTUGAL
Overview
Lisbon probably will not impose economic sanctions
unilaterally, but has indicated to US officials that it would
participate in a European-wide action. Lisbon acknowledges
Tripoli's role in international terrorism, but has stated that
Portugal is too small to take independent action.
SOUTH KOREA
Overview
South Korea's close economic relations with Libya have made
it difficult for Seoul to endorse US sanctions, although future
policy toward Libya may give somewhat more consideration to US
and Western views. Tripoli's insistence on using oil rather than
cash to pay its bills has prompted Seoul to caution South Korean
firms against vying for additional Libyan contracts.
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Actions Undermining US Sanctions
An Italian Foreign Minsistry official told US diplomats that
a South Korean firm had purchased the assets of a US oil company
that had pulled out of Libya. The Embassy could not confirm the
report and gave no additional details on the assests involved.
Overview
SPAIN
Madrid probably will not risk a further deterioration in
relations with Tripoli by independently imposing economic
sanctions. Spanish firms are active importers of Libyan oil and
Madrid's initial reaction to the US proposal to prohibit imports
of oil products produced from Libyan crude has been negative.
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On 23 July, Political Director Cajal of the Foreign Ministry
stated that Madrid has no illusions about the Qadhafi regime, but
will continue to maintain diplomatic and economic relations. He
added that, although Madrid has not yet completed its review of
the possible US ban on imports of oil products refined from
Libyan crude, initial reactions in the government have been
SWEDEN
Overview
Stockholm has taken no new position since saying it would
continue to prohibit arms exports to the Near East and would not
participate in economic sanctions unless they are approved by the
rT?
SWITZERLAND
Overview
Bern continues its opposition to formal,,~conomic sanctions.
Actions Supporting US Sanctions
A Swiss company declined a Libyan request to perform major
service on one type of commercial aircraft. Subsequently Bern
said it would convey US objections to Swiss companies capable of
performing major aircraft servicing, although it will not
actively discourage them from doing business with Libya.
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TURKEY
Overview
Ankara is trying to maintain its tough anti-terrorist policy
and its standing with Washington, while continuing to pursue
economic relations with Libya. Tripoli's ongoing failure to pay
$400-500 million in arrears to Turkish m anies continues to
dominate bilateral relations. 25X1
Actions Supporting US Sanctions
Several Libyan diplomats, including the "Ambassador,"
reportedly have been withdrawn from Turkey after being implicated
in the attempted attack on a US officers' club in April 1986. 0 25X1
The Turkish State Prosecutor has appealed the case of two
Libyan terrorists convicted of possessing explosives in
connection with the attempted attack. He is seeking to revive
murder conspiracy charges against the two, in an effort to secure
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UNITED KINGDOM
Overview
London remains vigorously opposed to~ecgtlomic sanctions
against Libya. The British agree with the US objective of
reducing Libyan oil exports but believe it would be difficult to
implement such a policy. The Foreign Office also sees some
problems in accommodating a US request for a government
certificate showing that oil product shipments from the UK
contain no Libyan crude because there is no structure in to
issue such documents i
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Actions Supporting US Sanctions
The British government and British Caledonian Airlines have
made numerous efforts, including court action, to stop the sale
of two Airbus A310s to Libya.
London is amending its export license requirements to include
the Optica aircraft and will not issue a license for sales to
Libya. The aircraft normally is not subject to export controls
but Foreign Office officals told our Embassy they want to avoid
undermining US sanctions. In addition, London considers it
"undesirable" for Libya to obtain aircraft with the Optica's
police and reconnaissance capabilities.
WEST GERMANY
Overview -
A West German official informed the US Embassy in early July
that Bonn still opposes sanctions in principle, but that current
policy amounts to a de facto limitation on Libyan economic ties.
Actions Supporting US Sanctions
According to the above mentioned official:
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o Bonn has postponed indefinitely meetings of .the .West
German-Libyan bilateral commission.
o Limitations on Libyan trade credits are inhibiting export
contracts.
o The Tripoli embassy no longer has an economic counselor.
o Bilateral trade is declining; during January-May, imports
from Libya were down 60 percent from the year-earlier
figure while exports to Libya were down 40 percent. ~
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SUBJECT: Libyan Sanctions Update #4
Distribution:
Copy 1 -
2 -
3 -
4 -
5-6 -
7 -
8 - D/DCI-DDCI
9 - DDI
10 - ANIO/EUR
11 - NIO/CT
12 - D/EURA
13-14 - EURA/PS
15-18 - IMC/CB,
19 - ALA/SAD/BR
20 - OEA/NA/J
21 - OEA/NA/K
Executive Staff
22 - C/MPS/PES (2G02)
23 - EURA/WE/BBC
24 - EURA/WE/CM
25 - EURA/WE/GN
26 - EURA/WE/IA
27 - C/EURA/WE
28 - DC/EURA/WE
29 - EURA/WE
30 - C/EURA/EY
31 - C/EURA/EI/EI
32 - WE Subject File
33 - NESA/SO
34 - C/NESA/A
35 - ALA/SAD/
36 - OGI/SRD/
DDI/EURA/WE~
August 86
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Ambassador Robert Oakley, Counterterrorism,
Ambassador Rozanne Ridgway, EUR, Rm 6226/ST
Kenneth Dillon, INR/WEA, ST
Roger Dankert, NEA/AFN, State
Douglas Mulholland, Room 4324, Treasury
Don Halstead, Room 4324 Treasury
~
I M
SC
SFB
Rm 2236/ST
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