U.S. Eases Libya Sanctions

President George W. Bush on Friday cleared the way for American companies to do business in Libya, easing nearly two decades of economic sanctions as a reward to Moammar Gadhafi for giving up weapons of mass destruction.

Libya's actions "have made our country and the world safer," the White House said.

The easing of sanctions imposed in 1986 and those imposed under a 1996 Libya sanctions law will allow a resumption of oil imports from Libya and permit most commercial activities, financial transactions and investments.

It also will permit American oil companies to resume commercial activities in Libya. Marathon, ConocoPhillips, Amerada Hess and Occidental all have assets in Libya but have been barred by the U.S. government from operating there since 1986.

Libyan assets held in the United States or by U.S. banks will remain frozen.

A Libyan official in Tripoli said the move constitutes a "recognition not only of Libya's economic potentials but also of the importance of Libya's role in the coming period." He did not specify what the significance of the "coming period" would be.

"It is a great step ... for Libya's political position," he said, speaking on condition of anonymity.

The Libyan official said the easing of sanctions will be beneficial both to the Libyan and American people. "American companies have an interest in being in Libya," and the Libyan oil industry can use the activities of American companies, he said.

Bush rolled backed the sanctions as a result of Libya's decision late last year to abandon weapons of mass destruction.

"Through its actions, Libya has set a standard that we hope other nations will emulate in rejecting weapons of mass destruction and in working constructively with international organizations to halt the proliferation of the world's most dangerous systems," White House press secretary Scott McClellan said. "Libyan actions since December 19 have made our country and the world safer."

Gadhafi also has garnered international backing with his decision to accept responsibility for the 1988 Pan Am 103 bombing. Libya has pledged $2.7 billion to compensate families of the airliner's 270 victims — $10 million per family.

The 1996 Libya sanctions law prohibited U.S. companies from investing in Iran and Libya. Sanctions also could be applied under the law to foreign companies that made investments in either country in excess of $40 million. In 2001, Congress extended the law for an additional five years. In the eight years the law has been in effect, no foreign company has been sanctioned.

Foreign firms can now feel free to carry out energy-related investment in Libya without fear of U.S. reprisal.

The main remaining sanction is Libya's presence on the U.S. list of state sponsors of terrorism. Nations on the list are barred from receiving arms-related exports or sales of U.S. origin or receiving U.S. economic assistance. The U.S. government also is barred from supporting loan requests from such countries in international lending institutions.

The White House said Bush's action "does not prejudge the removal of Libya from the terrorism list or detract from Libya's obligation to fulfill its continuing Pan Am 103 commitments.

"The necessity of ending any tie to terrorist groups or activities will continue to be a central issue in relations with Libya," the White House said.

Citing Libya's new stand, the White House said that Gadhafi's government "has taken significant steps eliminating weapons of mass destruction programs and longer range missiles, and has reiterated its pledge to halt all support for terrorism.

"In the last two months, the government of Libya has removed virtually all elements of its declared nuclear weapons program, signed the IAEA Additional Protocol, joined the Chemical Weapons Convention, destroyed all of its declared unfilled chemical munitions, secured its chemical agent pending destruction under international supervision, submitted a declaration of its chemical agents to the Organization for the Prevention of Chemical Weapons, eliminated its Scud-C missile force, and undertaken to modify its Scud-B missiles," the White House said.

In Tripoli, a Libyan economist, Saleh Ibrahim, said the U.S. move is "a step in the right direction. America this time has lived up to its promises of solving the remaining issues between the two countries."

"Libya has suffered from American sanctions, and international sanctions which were a consequence of the American ones. Libya will benefit from the lifting of sanctions because it was deprived of technology" and will be able to upgrade its oil industry, he said.

America, which was Libya's main trading partner and had a major share in its oil industry, "will now regain that role particularly in exploration and extraction." Saleh said it will also be of benefit for both countries in entering the African market, for which Libya is a gate.