Gadhafi Gets His Way, and So Do Americans

The United States decision to restore diplomatic relations with Libya heralds the beginning of what might be called a Golden Age in relations between the two countries.

This is exactly what Muammar Gadhafi wanted and has been waiting for since the end of 2003, when he made the dramatic leap from enemy to friend of the West, a switch that bestowed upon him incomparable Western acceptance. This is also exactly what America has wanted, with Washington waiting for just the right moment to make renewed Libya relations a reality.

It is true there are many who read this decision as a reward to Gadhafi for his submission to the West. And it is true that there are many Americans that tout the decision as evidence that when nations considered “rogue” change their methods and show a positive disposition, the United States can dispense rewards as well as punishments. America hopes that Gadhafi’s Libya will become a model for other governments, like those in Iran and North Korea. It is also true that the Bush Administration is showing its usual level of seriousness over the decision, after having conducted a painstaking review of Libya’s behavior, especially in the field of human rights, the fight against terror and plans for domestic reform.

But Gadhafi’s reward is being given for something that had already begun, namely agreeing to reform his system and open up the Libyan economy. And the formal resumption of ties is not a return on services that Gadhafi has rendered to the West, so much as it is a down payment on the profits that cooperation will garner in the future.

These mutual interests overshadow any words uttered by politicians. Imam Al-Gadhafi has opened the door to a goldmine of opportunity for American companies. Removing Libya’s name from the list of countries that foster terrorism is nothing but the official American declaration of the opening to this mine.

Today, Gadhafi’s mine is nothing but raw [undeveloped] land and after years of blockade and sanctions, is dependent on outdated technology. Yet Libya officially sits atop Africa’s most and the world’s eighth largest oil reserves (39 billion barrels, according to OPEC). Libya is hoping to increase its production from 1.6 million barrels per day today, to 2 million bpd between 2008 and 2010, and then to 3 million bpd in 2015. And this requires, according to estimates, investments totaling $30 billion over the next nine years, which Libya wants America to provide.

But America needs no persuasion. After the travel ban against Libya lifted in 2004, four American oil companies returned to Libya, and renewed their oil concessions until 2034. They also paid billions of dollars to become 40% partners with Libya’s National Oil Company. Within a year, Occidental Petroleum, Cononco Phillips, Marathon Oil and Amerada Hess doubled their oil reserves and began to reap the rewards.

While European competition means America doesn’t expect to control the Libyan oil industry, she certainly wants to grab her share before competing companies from China, India, Malaysia, and Venezuela arrive.

That is the oil situation. But increasing demand has also made Libyan natural gas far more attractive, especially to Asian markets. This industry will offer a tremendous number of job opportunities.

Amidst all of these natural resources there is another kind of wealth. Because Libya has remained cut off from the outside world for so long, practically the entire infrastructure needs to be repaired or rebuilt to bring the country into the modern age. This includes everything from schools, to hospitals, to electrical networks, to sewers, ports, water treatment plants, communication networks, agriculture, aviation, defense and more.

It’s no coincidence that the two countries have been mulling over the “Libya 2006” project long before they formally renewed ties. In December, Tripoli will host an exhibition for infrastructure, energy, oil and gas. The event will be, according to the Bush Administration, “an excellent opportunity for American companies to show their products and services.”

What’s important to Gadhafi is that he has begun to reap rewards from the West. And what’s important to America is that the goldmine has been opened, and in it is everything that the heart’s of American companies’ desire.

As for the spread of democracy, that will come later.