Libya wants diplomatic ties, oil contracts for agreement

CAIRO, Egypt -- Libya hopes to reopen relations with the West and gain lucrative oil contracts blocked by U.S. sanctions as well as reap other economic benefits by abolishing weapons of mass destruction.

Under the surprise disarmament agreement by Libyan leader Moammar Gadhafi, Libya would allow U.N. and U.S. inspectors to monitor its nuclear program in addition to getting rid of its arsenal, moves it believes will return the country to the good graces of the international community.

"We are turning our swords into ploughshares, and this step should be appreciated and followed by all other countries," Libyan Prime Minister Shukri Ghanem told the British Broadcasting Corp. -- a clear reference to the United States, the one country that maintains sweeping sanctions.

The United States imposed sanctions in 1986, accusing Libya of supporting terrorist groups. Ten years later, America pass-ed the Iran and Libya Sanctions Act that threatened to penalize the U.S. partners of European companies that did significant business in Libya and Iran.

When the U.N. Security Council voted to abolish its sanctions on Libya in September, the deputy U.S. ambassador to the world body, James Cunningham, said U.S. sanctions on Libya would remain "in full force."

Cunningham accused Gadhafi of actively developing biological and chemical weapons, upgrading its nuclear infrastructure, and seeking ballistic missiles to deliver weapons of mass destruction.

With Friday's decision, Libya believes it has wiped the slate clean.

"What Gadhafi is striving for is reacceptance into the community of nations," said Henry Schuler, a Libyan specialist who has met Gadhafi and spent eight years in the North African country as an American diplomat and an oil company executive.

So far, Gadhafi seems to be winning friends, even in places where he might not want them.

Israeli Foreign Ministry spokesman Jonathan Peled said Sunday that the move on weapons of mass destruction could lead to his country's establishing relations with Libya.

"There is no conflict or animosity with the Libyan people. We are definitely willing to have relations with any nation or country in the world that is willing to recognize Israel as a sovereign or free country," Peled said.

However, Libya's state-run press made clear that Israel would have to follow suit with it weaponry.

The Al-Jamahiriya newspaper said Libya's decision had reversed the "race" to produce weapons of mass destruction in the Middle East and placed "exceptional pressure on Israel" to come clean on its nuclear weapons, which the Jewish state has neither admitted nor denied possessing.

In Cairo, Egyptian President Hosni Mubarak said Libya's move will have an "echo in the world -- including Israel, which should remove its weapons of mass destruction."

Saad Djabbar, a North African expert at Cambridge University, said what Libya seeks is normalization with the United States and the removal of all sanctions.

American oil companies own joint-venture concessions in the Libyan oil fields, but sanctions have blocked them from developing those fields. Oil experts say their Libyan state partners are now operating the fields, but at levels far below their potential.

"With U.S. investment, Libya can become a world class oil producer," oil industry consultant Peter Gignoux told The Associated Press. The American companies "hold the best concessions and they have got very good technology."

Djabbar said Libya knows that once American companies have re-established themselves, "they would enhance the pro-Libyan lobby in Washington."

He believes the move on weapons of mass destruction will allow Libyan scientists to return to American universities and acquire the technical know-how Libya needs.

However, Schuler, the former diplomat, believes Gadhafi decided to abolish weapons of mass destruction for political and diplomatic reasons. "It's to enhance Gadhafi's historic reputation and to pave the way for Seif Gadhafi or one of the other sons to take over," he said.

As long as Libya is cut off from the United States and on the State Department's list of terrorist-sponsoring nations, "Gadhafi bears the terrorist stigma of the past and the prospects of him passing the mantle of leadership to his son are diminished."

Gignoux also said regime stability was key.

"The threat of regime change has been removed now," he said. "Gadhafi has gotten off the hook."

Yet while Schuler said Libya could develop the American oil fields by itself -- exploiting its joint ownership and advanced technology from other Western states -- Gignoux argued there was no substitute to American investment.

"American oil field technology is really stunning, it's second-to-none," he said. In the absence of American investment, "the Italians have been operating in Libya, but the results have been limited."