Lifting of U.N. sanctions will help Libya boost its oil industr

CAIRO, Egypt -- The United Nations' lifting of sanctions on Libya -- long branded a sponsor of terrorism -- gives the country a chance to boost its oil industry, improve its human rights record and return to the international fold.

People danced in the streets of Tripoli after the U.N. Security Council voted Friday to lift the 11-year-old embargo on arms sales and flights to Libya.

Amnesty International welcomed the U.N. move, but urged Libya to clean up its human rights record. Libyan leader Moammar Gadhafi tolerates no serious opposition, and Amnesty has accused his regime of holding hundreds of political prisoners.

"We are hoping the return of Libya to the international community will engender an improvement in the human rights situation in that country," Amnesty spokeswoman Nicole Choueiry said.

The U.N. action was mostly symbolic because the sanctions had already been suspended. Libya wanted them formally lifted to restore its standing in the international community.

Imposed in 1992

The U.N. sanctions were imposed in 1992 to force Tripoli to surrender two Libyans indicted for the 1988 bombing of a U.S. Pan Am jet over Lockerbie, Scotland.

The council suspended the sanctions after the two men were delivered for trial in 1999. It abolished them Friday after Libya agreed to compensate families of the Lockerbie victims and to provide additional payments to relatives of those killed in a 1989 bombing of a French airliner.

America abstained on Friday's Security Council vote. But the deputy U.S. ambassador to the United Nations, James Cunningham, said that the U.S. sanctions on Libya would remain "in full force."

Cunningham accused Gadhafi of actively developing biological and chemical weapons and upgrading its nuclear infrastructure. He added that Libya was also seeking ballistic missiles to deliver weapons of mass destruction and is receiving assistance, including from unnamed countries "that sponsor terrorism."

Libyan Foreign Ministry spokesman Hassouna al-Shawish called Saturday for the United States to repeal its 17-year-old sanctions, saying it inflicts losses of about $3 billion a year on the North African country.

"We expect in the future that the United States will lift completely the sanctions imposed on Libya, and will allow its citizens to visit our country," al-Shawish said in an interview.

Paying settlements

Arab League Secretary-General Amr Moussa also urged America to lift its sanctions.

France abstained as well because it and Libya had not yet finished negotiations over a revised compensation package for the bombing of the UTA jet in 1989.

Henry Schuler, a former diplomat and executive for a U.S. oil company who spent 30 years working in Libya, said Gadhafi appears to have restored his international credibility simply by handing over millions of dollars.

"It seems to me to be the wrong signal to be sending in the midst of the war on terrorism," Schuler said in a telephone interview from the United States.

The compensation for the Lockerbie bombing totals $2.7 billion. For the 1989 bombing of the French jet in Niger, Libya initially agreed to pay $33 million and is expected to increase that under a revised settlement.

The end of sanctions will not have an immediate impact on Libya's lifeblood, oil, because the industry is already producing at full capacity and the embargo never stopped a number of European companies from working on the oil fields.

"I don't think the Italian companies ever stopped doing business with Libya," said Jan Stuart, the head of energy research at FIMAT USA, a brokerage unit of Societe Generale, in New York.

But the U.N. move will have a substantial effect on its oil industry in three to five years, according to Roger Diwan, a departmental head at PFC Energy in Washington.

Friday's vote gives the go-ahead to many European companies that had been reluctant to invest in Libya because of the 1996 Iran and Libya Sanctions Act, Diwan said. The U.S. law threatened to penalize the American partners of European companies that did significant business in Libya and Iran.

Stuart said that what the Libyans really want is U.S. investment in its oil industry. American companies own a large number of concessions in Libya but are barred from developing them because of U.S. sanctions.

Stuart said that what the Libyans really want is U.S. investment in its oil industry. American companies own a large number of concessions in Libya but are barred from developing them because of U.S. sanctions.

Arab League Secretary-General Amr Moussa urged America to lift its sanctions, saying during a visit to Moscow that "normalization of relations between Libya and the West ... will allow us to throw our old differences behind us and boost Arab-American relations."