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Reference ID Subject Created Released Classification Origin
08TRIPOLI430 DIE HARD IN DERNA 2008-06-02 2011-02-01 CONFIDENTIAL//NOFORN Embassy Tripoli
08TRIPOLI453 QADHAFI AND ASAD 2008-06-11 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI455 LIBYA: MEETING WITH RETURNED GTMO DETAINEES UNDER USG-GOL TRANSFER FRAMEWORK MOU REF: A) STATE 14270, B) 07 TRIPOLI 1060, C) 07 STATE 163961, D) 07 TRIPOLI 723, E) 07 STATE 77783, F) 07 STATE 163961 CLASSIFIED BY: Chris Stevens, CDA, U.S. Embassy - Tripoli, Dept of State. REASON: 1.4 (b), (c), (d) 1. (S/NF) Summary: Post visited two returned Guantanamo detainees to confirm their welfare and whereabouts, and the legal basis on which they are being detained in Libya. One detainee's trial has been completed and he is awaiting a verdict on the four charges he faces; the case of the second detainee is expected to go to trial in the next two to three months. End summary. 2. (S/NF) At a June 10 meeting, P/E Chief interviewed separately returned Guantanamo detainees Muhammad Abdallah Mansur al-Rimi (AKA Abdul Salam Abdul Omar Sufrani, ISN 194) and Ben Qumu Abu Sufian Ibrahim Ahmed Hamouda (ISN 557) per ref A instructions. The meeting took place at a GOL security service facility in Tripoli, and was attended by a host government security official. The last visit to the two returned detainees took place on December 25, 2007 (ref B). ISN 194 3. (S/NF) Al-Rimi (ISN 194), who was returned to Libya in December 2006, said he had been detained at an External Security Organization (ESO) detention facility between December 2006 and June 2007, when he was transferred to the Abu Salim prison, located in the Tripoli suburbs. The security official explained that the Abu Salim prison is controlled and managed by military police; it is the facility at which terrorists, extremists and other individuals deemed to be particularly dangerous to state security are detained. Al-Rimi said he remains in solitary detention in a 15 foot by 15 foot cell and has not been mistreated. He is able to walk outside regularly, and is able to speak with other prisoners during exercise periods. He is provided with drinking water, tea and three meals a day. He does not have access to books, radio or television. He has access to medications and has been visited by a prison doctor on the occasions when he has been ill. Al-Rimi stated that members of his family have visited him three times since his return to Libya, most recently in March 2008. (Note: As reported ref D, their previous visits were in January and May 2007. End note.) 4. (S/NF) Asked about the condition of his arm and his teeth, about which he had previously complained (ref D), al-Rimi said both were better. He repeated his earlier claim (ref A) that he sustained the injury to his arm in 2004 or 2005 during a scuffle with U.S. soldiers who entered his cell to punish him for allegedly instigating a disturbance among several other prisoners. 5. (S/NF) Asked for his understanding of the legal basis on which he is being held and the status/schedule of any legal proceedings against him, al-Rimi said he was questioned by the ESO and Internal Security Organization (ISO) officials between his return in December 2006 and February 2008, when his case was transferred to the Prosecutor General's office. His case has subsequently been been tried and is currently with a panel of judges, who are reviewing it. His understanding is that he faces four charges: 1) membership in the Libyan Islamic Fighting Group; 2) membership in al-Qaeda; 3) forging a passport and travel documents and using them to exit the country, and; 4) failing to secure permission to exit the country when he left to fight in Afghanistan. Al-Rimi has court-appointed legal counsel. The Prosecutor General's Office told al-Rimi and his attorney that the court was expected to render a verdict in his case on/about June 16. A verdict had been expected on/about May 5; however, the trial was delayed. Al-Rimi does not know how long his prison sentence could be if convicted of one or more of the charges he faces; however, he claimed his attorney told him he stood a good chance of being acquitted and released. ISN 557 6. (S/NF) Hamouda (ISN 557), who was returned to Libya in August 2007, said he had been detained at an ESO detention facility for three months and was then transferred to the Abu Salim prison. He currently remains at Abu Salim, but understands he may be transferred next month to the Jdeida prison, which houses common criminals, in Ain Zaraa. He has been held in solitary detention since his return - his biggest complaint - and said he has not been mistreated. (Note: The security official explained that detention protocols for extremists and terrorists mandate that they be held in solitary detention to preclude the possibility that they could recruit other members of the prison population for extremist activities. End note.) He is not able to exercise at the Abu Salim prison, but was able to do so at the ESO facility before he was transferred. He is provided with drinking water, tea and three meals a day. He does not have TRIPOLI 00000455 002 OF 002 access to books, radio or television. He has access to medications and has been told he may be visited by a prison doctor if he is ill, but has not had need of one. Hamouda has had two visits by members of his family since his return: his wife and children visited in late December, and his wife and brother-in-law in January. He complained that his family had not visited since, but said he he did not know whether they had tried. (Note: He conceded that his wife had divorced him and remarried, and that relations between them were difficult; however, after the second visit, permission for further visits had to be obtained from the Prosecutor General's office, vice ISO. He speculated that the Prosecutor General's office may have been less efficient in processing visit requests. End note.) 7. (S/NF) Asked for his understanding of the legal basis on which he is being held and the status/schedule of any legal proceedings against him, Hamouda said he was questioned by ESO and ISO officials between his return in August 2007 and May 2008, when his case was transferred to the Prosecutor General's Office. His understanding is that he faces three charges: 1) membership in the Libyan Islamic Fighting Group; 2) membership in al-Qaeda, and; 3) that he performed illicit work for a private company in Sudan and Afghanistan. He also faces charges related to a drug trafficking offense for which he was convicted and imprisoned in the early 1990's. According to the security official, Hamouda escaped from prison and left Libya illegally in 1992 to travel to Sudan; he may/may face separate charges for escaping and leaving the country. Hamouda has no legal counsel, but said he does not want an attorney because he has committed no crimes. Claiming that if he were really a member of al-Qaeda " ~ the U.S. would have never returned me to Libya ~ ", he said his impression is that all of the charges against him are based entirely on hearsay from witnesses whose credibility is suspect. He has been told by the Prosecutor General that his trial may start in two to three months. Hamouda does not know how long his prison sentence could be if convicted for one or more of the charges he faces; however, he claimed that he had been granted a pardon by the Qadhafi Development Foundation for the original drug trafficking conviction and his subsequent escape from prison and illegal exit from Libya. 2008-06-11 2011-02-01 SECRET//NOFORN Embassy Tripoli
08TRIPOLI466 CHEMICAL WEAPONS CONVENTION (CWC): CONVERSION OF THE RABTA CHEMICAL WEAPONS PRODUCTION FACILITY REF: A) STATE 58476, B) THE HAGUE 482, C) TRIPOLI 119 CLASSIFIED BY: Chris Stevens, CDA, U.S. Embassy Tripoli, Dept of State. REASON: 1.4 (b), (d) 1. (C) Summary: The GOL's lead interlocutor on CWC issues told us: 1) conversion of the Rabta chemical weapons production facility would not be completed until December 2009 (which the GOL appears to have known since early 2006), 2) the GOL would not submit a new National Paper at the upcoming June 24-27 Executive Committee meeting of the OPCW, 3) GOL Delreps would/would read an official statement into the record of the EC's informal session that would address all points stipulated in ref A non-paper; 4) the GOL was ready to facilitate a bilateral visit by U.S. technical experts at any time, and; 5) despite delays, the GOL expects to complete destruction of chemical agents well before the deadline it agreed to with States Parties. End summary. 2. (SBU) P/E Chief conveyed ref A demarche points and non-paper on June 12 to Dr. Ahmed Hesnawy, who heads Libya's CWC compliance efforts, and Adel Ben Issa, who has the lead on CWC issues in the International Organization Department of the Ministry of Foreign Affairs (MFA/IO). Dr. Fathi Asseid, Technical Director of the General Company for the Manufacture of Pharmaceuticals and Medical Supplies, which controls the Rabta facility and a related pharmaceutical packaging plant, also attended the meeting. Stressing the GOL's commitment to transparency in declaring its CWC-related equipment, implementing conversion of the Rabta facility and destroying chemical weapon precursors, Dr. Hesnawy thanked the U.S. and U.K. for their "robust" support for Libya's efforts to date. Per ref A, copies of the non-paper and an oral brief on the demarche points were conveyed to U.K. and Italian Embassy counterparts in Tripoli. CONVERSION PROJECT 3. (SBU) On the points of the demarche, Hesnawy indicated the following: - CONVERSION DELAY: Conversation of the Rabta chemical weapons production facility will not be completed before November/December 2009. The GOL signed an original contract with Italian company PharmaChem on February 11, 2002; an addendum to that contract, signed on June 1, 2006 (which Hesnawy showed P/E Chief), stipulated that PharmaChem's portion of conversion work at the Rabta facility would be completed by September 2009. The GOL, factoring in possible unexpected delays, added three months to the timeline, yielding an expected completion date of December 2009. Hesnawy did not respond when asked why Libya had not notified States Parties earlier that conversion would be delayed if it had known since February 2006 that the contract with PharmaChem stipulated a completion date in late 2009. He insisted that the GOL would complete the conversion project and initiate production of pharmaceuticals at Rabta by December 2009. - NEW NATIONAL PAPER: Libya will not submit a new National Paper to the Executive Council (EC) meeting of the OPCW scheduled to begin on June 24. Noting that National Papers are to be submitted at least a month in advance of EC's for review by States Parties, Hesnawy pointed to the fact that the meeting was just ten days away and that there was not sufficient time for review. P/E Chief noted that we had asked since early May that the GOL immediately submit a new National Paper for review. Hesnawy had no response, but said Libya's delegation will instead submit an "official statement" during the Informal Session that would address all points stipulated in ref A non-paper. The informal statement would explain "completely" the reasons for missing the July 29, 2008 conversion deadline and the need for "a correction" to the conversion plan that would eliminate the requirement that a protective sandbag berm be removed. - VISIT BY U.S. TECHNICAL EXPERTS: Hesnawy and his MFA/IO counterpart stressed that the GOL stands ready to facilitate a visit to the Rabta facility by U.S. Embassy officials and/or U.S. technical experts - the U.S. side is "welcome to visit at any time - we have nothing to hide". Such a visit could occur before the upcoming EC meeting or after it. The GOL has already extended invitations through the Italian and U.K. Embassies for their capitals to send teams of technical experts. (Note: The Italian Ambassador and DCM, but not/not Italian technical experts visited Rabta on June 7. A U.K. technical team is notionally scheduled to visit July 6-9, 2008. End note.) Hesnawy stressed that the GOL was willing to accommodate a series of bilateral visits by technical experts, but was not/not willing to facilitate a visit by a combined team (i.e., of U.S. and U.K. experts) out of concern that the visit's agenda could be broadened. TRIPOLI 00000466 002 OF 003 - NEXT STEPS: Hesnawy indicated that he clearly understood that U.S. support for a conversion plan correction to allow retention of a modified protective berm depended on a commitment to transparency and conduct of a site visit to Rabta. He said that the GOL might/might be amenable to submitting a new National Paper at the next EC after the upcoming meeting in late June, indicating that the GOL would premise its decision in part on conversations with Delreps at the June 24-27 EC meeting. IRANIAN HARASSMENT DURING APRIL 2008 OPCW INSPECTION ALLEGED 4. (C) Referring to the April visit by an OPCW inspection team, Hesnawy complained that an Iranian inspector had raised issues with equipment in Building Number 3 and Building Number 4 that had since 2004 been mutually agreed to have been exclusively commercial in nature. According to Hesnawy, four previous tranches of OPCW inspectors had been informed of the equipment and assured the GOL that the equipment did not need to be declared. Referring to the GOL's decision to vote for a UN Security Council Resolution calling for a third tranche of sanctions against Iran because of its nuclear weapons program, Hesnawy said the Iranian inspector deliberately raised the issue of equipment in the commercial building to harass Libya in retaliation for its UNSC vote. Hesnawy claimed Iranian officials at the OPCW had conceded as much in conversations at The Hague with Libya's representative, Muhammad Gheton. "Libya feels it's being dragged back to 2004", Hesnawy complained, saying previous teams of inspectors should have raised the issue of the equipment earlier if it was indeed a subject of concern. DESTRUCTION: STATUS OF ITALIAN CONTRACT & PROJECT TIMELINE 5. (C) Regarding ref B reports that the timetable for Libya's destruction program had slipped, Hesnawy conceded that there had been delays; however, he maintained that Libya would nonetheless meet the deadline of the States Parties. The GOL envisions the project in two phases: 1) Repackaging of the agent from existing polyethylene containers (which has resulted in diffusion, vice leakage, of the agent) into improved containers for the 800 km trip from the Ruwagha facility in al-Jufra to the Rabta facility; and 2) actual destruction of the material. Hesnawy said the GOL will rely on Italian company SIPSA Enginerring and Libyan civil contractors to complete the repackaging and destruction work. Contract negotiations with the Italian company had been "completed" and terms were mutually understood by the GOL and SIPSA; however, the contract itself had not yet been formally approved by "all relevant GOL entities", according to Hesnawy. Additional details, such as securing GOL approval to establish requisite bank accounts and authority for letters of credit were also still being worked out. 6. (C) Hesnawy offered the following schedule for the destruction program: - January/February 2009: Repackaging of the agent takes place; agent is stored in Bunker 109 at al-Jufra until transport to Rabta in late 2009/early 2010; - March 2009: Construction completed on destruction building at Rabta facility; - March-October 2009: Destruction equipment installed in destruction building at Rabta facility; - December 2009: Cold and hot tests of destruction equipment at Rabta destruction facility; - Early February 2010: Commissioning of destruction facility at Rabta; - May 1, 2010: 1% of agent destroyed per agreement with OPCW. Hesnawy offered that SIPSA and the GOL estimated that destruction of all of the agent would require only 25 calendar days once destruction commenced at the Rabta facility. He anticipated no difficulty meeting the deadline for destruction of the agent, and predicted that Libya would complete the project well in advance of the deadline. 7. (C) Comment: Animated and at times angry, Hesnawy repeatedly stressed the GOL's annoyance at what it perceives as an "endless" series of questions about details of its conversion and destruction plans. Stressing that dignity was more important than anything in Libya, Hesnawy offered that GOL officials had considered whether it would be better to destroy the Rabta facility altogether rather than allow it to be used as a pretext for criticism of the GOL's intentions and performance TRIPOLI 00000466 003 OF 003 by "hostile international actors". STEVENS 2008-06-15 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI474 ENI'S OIL AND GAS DEAL EXTENDED, OTHER COMPANIES WORRY TERMS WILL SET A NEW (UNFAVORABLE) PRECEDENT REF: 07 TRIPOLI 912 1. (SBU) Summary: Soaring oil prices are allowing Libya to press for more stringent long-term contracts with foreign oil and gas producers. A twenty-five year extension for Italian firm Eni North Africa BV, which entailed a sizeable bonus payment and dramatically reduced the company's production share, was recently ratified after lengthy negotiations. The potential impact of Eni's deal is significant. Local observers expect that the National Oil Company's (NOC) success in securing very favorable terms will embolden it to pursue renegotiation of existing contracts with other international oil companies (IOCs). Despite Libya's relatively unique position in terms of unproven reserves, high quality oil and low recovery costs, observers here expect that some IOC's facing potentially long renegotiation periods and dramatically reduced production shares may choose to abandon production efforts in Libya. End summary. EPSA MODEL TIME-TESTED 2. (SBU) Libya's Exploration and Production Sharing Agreement (EPSA) rubric has been the most widely used model for producers in Libya since 1974. Under these agreements, international oil companies (IOCs) receive a fixed percentage of output from the fields involved based on the terms of their bid to explore and develop Libyan acreage. The terms of these agreements, particularly the share of overall production retained by companies, have grown increasingly less favorable to IOCs. Intense competition among foreign oil and gas companies to book reserves in Libya, widely perceived to be one of the relatively few places in the world with significant unproven reserves of sweet, light crude and natural gas, has fueled the trend towards less profitable EPSA's. 3. (SBU) As a point of comparison, the standard production share allocation for IOCs in the latest EPSA round (EPSA IV) has been 10-12% of overall production, down from production share allocations of 20% or more that were typical in earlier EPSA rounds. IOC's have accepted stiffer terms based on their high expectations of Libya's hydrocarbon producing potential, the comparatively low cost of oil recovery in Libya, the generally high quality of Libyan crude, Libya's close proximity to European markets and rapidly rising oil and gas prices. Encouraged by the willingness of some IOC's to accept production shares as low as 7 percent under the EPSA IV framework, the NOC - led by former Prime Minister Shukhri Ghanem, reputedly a hard bargainer - has been pressing all IOC's to accept further reductions in their production share allocations to increase Libya's take. Striking a nationalist tone, Muammar al-Qadhafi explicitly referred in his June 11 speech on the occasion of the "evacuation" of U.S. and British military bases in Libya to efforts to renegotiate EPSA contracts as a manifestation of Libya's continued resolve to resist Western imperialism. AT LONG LAST, ENI FINALIZES ITS CONTRACT EXTENSION 4. (SBU) In October 2007, ENI agreed with the NOC to convert its existing long-term production contracts, which were signed in the mid-1980s under EPSA III terms, to the most recent contractual model under EPSA-IV (reftel). That deal was submitted to Libya's General People's Congress for approval and ratification and was ratified on June 12. Under the new deal, Eni reduced its production share to 12% for oil (down from 35-50 percent for its various fields) and 40% for natural gas (down from 50 percent). The share for gas production will drop to 30% after 2018. In exchange, the NOC extended Eni's EPSA III contracts by 25 years, approved a 3 billion cubic meter (BCM) expansion to the Western Libya Gas Pipeline (WLGP), and the construction of a new 4 million tons per annum LNG facility at Mellitah. Eni accepted less attractive fiscal terms on its blocks (its overall portfolio has fallen by 42% due to lower production share figures), and made a $1 billion non-recoverable payment. Eni's licenses were converted to the EPSA IV model and will now expire in 2042 (for oil) and 2047 (for gas). OTHER DEALS IN THE OFFING? 5. (SBU) Several other major extensions are anticipated in the coming months, including those involving U.S. firm Occidental TRIPOLI 00000474 002 OF 002 Petroleum (along with Austrian partner OMV) and Petro-Canada. Those agreements were signed with the NOC in late 2007, but still require GPC ratification. It is possible the NOC will seek further concessions in light of its deal with Eni. Spain's Repsol and the NOC are renegotiating along the EPSA IV contractual model. The initial deal between Repsol YPF and NOC stipulated a 50-50 split of production; however, the NOC is now seeking a minimum production share of 72 percent. 6. (SBU) The NOC has approached numerous other IOCs about extensions, raising the possibility that it will reopen deals that were only concluded a few years ago. Even the U.S. Oasis Group (comprising Amerada-Hess, Marathon and ConocoPhillips), which paid $1.8 billion in December 2005 to return to acreage in Libya's Sirte Basin that it held before the suspension of U.S.-Libyan diplomatic ties and the imposition of U.S. and UN sanctions, may be affected. Libya's relatively modest 59.2 percent production share in that deal has generated preliminary probing by the NOC as to whether the Oasis Group would consider renegotiating, which it has so far successfully opposed. 7. (SBU) Comment: With ratification of its revised EPSA contract, Eni has secured a long-term position in Libya, but at a considerable price. Part of the calculus for Eni and other IOC's is the expectation that oil and gas prices are likely to remain high, making non-recoverable bonus payments and lesser production shares tenable from the standpoint of their projects' overall profitability. It is widely expected that the NOC will push hard to renegotiate other extant deals and extensions that involve reduced production shares for IOCs. Its confidence buoyed by favorable market conditions, Libya is playing hardball with the IOC's, sending a clear message that no deal is beyond renegotiation, no matter how recently concluded or how favorable the terms for the NOC. Libya and the IOC's have been here before: a spate of renegotiations and extensions occurred in the late-1960s and early 1970s, driven in part by the then-new al-Qadhafi regime to demonstrate to its people that it was a better steward of Libya's hydrocarbon resources than the Sanussi monarchy had been. As during that period, the current penchant for shifting the goalposts has not been well-received by the IOCs. Despite Libya's relatively unique position in terms of unproven reserves, high quality oil and low recovery costs, observers here expect that some IOCs facing potentially long renegotiation periods (and associated costs of idle personnel and materiel) and diminished production returns may choose to abandon altogether their production efforts in Libya. End comment. STEVENS 2008-06-17 2011-02-01 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tripoli
08TRIPOLI540 CHEVRON MAY QUIT LIBYA 2008-07-08 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI563 OXY'S 30-YEAR EXTENSION IN LIBYA AND WHAT LIES AHEAD FOR OTHER IOCS REF: A) TRIPOLI 555 B) 2007 TRIPOLI 983 TRIPOLI 00000563 001.2 OF 003 CLASSIFIED BY: John T. Godfrey, CDA, Embassy Tripoli, U.S. Dept of State. REASON: 1.4 (b), (d) 1. (C) Summary: The long-awaited ratification of Oxy's contract extension in Libya has solidified its position as one of Libya's leading oil and gas players. The process by which the contract was finalized has shed light on what lies ahead for other foreign companies, all of whom are expected to be approached soon to sign similar deals. The extensions contain considerable benefits, including higher profits, anti-corruption measures and less state company obstructionism; however, they contain lower production shares and reduced bookable reserve levels, and mandate a heavy reliance on the thinly-stretched National Oil Corporation. Given projections for steadily rising global energy costs, it remains to be seen how long the new contracts will remain in place without amendment. End Summary. 2. (C) Following the well-publicized announcement of Occidental Petroleum's (Oxy) extension in Libya (Ref A), post's Econoff and Econ/Commercial Assistant sat down with John Winterman (protect), Oxy's Country Manager for Libya, to discuss the negotiation process and contract terms, and assess the playing field for other international oil companies (IOCs) active in Libya. Winterman's experience in his current position and former tenure as Oxy's Worldwide Exploration Manager for 7 years makes him one of the most knowledgeable observers of Libya's energy sector. DONE DEAL - AT LAST 3. (C) Winterman confirmed the general contract terms outlined in press reports. Oxy and its partner OMV (Austria) signed a total of five Exploration and Production Sharing (EPSA) contracts with Libya's National Oil Corporation (NOC) on June 23. The contracts were based on terms of a "Heads of Agreement" memoranda signed between Oxy's Chairman and NOC Chairman Shukri Ghanem on November 24, 2007 (ref B). As reported in the press, Oxy paid a $1 billion signature bonus as part of the deal, and has committed to $2.5 billion (split 75/25 for Oxy/OMV) investment plan, with the NOC matching an equal amount for investment. Oxy intends to drill some 400 wells starting in 2011, requiring a minimum of 12-15 rigs working full-time. The contract extension allows them to bring in 50 additional staff, including 16 Amcits, all of whom already have their visas and residency permits. 4. (C) A two-person NOC negotiating team worked on all three agreements (Eni, Petro-Canada and Oxy). The NOC's driving force behind the negotiation process was Assam Ali Elmessallati, who bears the title Committee Member for Investment and Joint Venture Follow-Up. According to Winterman, Elmessallati stalled negotiations with Eni (the first of the three agreements that the NOC tackled), pulling a near-final agreement off the table in order to conduct further "internal reviews". According to Winterman, Elmessallati conducted "an internal socialization process" in which he circulated the agreement broadly to get as many Libyan government "fingerprints" on the deal as possible. His past role as architect of the EPSA IV process likely informed the effort, which garnered enough buy-in for the deal to move forward without the threat of last-minute opposition from parties who would have gone unconsulted absent his efforts. Winterman also noted that it was vital that these new EPSA deals be presented General People's Committee (Cabinet-equivalent) as "extensions" verses, as opposed to new deals that would have to be re-bid from scratch. NEW TERMS ARE BROADLY BENEFICIAL 5. (C) The IOCs' previous deals were based on a fixed margin, meaning that companies were somewhat insulated from fluxuations in the market price of oil by receiving a fixed price for every barrel produced. The new EPSA deals, while resulting in a lower overall production share for the IOCs, removes that fixed margin, allowing companies to reap higher profits per barrel when oil prices are high. That, together with the fact that the NOC will now cover the costs for all taxes, royalties and fees, results in the IOCs making a great deal more money per barrel of oil produced. Winterman assesses that the IOCs will get their money back (i.e. signature bonuses and investment requirements) very quickly under the new EPSA deals, as greater revenue driven by high oil prices will generate rapid reimbursement of their outlays. TRIPOLI 00000563 002.2 OF 003 6. (C) An additional element of the new terms is that the ties between the IOCs and their local Libyan operating partners (Zuetina in Oxy/OMV's case) are less direct, in two distinct ways. Development plans for existing fields are now no longer run through the Libyan operators, but have been negotiated directly with the NOC under the new agreements. This means that traditional Libyan national company resistance to new investment and technologies (i.e., the much lamented tendency to keep things "the old way") have been swept aside, paving the way (with NOC approval) for more ambitious field development that should boost Libya's national production much more quickly. (Note: The NOC claims it will increase national production from a current level of 1.75 million bbl/day to 3 million bbl/day figure by 2012-15. End note.). The new EPSA framework has a substantial new anti-corruption measure that will prevent state-run companies (infamous for skimming off the top of contracts) from being involved in the tendering process. The new tendering arrangement will be between IOC and NOC representatives only, so the state-run companies have been frozen out entirely. This new arrangement creates "Joint Project Teams" that should reduce the potential for graft, while at the same time allowing for faster work rates through a streamlined decision-making and tendering process. Finally, the EPSA agreements incorporate robust IOC-provided training programs for Libyan nationals, which should help to ensure the creation of Libya's next generation of energy sector experts. TWO SHORTCOMINGS: BOOKED RESERVES SHARE SMALLER . 7. (C) The new contracts, which feature lower production shares (now in the 10-12% range, down from 20% or higher), mean that companies can no longer "book reserves" (i.e., demonstrate to stockholders that they are contractually guaranteed to have access to a proven quantity of oil and gas) to the degree that they have in the past. This creates a new paradigm for Libya that is playing out worldwide in a growing number of oil-producing countries where the state and its energy authority are demanding tough terms for in-country IOCs. Winterman assesses that this trade-off between booked reserves and profit is creating a new system where the old rules no longer apply; the thinking of IOCs' stockholders will have to evolve to reflect the fact that their companies' stock values should be evaluated differently in an environment where reserves are harder to replace. Because this new way of thinking is still evolving, lowered production shares have the potential to hurt companies' stock prices in the short term. 8. (C) An additional consideration in this regard is the recent surge of interest in Libya on the part of non-Western IOCs (particularly from India, Japan, Russia and China), who have won the bulk of concessions in the NOC's recent acreage bid rounds. These government-owned companies are driven by the desire to book reserves to assure supply to their domestic markets in the years to come. Assuming that their exploration of Libyan acreage bears fruit in the discovery of exploitable reserves, they may find that NOC terms allow them to book less in reserves that they had hoped. With that prospect in the offing, the interest of companies primarily concerned with booking reserves may wane as they consider making the jump to producing entities. ..AND GREATER NOC INVOLVEMENT NOT A PANACEA 9. (C) Although the new agreements carry substantial benefits, the more central involvement of the NOC does not by itself guarantee more efficient operations. Winterman stressed that the NOC is still more concerned with "price over performance," and can often be a difficult sell when it comes to using the latest (more expensive) technologies to generate efficiencies and augment output. He also questioned whether the NOC would be willing and able to hold up its end of the investment burden, as it has shown reluctance to make the kind of substantial re-investments in existing fields that their $2.5 billion commitment under the Oxy deal requires. Delays are likely, particularly given the NOC's haphazard budgeting process. For example, the NOC only received approval for the current year's budget in June, and even that approval only resulted in flatlined spending along the same lines as the previous year. Also, although the NOC retains many skilled technocrats with long experience and educational ties to the U.S., that group represents a dying breed (nearing retirement age), and the NOC's TRIPOLI 00000563 003.2 OF 003 bench strength is being rapidly depleted as many of its best personnel take more lucrative opportunities in the private sector in Libya and abroad. The fact that the Eni, Petro-Canada and Oxy deals were hammered out using a common text reinforces the notion that the NOC is seeking to simplify the terms under which companies operate, in part because of its own limited institutional capacity. NEXT ON THE BLOCK: EVERYONE ELSE 10. (C) Winterman was confident in predicting that Repsol (Spain), Wintershall (Germany) and TOTAL (France) were the next IOCs who would be forced to extend their presence in Libya via the signing of new EPSA agreements. After that, the next major set of operators will be the companies of the Oasis Group, composed of U.S. firms ConocoPhillips, Marathon and Hess. This NOC approach is reportedly on the horizon, despite the fact that the Oasis companies paid $1.8 billion in December 2005 to reclaim their former Sirte basin acreage in concert with local operator Waha (the eponymous Libyan state-run oil company that took over the fields when they left) following two years of negotiations with the NOC. The Waha-Oasis group currently produces about 350,000 bbl/day, roughly one-fifth of Libya's total oil output. Econoff has been told separately by the Country Managers of both ConocoPhillips and Marathon that senior NOC officials have hinted that a new deal with the Oasis group should be negotiated soon. 11. (C) This will present a unique challenge for the Oasis group, as the two major shareholders (CP and Marathon) reportedly have very different corporate priorities in Libya. For Marathon, whose booked Libyan production accounts for some 60% of the company's worldwide total, a reduction in production rate under an EPSA could have serious repercussions for the company's share price. On the other hand, ConocoPhillips is judged to have sufficient worldwide booked reserves that a drop in its production share would not be such a major blow, and its overall size puts it in a better position to reinvest the greater financial returns stemming from a new deal. Both would benefit from being freed from the intransigence to change shown by their counterparts in Waha (who routinely deflect their proposals for field development projects), but it may prove difficult for the Oasis partners to adopt a shared approach when the NOC begins to press in earnest for a extension of their presence. 12. (C) COMMENT: Although the concession extensions carry some positive aspects, the fact that the NOC may be prepared to reopen negotiations with the Oasis group is troubling. If the Waha consortium is forced to renegotiate after cementing a deal less than three years ago at a cost of $1.8 billion, can it - or any other IOC operating in Libya - reasonably expect that the new agreements will stand the test of time? Given the GOL's political approach to economic policymaking, as well as its penchant for extracting maximum concessions for production of its hydrocarbon resources, how long would revenue from oil that could hit $175 or $200/bbl oil be allowed to accrue to foreign companies before the GOL would (again) seek a larger cut? While the answer to that question remains to be seen, it is clear is that the recent contract extensions have set Eni, Petro-Canada and Oxy apart as leaders in the Libyan energy sector. It is expected that they will account for at least 55% of Libya's total oil production if the terms of their contracts are fulfilled. End comment. GODFREY. 2008-07-13 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI584 LIBYAN FOREIGN BANK - PRIMED FOR EXPANSION REF: A) GODFREY-MCKEEHAN EMAIL 7/15/2008, B) TRIPOLI 214, C) TRIPOLI 230, D) TRIPOLI 126, E) TRIPOLI 199, F) TRIPOLI 227 CLASSIFIED BY: John T. Godfrey, CDA, U.S. Embassy - Tripoli, Dept of State. REASON: 1.4 (b), (d) 1. (C) Summary: The Libyan Foreign Bank (LFB), Libya's longtime conduit for international trade, is pursuing a substantial program of expansion involving a ten-fold increase in its capitalization and creation of an onshore bank. Its chairman is aggressively seeking new investment opportunities in Africa and beyond, and is contemplating whether and how to get into the U.S. market. The LFB recently doubled its capitalization of Bahrain-based Alubaf Bank, of which it has a 95 percent share. Regarding much-anticipated GOL reform initiatives, the LFB's Chairman expects a reprise of past efforts that featured form over substance. End Summary. 2. (SBU) CDA and Econoff met with Dr. Mohammed Abdullah Bayt Almal, Chairman of the Libyan Foreign Bank (formerly known as the Libyan Arab Foreign Bank) on July 16 to discuss recent changes at the LFB and its plans for the future. Established in 1972 as an offshore bank, the LFG has been Libya's leading institution for transactions essential to the conduct of international trade (issuing letters of credit, providing currency exchange services, etc.). The LFB has historically been the only Libyan bank that handled foreign currency accounts; Bayt Almal confirmed that it still does not possess any Libyan dinar-denominated accounts. ALUBAF BANK 3. (C) CDA asked about press reports detailing recent initiatives made by Bahrain-based Alubaf Arab International Bank. Bayt Almal confirmed that a proposal to double Alubaf's capital to $100 million and to appoint Bayt Almal to the Board of Directors were approved by shareholders in a meeting on July 9. He offered that Alubaf Bank nearly collapsed after a significant number of Iraqi-owned accounts were closed in 2003, but said the bank had since rebounded. He confirmed that the LFB owns a 95% share of Alubaf's Bahrain branch and 100% of its branch in Tunisia (ref A). Libya's Central Bank owns 100% of LFB, and is therefore the ultimate owner of Alubaf. DIVERSIFIED & SEEKING A PRESENCE IN THE U.S. 4. (SBU) The LFB's foreign interests are diverse and growing. It currently has "participation" (i.e., interests) in thirty-seven foreign entities located in twenty countries, from Mexico to China. Most of its interests are focused in sub-Saharan Africa, including every country in the Maghreb except Morocco. Bayt Almal estimated the LFB's current capital at $1 billion, with assets in excess of $21 billion worldwide. We had heard and reported previously that all Libyan government and financial institutions had divested themselves of holdings and accounts in the U.S. in response to potential seizure of assets under Section 1083 of the 2008 National Defense Authorization Act (the so-called Lautenberg Amendment. According to Bayt Almal, the LFB continues to hold U.S. dollar accounts and - despite efforts by the Libyan Investment Authority and other Libyan government entities to limit their exposure in the U.S. (ref B) - is actively exploring the possibility of establishing a "strategic partnership" with a major U.S. bank and investing in a U.S.-based bank. LAND HO: MOVING ONSHORE 5. (SBU) Bayt Almal said that the LFB planned to open an onshore bank in Libya soon, contingent on approval by its parent institution, the Central Bank (CB). A plan currently before CB Governor Farhat Ben Gdara calls for a ten-fold expansion of the LFB's capital, from $1 billion to $10 billion. Conceding that LFB had aimed high, Bayt Almal said he would be happy with $6-7 billion, and expected to get it. Part of the justification for expanded capitalization involves establishing an onshore entity, which would allow LFB to diversify the range of products it offers in the Libyan market. With the continuing reform of the Libyan banking system, to include the purchase of stakes in Libyan banks by foreign entities (refs C, D), the LFB wants to ensure that it will remain competitive. It intends to inaugurate risk management and asset management services, which would both be entirely new service lines for the bank. (Note: Risk management and asset management are areas CB Governor Ben Gdara told us are most in need of help. End note.) In anticipation of this step, the LFB has expanded its training TRIPOLI 00000584 002 OF 002 efforts, sending employees abroad for hands-on training at partner institutions in Europe (Britain, France, Belgium, and Germany) and the Middle East (Jordan and the UAE). Bayt Almal cited a dearth of trained employees as one of the biggest stumbling blocks to banking reform in Libya. AL-QADHAFI'S PROPOSED GOVERNMENT REFORMS - "FORM OVER SUBSTANCE" 6. (C) Responding to a question about expected privatization and government restructuring stemming from Muammar al-Qadhafi's dramatic speech to the General People's Congress on March 2 (refs E, F), Bayt Almal wearily noted that Libya had "been through this before". He referred to his own experience in 2000, when the Libyan Cabinet underwent wholesale changes, leaving only Bayt Almal (then the Finance Minister) and the Foreign Minister in a "Prime Minister-plus two" formulation. During that round of reform, other ministries were re-labeled as "Haya" (translated as "institution" or "entity"). Despite the semantics, the old structures were essentially left in place. Bayt Almal expected a similar outcome at the end of the current reform exercise. He predicted that foreign affairs, defense, finance and the security services would be left intact in their current guises as "sovereign ministries" that would report directly to the Prime Minister-equivalent, a formulation al-Qadhafi himself hinted at in his March 2 address. 7. (C) Biographical Note: Bayt Almal was born in Egypt in 1948 and spent his childhood in Benghazi, despite the fact that his family originally hails from Misurata. He spent 1970-1978 in U.S., where he obtained an MA in accounting (in Muncie, Indiana) and PhD (at the University of Kentucky in Lexington) in finance. He then returned to Libya, where taught accounting at Garyounis University in Benghazi before serving as Secretary of Finance (1992-2000) and Auditor General (2003-2005). Various sources report that he served a three-year prison sentence in 2000-2003 in connection with an embezzlement case in Benghazi (Emboffs were not able to corroborate this story during their office call). Bayt Almal was married in 1970 while in the U.S., and he has seven daughters (two of them AmCits by birth), all of whom currently reside in/around Misurata. End biographical note. GODFREY 2008-07-21 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI588 LIBYA ENFORCES TRAVEL RESTRICTIONS AGAINST U.S. OFFICIALS REF: A) TRIPOLI 530, B) TRIPOLI 412, C) STATE 55839, D) TRIPOLI 478 (NOTAL), E) 07 TRIPOLI 165, F) TRIPOLI 515 CLASSIFIED BY: John T. Godfrey, CDA, U.S. Embassy - Tripoli, Dept of State. REASON: 1.4 (b), (d) 1. (C) Summary: Four years after re-establishing diplomatic relations, the Government of Libya (GOL) remains deeply concerned about efforts to cover internal political issues and actively seeks to prevent Emboffs from traveling in-country and engaging with Libyans. The GOL has actively enforced new strictures to prevent certain foreign diplomats from traveling outside Tripoli without prior permission and a travel permit. The measures have been justified on security grounds; however, they appear to be largely motivated by a desire to circumscribe reporting on internal political issues and to specifically target U.S. diplomats. While perceptions of foreign interference are known to be a particularly neuralgic issue for the GOL, recent actions to limit our activities nonetheless go beyond the pale, the more so since since they appear to specifically target U.S. diplomats. Since March, there have been five instances of proposed in-country travel by Emboffs - involving five different officers and four different putative destinations - that the GOL has effectively blocked. Given that the regime's other recent measures on sensitive bilateral issues appear to have been authored at the highest levels, engagement by senior officials in Washington with their GOL interlocutors will likely be necessary to mitigate the current constraints on Post's ability to conduct in-country travel and engagement with Libyans. End comment. ATTEMPTS TO CONDUCT IN-COUNTRY TRAVEL, ENGAGEMENT STRIKE A NERVE 2. (C) As reported ref A, an attempt to visit the historical Berber heartland in March prompted an angry response from the MFA and a prohibition against travel to the city of Zuwara by Emboffs. MFA interlocutors angrily denounced Post's attempt to engage with the Berber community as "unacceptable interference" in Libya's domestic affairs. Following the Berber incident, CDA and P/E Chief spoke with MFA counterparts to clarify the mechanism by which proposed in-country travel could be coordinated through the MFA to avoid complications. 3. (C) Following the protocol established in those discussions, post proposed in early March that Poloff visit the southern city of Sabha (located some 650 km southeast of Tripoli, in the Fezzan Province) to meet with Libyan officials to discuss local government and migration issues. The MFA claimed to support the visit and offered to facilitate meetings with local Libyan officials. Post formally advised the MFA of Emboff's travel plans on March 30; however, on April 19, the MFA asked that the visit be delayed to allow additional time to arrange meetings with the Basic People's Congress in Sabha. The MFA also requested changes in the language of the diplomatic note advising the GOL of the proposed visit. Post sent a new diplomatic note, incorporating the MFA's suggested changes, on April 22 regarding Poloff's proposed visit to Sabha on May 6, and was in regular contact with the MFA concerning trip logistics from May 1-6. EMBOFF DETAINED TO PREVENT TRAVEL TO SABHA 4. (C) On May 6, Libyan security officials pulled Poloff out of line on the tarmac at Tripoli International Airport while he attempted to board a commercial flight from to Sabha. A plainclothes security official took Emboff's travel documents; other plainclothes security officials and uniformed police prevented Poloff from boarding the flight. A uniformed police officer told Poloff he was not allowed to wait on the tarmac and escorted him inside the terminal, where he was directed to report to the senior security official on site at the airport to retrieve his travel documents. Poloff was subsequently detained for approximately an hour in the senior security official's office, where he was surrounded by four to six uniformed and plainclothes security officials and two armed guards in uniform. Security officials attempted to question Poloff about his work at the Embassy and accused Poloff of not having a valid residence permit to remain in Libya. Poloff was told during the course of questioning that his luggage had not been loaded on the aircraft because security officials had decided well before the flight that he would not be allowed to travel. (Note: The MFA was aware that Poloff intended to travel on May 6 and gave no indication that there was any problem with the proposed trip. End note.) Nearly two hours after he was to have boarded the flight, security officials informed Poloff that he must "leave the airport immediately" without further explanation. 5. (C) Following the incident at the airport on May 6, the MFA TRIPOLI 00000588 002 OF 004 sent Post a diplomatic note asking that the Sabha trip be "delayed". A senior Libyan official told CDA on May 8 that while the MFA would attempt to coordinate with security officials to reschedule the visit, elements of the security apparatus, particularly the External Security Organization (ESO), were deeply uncomfortable with attempts by reporting officers to travel in-country and engage with Libyans outside of narrowly circumscribed official channels. To date, the MFA has not arranged the requested Sabha visit; Post has been informed that all Emboffs are currently banned from traveling to Libya's third largest city. MFA ATTEMPTS TO REQUIRE THAT ALL DIPLOMATS OBTAIN "PERMISSION" FOR IN-COUNTRY TRAVEL 6. (SBU) As reported ref B, the MFA sent to Western European and North American missions on May 19 a diplomatic note requiring that all diplomatic missions obtain "permission" (the Arabic wording is exact) for diplomats and/or members of their families to travel more than 70 km outside of Tripoli, regardless of the purpose of travel. Per guidance in ref C, Post has adopted a policy of notifying the GOL of travel by Emboffs and their families outside the 70 km radius. Add language on 'ya'ani greater Tripoli area" SECURITY SERVICES OBSTRUCT CHARGE'S TRAVEL TO BENGHAZI & POINTS EAST 7. (C) On May 23 - after receipt on May 19 of the MFA note requiring permission to travel and before receipt of ref C guidance on May 23 - security officials attempted to prevent CDA and two Emboffs from making a trip to Benghazi and eastern Libya for tourism. Four security officials, who identified themselves as External Security Organization (ESO) officials, met CDA inside the terminal at Tripoli International Airport and demanded to see his travel permit. Security officers were overheard discussing in Arabic the arrival of "the Americans" in the terminal. The officials noted that they were informed on May 22 that three Emboffs would attempt to travel to Benghazi. The ESO officials told CDA that the Emboffs would not be allowed to travel to Benghazi because they had not obtained permission to do so. CDA and Emboffs nonetheless attempted to check in for the flight; however, a security official physically went behind the airline counter to instruct the agent not to allow them to check in for their flight. After multiple phone calls to senior MFA and security officials, the security officials at the airport agreed to allow the officers to travel; however, they refused to allow Emboffs to ride on the same airport shuttle bus with other passengers and kept them under close observation. 8. (C) A Buraq Air agent told CDA and Emboffs during the encounter on May 23 that all Libyan-owned airlines with domestic service - Buraq Air, Libyan Arab Airlines, and Afriqiyah - received instructions from GOL officials in May that they were not to allow U.S. diplomats to board domestic flights from Tripoli without special permission from security organizations. The Buraq agent clarified that the instructions applied only to U.S diplomats, vice the entire diplomatic community. 9. (C) In Benghazi, security officials subjected CDA and Emboffs to a steady stream of harrassment. A security officer met CDA and Emboffs on the tarmac in Benghazi and immediately began questioning them about their trip. During a road trip from the Benghazi airport to Susa (some 200 km northeast), four security officials closely followed CDA and Emboffs. When they stopped at a scenic overlook, a security official in one of the chase cars got out and took numerous photographs of CDA, Emboffs and their locally-hired driver from a distance of five to ten feet. CDA confronted the official, who refused to identify himself and refused to stop taking photos. The same individual aggressively snapped hundreds of photographs of CDA, Emboffs, and the locally-engaged driver during the subsequent two days of their trip to eastern Libya. The driver, who is from Benghazi and is regularly used by Emboffs when they visit the east, said security officials routinely question him "for hours" after each visit by Emboffs and had instructed him to report any trip coordination with Emboffs at least 24 hours before their planned arrival in Benghazi. (Note: P/E Chief traveled to Benghazi and eastern Libya in early May and used the same driver, who is also used by PD officers when they travel in the east. End note.) Following Poloff's May 22 phone call to arrange a pick-up from the Benghazi airport, the driver had notified local security officials that the CDA and Emboffs planned to travel to Benghazi. TRIPOLI 00000588 003 OF 004 EMBOFFS DENIED "PERMISSION" TO TRAVEL IN SUPPORT OF U.S. PROGRAMS 10. (C) In late June, Post formally advised the MFA via diplomatic note that two Emboffs would accompany an Export Control and Border Security (EXBS) team to Benghazi, where they planned to conduct a three-day course on July 12-15 for 50 Libyan officials responsible for airport security and passenger screening. Post provided detailed information on Emboffs' proposed travel and clearly stated that they were to provide logistical support to the U.S. delegation. On July 9, the MFA informed Post via diplomatic note that Emboffs would not be permitted to travel to Benghazi in support of the EXBS training program (text of note sent via email to NEA/MAG). The note provided no explanation for denying permission to Emboffs to travel in support of the program. Post has cancelled the Benghazi portion of the airport security training course; a parallel EXBS airport security training program at the Tripoli International Airport is currently underway. In a meeting on July 15, MFA Americas Department Director Matari expressed frustration and conceded that such decisions were driven by security organizations, but said he would see what he could do to help. He advised that Emboffs seek in the interim to obtain the travel permit mandated in the May 19 diplomatic note to facilitate their in-country travel. 11. (C) On July 9, Post formally advised the MFA via diplomatic note that the Public Affairs Officer, CDA and their son would travel on July 20 to the Graeco-Roman ruins at Cyrene (east of Benghazi) for tourism. The PAO also intended to meet with representatives of the Global Heritage Fund, who received a USG grant for archaeological work being done at the Cyrene site. Despite daily inquiries between July 14 and 20, the GOL failed to issue travel permits for PAO and CDA. Inquiries to airline officials suggested that Emboffs would not be allowed to board the flight to Benghazi without travel permits; the trip was therefore cancelled. TRAVEL RESTRICTIONS APPEAR TO TARGET U.S. DIPLOMATS 12. (C) In addition to instructions prohibiting Libyan air carriers from boarding U.S. diplomats for domestic flights from Tripoli, the May 19 diplomatic note requiring diplomats and their families to obtain permission for travel more than 70 km outside Tripoli appears to be targeted at western diplomats, particularly those from the U.S. The requirement for travel permits has been on the books for some time; however, it has not been consistently enforced. Diplomats at the embassies of Egypt, Tunisia, Algeria, Jordan, Chad and Sudan told Emboffs their missions did not receive the MFA's note requiring travel permits and are not required to notify the GOL in advance of in-country travel. Egyptian and Tunisian diplomats laughed off the suggestion that they would comply with the requirement, noting that if the GOL tried to enforce it against them, their governments would immediately reciprocate with similar strictures on Libyan diplomats accredited to Cairo and Tunis. European diplomats report that while certain EU embassies provide the GOL with advance notice of their travel (the U.K., for instance), there are no known instances in which the GOL has restricted a European diplomat or their family from traveling outside Tripoli. Several eastern European missions that received the May 19 note told us they have no intention of complying with the requirement; personnel from those missions have subsequently traveled without incident (and without permits) to Benghazi, Sabha and Ghadames. 13. (C) Comment: Despite comments by senior GOL officials attesting to the desire for broader and deeper ties, significant elements of the regime, particularly within the security apparatus, remain deeply skeptical of U.S.-Libya bilateral re-engagement in general, and of Emboffs' travel and outreach in particular. The GOL maintains an expansive definition of "unacceptable interference" in its domestic affairs; security organizations regard any effort to engage with Libyans and to report on domestic issues as dangerously subversive, reflecting the regime's overweaning focus on pre-empting any potential challenge to its authority. While perceptions of foreign interference are known to be a particularly neuralgic issue for the GOL (witness the March 2006 attack on the Italian consulate in Benghazi and the December 2007 arrest of a Lukoil executive on charges of industrial espionage), GOL officials appear to harbor particular concerns about U.S. diplomats. Blunt demarches by senior GOL officials (refs D, E) have underscored TRIPOLI 00000588 004 OF 004 the GOL's concern. Recent actions by the GOL to limit our activities nonetheless go well beyond the pale, particularly since they appear to have specifically targeted U.S. diplomats. We now have five instances of proposed in-country travel by Emboffs (involving five different officers and four different putative destinations) since March that the GOL has effectively blocked. Given that the regime's other recent counter-productive measures on the bilateral front appear to have been authored at the highest levels (refs A, D and F), engagement by senior officials in Washington with their GOL interlocutors will likely be necessary to mitigate the current constraints on Post's ability to conduct in-country travel and engagement with Libyans. End comment. GODFREY 2008-07-21 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI595 A COMMERCIAL CAUTIONARY TALE: BECHTEL'S BID FOR SIRTE PORT PROJECT FALLS FLAT CLASSIFIED BY: John T. Godfrey, CDA, U.S. Embassy - Tripoli, Dept of State. REASON: 1.4 (b) 1. (C) Summary: An unsuccessful year-long bid by U.S. firm Bechtel to build a commercial port in the Libyan city of Sirte has shed light on how decisions about large foreign investment projects in Libya are made. Bechtel's bid went through several evolutions, including signing a memorandum of understanding with the Prime Minister and a resolution by Libya's Cabinet-equivalent to give the company the contract. In the end, the contract evaporated after apparent late-innings intervention by senior regime figures. Despite a year's worth of effort, $1 million worth of expenses, numerous high-level visits, and formal decisions by the GOL to bless the contract, the company's efforts were ultimately unsuccessful, underscoring the fact that Libya's much-trumpeted bidding process is less than transparent, and that the GOL's formal structures do not have the final word on major foreign investment projects. The fact that an operator with Bechtel's savvy and deep pockets was ultimately unable to secure its contract serves as a cautionary tale for the many U.S. and western companies seeking to enter Libya's booming market. End summary. PROMISING BEGINNINGS ... 2. (C) U.S. engineering and consulting giant Bechtel has just declared as dead a year-long attempt to secure a $1 billion cost-plus contract to build a commercial port in the Libyan city of Sirte. Bechtel began its pursuit of the Sirte port contract in July 2007, when senior Bechtel representative Charles Redman (strictly protect), former U.S. Ambassador to Germany, arrived in Tripoli for discussions at the invitation of the Qadhafi Development Foundation (QDF), a quasi-governmental entity headed by Saif al-Islam al-Qadhafi, son of Muammar al-Qadhafi. During the initial visit, QDF representatives encouraged Bechtel to bid on several small infrastructure projects so the company could "prove itself". Redman made it clear that Bechtel wanted, but did not need, business in Libya and had a record that spoke for itself. Eventually, QDF representatives invited Bechtel to execute two projects: a new commercial port facility at Sirte and management of an industrial city adjacent to the Ras Lanuf oil facility. The QDF proposed that Bechtel partner with the Libyan Economic and Social Development Fund (ESDF) to execute the Sirte Port project. 3. (C) This initial burst of positive energy dissipated over the next six months. Bechtel slowly made progress on a contract for the Sirte port project, but its relationship with General People's Committee (GPC) for Transportation, its primary interlocutor on the deal (apart from the QDF), became increasingly difficult. This primarily manifested itself in a lack of responsiveness on facilitation of visas for Bechtel representatives, prompting Bechtel to seek support from other quarters of the Government of Libya (GOL) to facilitate travel by its negotiators and technical staff. In November 2007, then Deputy Foreign Minister Muhammed Siala remarked publicly during a visit to Washington that Bechtel would not secure the Sirte port contract if Secretary Rice failed to visit Libya by year's end. LEAD TO HIGH-PROFILE COMMITMENTS 4. (C) After months of go-slow negotiations, Bechtel experienced an apparent breakthrough in February, when Redman received an urgent call from Minister of Transportation Elmabruk, who asked that the company's team be in Sirte on February 25 to "sign the contract". Although the company was still in the midst of conducting a laborious due diligence review of the contract (key provisions of which had not been finalized), they were convinced to rush a delegation to Sirte in time for a signing event. At that event, Prime Minister al-Baghdadi al-Mahmoudi and Bechtel signed a memorandum of understanding (MOU) committing the two sides to finalizing the contract as soon as possible. In addition, the General People's Committee (Cabinet-equivalent) issued Decision #158 on March 3, which was effectively an announcement of contract terms that granted permission to the GPC for Transportation to sign a contract with Bechtel. Following these public steps by the GOL, Bechtel reported that the GPC for Transportation appeared to be working in earnest to finalize an English-language version of the contract. RADIO SILENCE BROKEN BY BAD NEWS FROM SAIF AL-ISLAM'S INTERMEDIARY TRIPOLI 00000595 002 OF 002 5. (C) With expectations running high that a final deal was imminent, Bechtel pressed on with negotiations and a fully-vetted contract was presented to the Transportation Minister in early May. From that point on, all communication with the QDF, GPC for Transportation and Libyan Ports Authority (another key player in the deal) went dead. Sensing that something was amiss, Bechtel representatives continued to inquire about that status of the contract, but received no response. On July 14, Abdulhakim el-Ghami, described as "an intermediary for a person very close to Saif al-Islam", called Redman to inform him that the port project had been canceled. (Note: Redman told us el-Ghami, who is based in Munich, appears to be a key conduit for Saif al-Islam's dealings with foreign companies. End note.) Bechtel received no explanation as to why the contract was cancelled, but el-Ghami encouraged the company to "seriously consider" undertaking a different, unspecified infrastructure development project. 6. (C) Comment: Bechtel's experience throws into stark relief the fact that economic and commercial decisions ostensibly finalized by even the most senior levels of the GOL can be overturned by influential elements operating outside the formal government structure. Libyan officials have made much of recent measures designed to ensure transparency and predictability in bids for commercial contracts; however, the reality is that contracts of any size, particularly those involving foreign companies, are subject to intense maneuvering by regime insiders jockeying to ensure that they company they happen to champion wins the prize. Bechtel's story also reinforces post's understanding of Saif al-Islam's key as a principal gatekeeper for large foreign investment projects in Libya, a process he manages through the QDF and the National Engineering Services and Supply Company (NESSCO - further details will be reported septel). The silver lining in this tale of woe is that Bechtel's power division has been awarded a project management job for construction of a new power plant outside Sirte; however, the sorry denouement of the company's efforts to secure the Sirte port contract have dampened its for seeking any new major projects in Libya in the near future and should serve as a cautionary tale for other U.S. companies considering major investment projects here. . GODFREY 2008-07-23 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI642 2008-08-12 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI650 LIBYA SEEKS TO PURCHASE 130,000 KALASHNIKOVS FOR UNKNOWN END-USERS CLASSIFIED BY: Chris Stevens, CDA, Embassy Tripoli, Department of State. REASON: 1.4 (b), (d) 1. (C) UK Embassy PolOff told P/E Chief on August 10 that HMG's Embassy in Tripoli had recently received a request from the Foreign and Commonwealth Office to vet a request for a license to export to Libya a sizeable quantity of automatic rifles. UK company York Guns, acting as the intermediary between an unidentified Ukrainian arms manufacturer and procurement officials at Libya's Temporary People's Committee for Defense (MinDefense-equivalent), has requested an export license to deliver 130,000 Kalashnikov automatic rifles (NFI on model) to Libya in the fourth quarter of 2008. According to UK PolOff, it is not clear what the rifles would be used for; attempts to solicit further information from York Guns representatives and Government of Libya (GOL) officials have "raised more questions than they answered". 2. (C) He said the UK had received no answer as to whether the weapons would be used to equip Libyan military units, and in any event was skeptical that such would be the case given the quantity involved. (Note: Information available to the DATT suggest that Libya's armed forces comprise approximately 90,000 personnel, of which some 60,000 are in the ground forces. The London-based International Institute for Strategic Studies puts the total number of military personnel at 76,000. End note.) UK PolOff noted that the UK is concerned that the intention may be to re-export the weapons, particularly to armed rebel factions backed by Khartoum and/or Ndjamena in the Chad/Sudan conflict. He thought the license request would not be approved. 3. (SBU) In a similar case reported in open source media in April, Italian police arrested a number of Italian arms traffickers in February 2007 who were finalizing arrangements for the delivery of 500,000 Chinese-manufacture T-56 automatic rifles to Libya. The 500,000 represented the initial tranche of a deal that was to have included one million automatic rifles and 10 million rounds of ammunition. Media reports and Italian contacts indicated that Italian authorities concluded from their investigation that the weapons were to have been re-exported from Libya to Chad and Sudan. 4. (C) Comment: The fact that York Guns and GOL officials have been vague about the intended end-use of the 130,000 Kalashnikov rifles raises potentially troubling questions about the extent to which Libya is still involved in supplying military materiel to parties involved in the Chad/Sudan conflict. End comment. STEVENS 2008-08-18 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI676 ENVIRONMENTAL DISASTER AVERTED: HOW LIBYA (MIS)HANDLED RECENT OIL TANK BLAZE REF: TRIPOLI 368 CLASSIFIED BY: Chris Stevens, CDA, U.S. Embassy Tripoli, State. REASON: 1.4 (d) 1. (SBU) Summary: On August 19, a storage tank for crude oil caught fire during routine maintenance operations in Ras Lanuf, the site of Libya's largest oil refinery and a petroleum port. The fire was isolated to one tank after burning for two days. There were no casualties and oil exports from the port of Ras Lanuf were not immediately affected. The long-term impact on production and the tank farm is not yet clear. The incident highlighted, however, shortcomings in the capacity of Libya's National Oil Company (NOC) and the Government of Libya to respond to such incidents. End Summary. 2. (C) According to Ian MacIntosh (strictly protect), General Manager of Petro-Canada in Libya, the fire began the morning of August 19 inside one of the thirteen tanks at the Ras Lanuf facility, and pressure caused by the fire helped prompt a leak of oil through a faulty valve at ground-level. Oil spread into a ditch, surrounded by a dirt berm encircling the tank. That oil then caught fire as well, further heating the tank from outside. The tank in which the fire began has a capacity of 460,000 bbl. The structural integrity of the tank remained intact; however, there were concerns about whether that would hold. MacIntosh noted that public remarks by NOC Chairman Shukhri Ghanem that most of the oil in the tank was from fields developed by Petro-Canada were misleading. Only 2-4% of the oil in the tank was Petro-Canada's; the rest was NOC oil. Ghanem has also said that production would have to be reduced from 70,000 to 100,000 barrels per day (bpd); however, McIntosh told PolEcon Chief that Petro-Canada has not yet concluded that such would be the case. 3. (SBU) While some 1,000 Libyan police, firefighters and NOC employees were on-site by the end of the day on August 20, the incident has underscored real limitations in the capacity of the NOC and the GOL to respond to such issues. According to press reports, Libya was already producing below its full capacity of 1.85 million barrels per day (bpd) before the fire, in part due to a drilling accident last May in an offshore field which cut output by 45,000 bpd (see reftel). In addition, maintenance on a pipeline for associated gas in the Sirte region has reduced output by 100,000 barrels a day since July. ENVIRONMENTAL DISASTER AVERTED 4. (C) Coincidentally, a new Health, Safety & Environment (HSE) officer for Petro-Canada arrived in Libya the day just before the blaze. He was quickly dispatched to the scene. MacIntosh stressed that the biggest value the HSE officer added was not what he did (oil firefighting capabilities here are limited), but rather, what he prevented officials of the NOC and GOL from doing. At one point, they were seriously considering emptying the burning tank (about 200,000 bbls of oil were still in the tank at that point) into the adjoining desert, which would have been "an environmental nightmare." The HSE officer dissuaded them from carrying out this plan. AN INEFFECTIVE RESPONSE 5. (C) Comment: The reaction of the NOC and Libyan authorities has been judged by the tightly-knit community of international oil community (IOC) representatives here to have been ill-coordinated and ineffective, underscoring real limitations in the capacity of the NOC and the GOL to respond to such incidents. Efforts by the NOC to increase production from 1.8 million bpd to 3.0 million bpd will further stress the oil and gas infrastructure, much of which suffered for lack of maintenance during the period in which international sanctions against Libya were in place. End comment. STEVENS 2008-08-27 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI679 SAIF AL-ISLAM AL-QADHAFI CALLS FOR FURTHER REFORM, THREATENS TO WITHDRAW FROM POLITICS REF: A) TRIPOLI 666, B) 07 TRIPOLI 759, C) TRIPOLI 227 TRIPOLI 00000679 001.2 OF 005 CLASSIFIED BY: Chris Stevens, CDA, U.S. Embassy - Tripoli, Dept of State. REASON: 1.4 (b), (d) 1. (C) Summary: In a lengthy, much-anticipated speech at an annual youth forum gathering, Saif al-Islam al-Qadhafi, son of Muammar al-Qadhafi, implicitly criticized past decisions of his father's regime, called for dramatic changes to Libya's system of governance, claimed that much of his program of social, political and economic reform had been achieved, and said he intended to withdraw from politics to focus instead on civil society and development work. Conceding that Libya had suffered from "stagnation" during the sanctions period, he focused on the government's ambitious development program. The decentralized Jamahiriya system instituted by his father was confusing and had not delivered results, and Libya needed a constitution to underpin a more transparent government structure and more predictable decisionmaking processes. Drawing a line between proposed government restructuring and greater participation by Libyans in their own governance, he called for a more robust civil society, judicial reform, greater respect for human rights, and more press freedoms. Describing Muammar al-Qadhafi as a historically unique figure whose powers and prerogatives could not be inherited, he criticized Arab regimes in which sons succeed their fathers and flatly rejected the idea that he would automatically assume a position of leadership by dint of being his father's son. In the most controversial portion of his remarks, Saif al-Islam claimed that the major foreign policy issues and reform agenda items had been resolved, and that he intended to withdraw from politics. Expected to be a speech in which he previewed his father's upcoming Revolution Day address and clarified reform efforts and perhaps his own role within the government, Saif al-Islam's speech has instead confused Libyans and raised more questions than it answered. There have already been a series of highly-publicized meetings and press articles calling for him to "return" to politics, suggesting that his announced intention to "disappear for awhile" may have been a ploy to engender statements of popular support, possibly to help buttress him against critcism from conservative regime elements unhappy with his reform agenda. Regardless of his intent, the speech has raised doubts about the long-term viability of the reform agenda and called into question whether Saif al-Islam is ready for a formal leadership role. End summary. LIBYA'S FOREIGN POLICY ISSUES HAVE BEEN RESOLVED ... 2. (C) At at the third annual Libya Youth Forum near the southern city of Sabha on August 20, Saif al-Islam al-Qadhafi framed his remarks by saying that Libyan had resolved its major foreign policy issues and no longer faced external threats. (Note: The head of the Federal Express franchise in Libya, who bid on a contract to deliver equipment and supplies to the venue, said the remote site had been selected largely to facilitate better crowd control and security. Demonstrations, which were violently suppressed, broke out at last year's Youth Forum gathering in Benghazi, prompting state media to cut the television feed. End note.) Speaking at a desert venue by the Oubari Lakes, Saif al-Islam referred to the U.S.-Libya comprehensive claims settlement agreement signed by NEA A/S Welch in Tripoli on August 14 (ref A) and noted that embargoes and sanctions were now a thing of the past. The U.S. and other states were now contemplating selling arms to Libya, which had been "just a dream" a few short months ago. Saif's reference to the U.S.-Libya claims agreement drew loud, sustained applause from the crowd of young Libyans. In an implicit criticism of Libya's past foreign policy adventures, Saif al-Islam said that many of Libya's issues with the West had been "unnecessary battles in the first place". ... LEAVING IT TO FOCUS ON REMEDYING INTERNAL "STAGNATION" 3. (SBU) Saying Libya had been "in stagnation for decades" because of international sanctions, Saif al-Islam conceded that Libya was "also at fault" for its period of isolation. He cautioned that while there were many reasons for Libya's past foreign policy decisions, "now is not the time to talk about that". He instead focused on Libya's ambitious program of infrastructure development, much of which is designed to demonstrate tangible benefits of the Fatah Revolution in the run-up to the upcoming 40th anniversary of the September 1, 1969 coup that brought Muammar al-Qadhafi to power. Conceding that infrastructure, housing and development had been neglected for too long, he also tacitly conceded that the current sudden spending spree had occasioned its own problems, saying that the rush to disburse 130 billion Libyan dinar (about USD 108 billion) worth of infrastructure contracts in the past year had led to "confusion and hysteria". In a nod to two key popular TRIPOLI 00000679 002.2 OF 005 concerns, he specifically mentioned large investments in education and health care, claiming that foreign universities and foreign hospitals were being established in Libya. JAMAHIRIYA SYSTEM HASN'T DELIVERED; NEW GOVERNMENT STRUCTURE & CONSTITUTION NEEDED 4. (SBU) Turning to governance, Saif al-Islam resurrected his call for a constitution, something he explicitly advocated in his 2006 Youth Forum speech in Sirte, which drew harsh criticism at the time from the Revolutionary Committees and other conservative regime elements. Reacting to that, Saif al-Islam had softened his language in his 2007 speech in Benghazi (ref B), using the term "social contract". In Sabha this year, he adopted slightly more forward leaning language, saying Libya "needs something, which is perhaps called a constitution - let's say a popular pact similar to the social pact or a pact of the mass of the people". Such a contract should stem from the popular authority of the people, he said, but stressed that a formal document of some kind was needed to enshrine and protect the will of the people against unconstitutional attempts to usurp power as in the recent coup in Mauritania. 5. (SBU) Criticizing the inchoate nature of the decentralized Jamahiriya system, he said Libyans are frustrated with the the existing system's failure to deliver basic services such as trash collection, pest control, water and electricity, and now want a clearly articulated system of rules that govern personal conduct, economic affairs and governance. Describing the bedrock of good governance as effective local government, he stressed that despite the rhetoric about popular local committees, the Jamahiriya system of his father had not delivered on that front. Describing the decision to dismantle formal decisionmaking structures and to effectively decouple the local and central governments as "a mistake", he called for a "new administrative structure" that would better integrate local municipalities and districts with the central government. 6. (SBU) Referring to Muammar al-Qadhafi's March 2 address to the General People's Congress, in which he called for government restructuring and radical privatization (ref C), Saif al-Islam conceded that he had been personally involved in the work of the committees tasked with implementing his father's vision. He emphasized that plans for restructuring the government are underway, and will involve reshaped local institutions and greater privatization. Arguing for aggressive privatization, he said "the state will not own anything" and "everything should be done by the private sector". (Note: As reported ref C, five committees were established to formulate plans for implementing Muammar al-Qadhafi's March 2 vision. Contacts have told us Saif al-Islam established shadow committees staffed by personnel from the Economic Development Board (EDB) and National Planning Council (NPC); the final recommendations for implementing al-Qadhafi's vision reflected heavy input from the shadow committees. End note.) Referring obliquely to reports of fierce infighting over recommendations about restructuring and privatization, Saif al-Islam noted that "many things that were not nice" had happened in the course of recent intra-government debates, but stressed that those issues had been resolved. CIVIL SOCIETY, JUDICIAL REFORM, HUMAN RIGHTS & PRESS FREEDOMS NECESSARY 7. (SBU) Drawing a line between proposed government restructuring and greater direct participation by Libyans in their own governance, Saif al-Islam explicitly called for a more robust civil society, judicial reform, greater respect for human rights, and more press freedoms. Stressing that the best guarantee of "democracy, liberty and human rights" was "a strong, independent, enduring civil society" akin to that in the U.S., he argued that Libya urgently needs a more robust civil society if it is to develop further. Noting his personal involvement in sending an estimated 12,000 Libyan students abroad to Europe, Australia and the U.S. to study, he predicted that great strides would be made when those students returned to work in Libya, and called on Libyan youth to establish civic associations to help ensure government accountability. 8. (SBU) Citing corrupt judicial systems in the former Soviet Union and elsewhere in the Middle East, Saif al-Islam called for a fair judicial system and rule of law, without which "all the things (reforms) that we do will be undermined ... and disappear". In a swipe at Muammar al-Qadhafi's famously TRIPOLI 00000679 003.2 OF 005 mercurial style of leadership, Saif al-Islam linked human rights progress to a stable, clearly articulated political and judicial system, noting that "we want to have an administrative, legal and constitutional system once and for all, rather than change ... every year". In a line that drew sustained applause and wide press coverage, he noted that a new draft legal code was currently being reviewed by the government and said " ... the count-down towards building a state of institutions, constitutions, rule of law, and modern management has started with a set of new laws which is being presented to the people everywhere, incuding the new administrative structure of the country". 9. (SBU) The new legal code, he argued, was critical if Libya was to enshrine essential civil society concepts such as expanded respect for human rights and press freedoms. Conceding that "anybody could have violated your rights" in Libya before, he claimed those days were over. Softening his criticism of past abuses, he said Libya had not been in a position to simultaneously address development and human rights needs. With progress on the development front, respect for human rights was now necessary, in part to help sustain development efforts: "Libyans cannot build the Libya of tomorrow when they are scared and frightened of internal, external security apparatuses, the police and so on". (Note: The Qadhafi Development Foundation, headed by Saif al-Islam, announced an initiative the week before his speech to compensate families of prisoners killed during the government's suppression of a riot at the notorious Abu Salim Prison in 1995. End note.) He called for greater press freedom as a means to help ensure government accountabilitym noting that a more independent press would reveal "where the secret deals are taking place, where the problems lie, and where the conspiracies are being planned". NO ONE CAN INHERIT MUAMMAR AL-QADHAFI'S POWERS & PREROGATIVES 10. (SBU) Criticizing the "forest of dictatorships" in the Middle East, he said modern Arab regimes were characterized by hereditary, dictatorial executives, "fanciful, ineffective parliaments" and human rights violations. Disparaging Arab governance, he complimented the state of Israel, in which a president could be forced from office on sexual harassment charges, and a prime minister on corruption charges. Reprising nomenclature he used in his 2007 Youth Forum address in Benghazi (ref B), Saif al-Islam nonetheless described Muammar al-Qadhafi's role as a "redline" that was beyond criticism and not subject to other government restructuring efforts. Likening his father's position in modern Libya to that of George Washington, Mustafa Kemal Ataturk and the Ayatollah Khomeini, he stressed that Muammar al-Qadhafi's role was historically unique and that neither he nor anyone else was entitled to inherit that mantle. He flatly rejected the proposition that he would automatically assume the position and prerogatives of his father by dint of blood relation. "This is not a private farm to be inherited", he said. For Libya to experience hereditary succession would put the country "at square one again" in terms of political development. SAIF SAYS HE'LL WITHDRAW FROM POLITICS ... 11. (SBU) In the most publicized and controversial part of his address, Saif al-Islam said he would recuse himself from politics and instead focus on civil society and development work. Claiming that "the time of major battles has ended" - he referred to the U.S. claims agreement and foreign policy contretemps such as the Lockerbie bombing and the Bulgarian medics case - Saif al-Islam said "I have no more major battles and my position has become embarrassing". Justifying his prominent role in sensitive affairs of state, he admitted freely that he had intervened extensively in foreign affairs, government restructuring and development " ... because there were " ... no presently-functioning institutions and no administrative system (in Libya) which were capable of doing these jobs". Claiming that much of his program of resolving key foreign policy challenges, initiating government restructuring and development, and human rights reforms had been accomplished and that the rest was "on track", he said his central role was no longer needed or appropriate. Referring to George Orwell's novel "The Animal Farm" as a cautionary tale against the danger of would-be revolutionary leaders recapitulating the errors of the systems they had overthrown, he cautioned that it would be problematic if he were to continue his involvement in political issues. Noting that some regime elements "hated" his reform efforts, he stressed that Libya's future lies with clearly TRIPOLI 00000679 004.2 OF 005 organized institutions and a robust civil society, rather than charismatic personalities. Addressing his future, Saif al-Islam claimed he would withdraw from affairs of state, perhaps "disappear for awhile" and focus on civil society and development efforts. Discounting the possibility that he would be lured back into politics, he stressed that he did not intend to return and said he would rightly be considered "a liar" if he did. .. BUT THE MASSES SAY HE MUST "CONTINUE HIS REVOLUTIONARY JOURNEY" 12. (SBU) Reaction to Saif al-Islam's stated intention to withdraw from politics has been swift and well-coordinated. In a series of meetings held on August 24 at the People's Hall in Tripoli, members of the Revolutionary Committees, various youth organizations, professional associations, and local government committees issued strongly worded calls for Saif al-Islam to "return" to politics. The crowd at the People's Hall frequently broke into chants of "Keep up the journey, oh son of the brave man!" The dean of the lawyers' association, Bashir al-Tawir, said Saif al-Islam was "a revolutionary man who should continue his revolutionary journey". Striking a populist note, Muhammad Aribi, the People's Leadership Coordinator in Tripoli, claimed that "only America and Zionism" would benefit from Saif al-Islam's withdrawal from politics. Similar calls were issued at gatherings of youth organizations around the country that began the day after his speech, and a larger youth event - designed to lure Saif al-Islam back - is scheduled to take place in Benghazi shortly before Muammar al-Qadhafi's Revolution Day speech on September 1. The leadership of the national youth organization and Saif al-Islam's Libya al-Ghad (Libya of Tomorrow) organization reportedly threatened to resign en masse unless he continued in his political role. Unusually, the proceedings at the People's Hall were not covered by state radio or television, but were heavily covered by the Libya Fada'iya satellite channel and Ouea newspaper, both owned by Saif al-Islams 1/09 media group. COMMENT 13. (C) Saif al-Islam's Youth Day speeches are closely followed as a barometer of reform efforts and a harbinger of policy initiatives. Embassy contacts, who expected Saif al-Islam's remarks to clarify expectations about Muammar al-Qadhafi's Revolution Day speech early next week, were instead left confused about the state of the reform agenda and government restructuring, as well as Saif's own political future. Several noted that Saif al-Islam did himself a disservice by clearly departing from his prepared remarks in an attempt at a more improvised delivery. The halting, rambling speech exacerbated the perception that the typically charismatic Saif al-Islam was nervous. Key advisers Omran Bukhres and Dr. Yusuf Sawani were reportedly "beside themselves" that he had departed from the carefully crafted text they helped prepare. Several contacts also noted that there were junctures at which Saif al-Islam appeared to be restraining himself from going further in his remarks, particularly with respect to intra-governmental squabbling about restructuring and rumors that he was hated by conservative regime elements. 14. (C) Few take seriously Saif al-Islam's claim that he intends to withdraw from politics entirely, but there is confusion about what he intended to achieve by threatening to do so. The swift calls for him to "return" suggest a scripted plot to garner political credibility for him as a genuinely populist figure, possibly as a prelude to announcement of a more formal role for him during the upcoming Revolution Day speech. There have been reports on websites that the government restructuring could include a Social Leadership Council, to be headed by a senior figure. Some observers have speculated that his remarks on hereditary Arab regimes and Muammar al-Qadhafi's historically unique role were intended as a subtle warning to his own siblings, some of whom have recently become more naked in their ambitions. A contact with regular access to the family believes that Saif al-Islam intended to signal to his father dissatisfaction that he, Saif, has undertaken the most sensitive, labor-intensive work in the government without benefit of formal position, by contrast with his brother, Muatassim, who was named National Security Adviser last year. 15. (C) Saif al-Islam's claim that work on human rights, personal liberties and development was in "its last round" is broadly seen to be premature. The consensus among Libyans is TRIPOLI 00000679 005.2 OF 005 that while Saif al-Islam has helped contribute to the beginnings of reform in some areas, much remains to be done. A line of thinking we've heard from some of our savvier contacts is that references to accomplishments and intra-government bickering were a tacit admission that he had not yet achieved all he hoped to, in part because of resistance from truculent conservative regime elements. The corollary to that interpretation is that he is still needed to keep those efforts in train. His remarks about closing the books on past mistakes have been interpreted by a number of contacts as a subtle signal to the Revolutionary Committees and other old guard regime elements that he is willing to put aside old grievances. The commonly-held view is that while Libya has made some strides in the right direction since Saif al-Islam's coming out party in 2003, when he previewed a reformist agenda in his first major public address, the gains that have been made to date are modest and not likely to endure absent the active advocacy and protection of a politically well-connected patron. Whether he was sincere in stating his intent to withdraw from politics or meant it as a coy means by which to engender popular support, the effect of Saif al-Islam's speech has been to raise doubts about the long-term viability of the reform agenda (if he in fact exits the scene) and to call into question whether he is really ready for a formal leadership role (if this is all part of an elaborate act of kabuki theater). All eyes are now on Muammar al-Qadhafi and his Revolution Day address on or about September 1. End comment. STEVENS 2008-08-28 2011-02-01 CONFIDENTIAL Embassy Tripoli
08TRIPOLI685 LIBYA: MEETING WITH RETURNED GTMO DETAINEES UNDER USG-GOL TRANSFER FRAMEWORK MOU REF: A) NARDI-GODFREY/POMPER EMAIL 08/22/2008, B) WILLIAMS-STEVENS EMAIL 08/ 23/2008, C) TRIPOLI 455, D) GODFREY-NARDI/POMPER EMAIL 08/22/2008, E) 07 TR IPOLI 723 CLASSIFIED BY: Chris Stevens, CDA, U.S. Embassy - Tripoli, Dept of State. REASON: 1.4 (b), (c), (d) 1. (S/NF) Summary: Post visited two returned Guantanamo detainees to confirm their welfare and whereabouts and clarify the status of any pending legal action against them. One detainee's trial has reportedly been completed and he understands he has been sentenced to 25 years imprisonment. The trial of the second detainee has begun and several hearings have been held; the next is scheduled for September 3. End summary. 2. (S/NF) Per refs A and B, P/E Chief interviewed separately returned Guantanamo detainees Muhammad Abdallah Mansur al-Rimi (AKA Abdul Salam Abdul Omar Sufrani, ISN 194) and Ben Qumu Abu Sufian Ibrahim Ahmed Hamouda (ISN 557) on September 1. The meeting took place at a GOL security service facility in Tripoli. A host government security official facilitated the meeting; however, no host government officials participated in the meetings with the two returned detainees. The last visit to the two returned detainees took place on June 10, 2008 (ref C). ISN 194 3. (S/NF) Al-Rimi (ISN 194), who was returned to Libya in December 2006, said he remains in detention at the Abu Salim prison, located in the Tripoli suburbs. (Note: Al-Rimi had been detained at an External Security Organization (ESO) detention facility between his return to Libya in December 2006 and June 2007, when he was transferred to Abu Salim. End note.) Al-Rimi said he continues to be held alone in his cell, but he is able to exercise at least once a week for about an hour at a time. He indicated he is able to leave his cell and interact with other prisoners. He is provided with drinking water, tea and three meals a day. He does not have access to books, radio or television. He has access to medications and has been visited by a prison doctor on the occasions when he has been ill. Al-Rimi stated that he had received one family visit - his sisters came to see him in July - since our last meeting with him on June 10. (Note: Our understanding is that members of his family have visited him on four occasions since his return to Libya - January 2007, May 2007 (ref D), March 2008 and July 2008. End note.) Al-Rimi said he would like to receive more family visits, if possible. 4. (S/NF) Asked about the condition of his arm and his teeth, about which he had previously complained (ref E), al-Rimi said both were fine. He noted that he needed dental care for another tooth, which had developed problems after his return to Libya. A dentist recently visited him at Abu Salim prison and told al-Rimi the tooth (a back tooth on the upper row in which al-Rimi has recently experienced pain) should be extracted. Al-Rimi said he instead requested that it be "cleaned and repaired", but the dentist said the tooth was not salvageable. According to al-Rimi, the dentist is to visit him again soon to discuss how to proceed. 5. (S/NF) In our previous meeting on June 10, al-Rimi said he understood his case was being deliberated at that time by a panel of judges, who were to render a verdict and issue a sentence on/about June 16. Al-Rimi said he was not present when his verdict and sentence were issued, but heard from other prisoners who were present in the courtroom on June 16 in connection with their own cases that he was found guilty of some charges (NFI) and sentenced to 25 years imprisonment. (Note: Per ref C, al-Rimi's understanding was that he faced four charges: 1) membership in the Libyan Islamic Fighting Group; 2) membership in al-Qaeda; 3) forging a passport and travel documents and using them to exit the country, and; 4) failing to secure permission to exit the country when he left to fight in Afghanistan. It is not clear which of those he was convicted of. End note.) Al-Rimi has received no information from Libyan officials about his trial, verdict or sentence. He met with his court-appointed legal counsel on one occasion about two months before his reported conviction and sentencing on June 16, and has not heard from him since. ISN 557 6. (S/NF) Hamouda (ISN 557), who was returned to Libya in August 2007, said he remains in detention at the Abu Salim prison, located in the Tripoli suburbs. (Note: He was detained at an ESO detention facility for about three months after his return and was then transferred to the Abu Salim prison. End note.) He remains in solitary detention, his biggest complaint. He is able to speak through the walls with prisoners in adjacent cells, but is not able to leave his cell and interact with other prisoners and is not able to exercise. Hamouda wants to be able TRIPOLI 00000685 002 OF 002 to leave his cell. (Note: During our previous meeting on June 10, the security official who facilitated the meeting explained that detention protocols for extremists and terrorists mandate that they be held in solitary detention to preclude the possibility that they could recruit other members of the prison population. End note.) Hamouda complained about the lack of sunlight and fresh air. He is provided with drinking water, tea and three meals a day. He does not have access to books, radio or television. He requested that he be provided with pens, paper and books. Hamouda said he not received a family visit since our last meeting with him on June 10, but conceded that he was unsure whether they had tried to do so. (Note: Our understanding is that Hamouda has had two visits by members of his family since his return: his wife and children visited in late December, and his wife and brother-in-law saw him in January. End note.) 7. (S/NF) Hamouda has access to medications and was visited by a prison doctor in March/April, who responded to his complaints of depression and anxiety by prescribing him anti-depressant medication that left him "groggy and tired". He also received a prescription at that time from the Libyan doctor for an indeterminate condition for which he said he had been treated at Guantanamo Bay. He complained that the medication prescribed by the Libyan doctor for the condition was ineffective and asked for Laproxin, which was prescribed for him at Guantanamo Bay and had been effective; however, he has been told that Laproxin is not available in Libya. (Note: Per ref C, Hamouda said on June 10 that he may be seen by a prison doctor if he is ill, but that he had not needed to so since his return. He had no answer when he was asked to explain the contradictory accounts. End note.) 8. (S/NF) Hamouda said his trial had begun and that there had been three hearings to date, which he attended, at a court facility in the Abu Salim prison. His next hearing is scheduled for September 3; it is unclear whether the court will render a verdict at that hearing. He has court-appointed legal counsel, but has not met his lawyer outside of courtroom hearings. His understanding is that he faces three charges: 1) membership in the Libyan Islamic Fighting Group; 2) membership in al-Qaeda, and; 3) that he performed illicit work for a private company in Sudan and Afghanistan. He also faces charges related to a drug trafficking offense for which he was convicted and imprisoned in the early 1990's. He complained that the charges against him are based entirely on hearsay from witnesses whose credibility is suspect, and maintained that he was innocent. 9. (S/NF) Facilitation of access to the detainees under the revised rubric detailed in ref D was quick and straightforward. Post submitted a diplomatic note on August 24 formally requesting access to the detainees and, despite the beginning of Ramadan and Libya's national day celebrations in the intervening period, access was granted on September 1 (i.e., within a week of the request). 10. (S/NF) Despite several requests for information about the legal basis on which the two returned detainees are being held and the status/schedule of any legal proceedings against them, Post has received no response from the GOL to date. The only information we have is from the two detainees. We pressed the GOL to provide information about the detainees' legal status and the state of play in the legal proceedings against them, stressing that we needed to receive such information directly from the GOL. To date, however, we have not received the requested information from the GOL. STEVENS 2008-09-02 2011-02-01 SECRET//NOFORN Embassy Tripoli
08TRIPOLI741 MINISTER OF ECONOMY POSITIVE ON BILATERAL ENGAGEMENT, CONCERNED ABOUT DOMESTIC REFORM PLANS TRIPOLI 00000741 001.2 OF 002 CLASSIFIED BY: Chris Stevens, Charge d'affaires, U.S. Embassy Tripoli. REASON: 1.4 (d) 1. (C) Summary: During a September 16 meeting, Dr. Ali al-Issawy, the Secretary of the General People's Committee for the Economy, Trade and Industry (equivalent of minister of economy and trade) told the CDA that he looked forward to the visit of Assistant Secretary of Commerce Israel Hernandez in October, and to finalizing the Trade and Investment Framework Agreement. Commenting on GOL plans to distribute oil revenues directly to the public and to privatize Libya's public sector, al-Issawy expressed concern about the impact on prices and the Libyan work ethic. Al-Issawy said he was interested in pairing U.S. and Libyan universities, and requested U.S. experts visit Libya to advise on the mortgage market. End summary. WELCOMING A/S HERNANDEZ 2. (SBU) Minister al-Issawy said he looked forward to the planned visit of Assistant Secretary of Commerce and Director General of the U.S. and Foreign Commercial Service, Israel Hernandez in October. CDA, introducing the Embassy's new FCS officer, said the visit was intended to highlight the growing commercial relationship between the two countries, and to open the Embassy's U.S. and Foreign Commercial Service office. TIFA: WAITING FOR THE END OF RAMADAN 3. (SBU) Al-Issawy said he looked forward to finalizing the Trade and Investment Framework Agreement (TIFA). He suggested that his staff work directly with Embassy staff (in coordination with USTR) to finalize the agreement. He preferred to wait until after Ramadan to meet and go over any remaining points in the text. (Note: Embassy had previously sent the latest USTR-cleared draft to the ministry's lead negotiator, Mr. Dia Hammouda and his team). PLANS IN PROGRESS ON OIL WEALTH DISTRIBUTION 4. (C) Referring to Muammar al-Qadhafi's recent national day speech, the CDA asked about plans to distribute Libya's oil revenue directly to the public. The Minister expressed concern about inflation, noting they could not simply hand out cash. It would be preferable to distribute a combination of cash, securities and shares. He said the final decision on a framework for the distribution was not yet finished. Once the plan was finished, he believed it would be presented to the General People's Congress for final approval. "LIBYA HAS A CULTURE OF RENT, NOT WORK" 5. (C) Minister al-Issawy commented that some Libyans were already dreaming about using the money they will eventually receive to live in Tunisia or Malta (two favorite nearby holiday destinations). He added some students are already wondering about the utility of studying because they think they won't need to find jobs once the wealth distribution program starts. He attributed these attitudes to what he called Libya's "culture of rent" as opposed to a "culture of work." 6. (C) On the other hand, the Minister noted a wealth distribution plan could smooth the way for greater liberalization of the economy, especially in terms of lifting price controls and doing away with subsidies. His thinking was that if people have more disposable income, they will be able to afford unsubsidized goods. When asked when the program would start, he said teams were working "day and night" to finalize the wealth distribution program and the related privatization plans. MOVING AHEAD ON PRIVATIZATION AND LOOKING FOR U.S. PARTNERS IN HIGHER EDUCATION 7. (SBU) Minister al-Issawy said plans for privatizing key sectors of the economy, including health, education, utilities, and transportation were almost finished. The CDA said he had heard concerns from Libyans that they would be negatively affected by privatizing health and education, in particular. The Minister agreed these were the sectors that worried people the most. 8. (SBU) On higher education, in particular, the Minister said they were interested in joint ventures with U.S. universities, such as MIT. The CDA told him the Ministry of Foreign Affairs had raised a similar idea. He noted there were many models in the region for such collaboration, including in Dubai, Qatar, and Morocco. The CDA said the Embassy would provide him with more information on these partnerships. .AND ALSO LOOKING TO LEARN FROM THE U.S. MORTGAGE CRISIS TRIPOLI 00000741 002.2 OF 002 9. (SBU) The Minister also asked if the Embassy could provide an expert to speak about the mortgage situation in the U.S. since Libya plans to privatize the housing sector and make loans more broadly available to potential home-owners. He mentioned Freddie Mac and Fannie Mae. The CDA said he would look into potential U.S. experts to engage with the GOL. STEVENS 2008-09-19 2011-02-01 CONFIDENTIAL Embassy Tripoli
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