US recognition of Libya 'a message for Iran'

Paul Richter, The Age:

SENIOR US officials have acknowledged that the move to restore full diplomatic ties with Libya after more than 25 years is aimed in part at influencing Iran to give up uranium enrichment.

State Department officials said the message to Iran was that it would reap concrete benefits if it did likewise — although that prospect now seems remote. READ MORE

The Bush Administration has re-established full diplomatic relations with Libya, rewarding a long-time foe for giving up terrorism and unconventional weapons. Completing a reversal that began three years ago, Administration officials said they would open an embassy in Tripoli and drop Libya from their list of nations that sponsor terrorism.

The Assistant Secretary of State for the Middle East, David Welch, said the announcement showed that when countries "follow international norms" they would reap the benefits.

"Libya serves as an important model as we push for changes in policy by other countries, such as Iran and North Korea," he said.

Libya welcomed the move, saying the decision would help boost co-operation in all areas. "The decision is a significant step on the way to strengthening links between the US and Libya and improving relations in all fields of co-operation," a Libyan Foreign Ministry spokesman, Hassouna Chaouch, said.

The two countries have not had full ties for more than 25 years, but relations dramatically improved after Libya decided in December 2003 to give up its nuclear weapons program.

US officials hope the move will encourage Libya to further open its economy, including its underdeveloped oil industry, which is potentially one of the world's largest. Libya's oil reserves ranked in the top 10 worldwide, but production lags.

Mr Welch denied that the move was driven by an interest in oil, but acknowledged that Libya's economy had not opened up to Americans as much as hoped since economic sanctions were lifted.

Libya "remains a problematic place" to do business, he said. "We would appreciate greater openness, as would any number of potential foreign partners."

US officials said the Libyan economy had many traditional rules — common to the region — that made it hard for foreign investors to trade and invest.

State Department travel warnings note that the credit cards and cheques tied to US banks are usually not accepted in Libya, which mostly remains a cash economy.

Officials said they hoped that better ties would give momentum to modernisation and lead to an opening of the economy.

The US closed down its embassy in Libya in 1980, a time when US officials viewed its leader, Muammar Gaddafi, as one of the most dangerous men in the Middle East.

The US held Libya responsible for a series of deadly terrorist attacks in the 1980s, including the destruction of Pan Am flight 103 over Lockerbie, Scotland, in 1988, which killed 270 people, mostly Americans.

President Ronald Reagan ordered the bombing of Libya in 1981 and 1986.