Libya Is Too Big to Fail

Despite what you may be hearing from critics of March 17’s U.N. Security Council resolution calling for a no-fly zone and "all necessary measures" to protect civilians from harm, Libya is not peripheral to the world system. It is at its very core. Libya possesses 1,800 kilometers of Mediterranean coastline. The country produces 2 percent of the world’s oil, with 85 percent of exports going to Europe. Libyan nationals have been prominent jihadists in Iraq. Since the beginning of the Great Recession and the slump in global demand in 2008, Libya has allocated $200 billion toward new infrastructure spending.

And yet Richard Haass, president of the Council on Foreign Relations, curiously described U.S. interests in Libya as "less than vital" in a Wall Street Journal op-ed last week. He cautioned that even the modest step of participating in a multilateral no-fly zone would be incommensurate with America’s limited strategic interests. Harvard University professor Stephen Walt made a similar point. "For starters," Walt argued, "let’s acknowledge that the United States has no vital strategic interests at stake in the outcome of the Libyan struggle."

But a brief review of Libya’s history demonstrates that Britain, France, Italy, Russia, the United Nations, and the United States have long had a great deal at stake in Libya, even before oil was discovered in 1959. Today, it is a paramount American interest that Libya not return to being a rogue state or descend into civil war. If Libyan leader Muammar al-Qaddafi reasserts control over the east or even if he fails and the country is cleaved in two, U.S. interests in the region would suffer a major setback.

What makes Libya so important? Any real estate agent could tell you: location, location, location. Control of the country has always been a remarkably effective way to project power into Egypt, the Mediterranean, and beyond. Similarly, denying a hostile power (be it the Soviet Union, Muammar al-Qaddafi, or terrorists) the ability to destabilize surrounding countries from Libyan territory has been a consistent thread in U.S. policy since the end of World War II.

Seventy years ago, the Axis powers used Libya to launch daring tank offensives aimed at the Suez Canal. With the British victory at El Alamein in late 1942 and the ensuing conquest of northern Libya, British strategic planners decided that Cyrenaica (eastern Libya) was the only part of conquered Italian colonial territory that was essential for Britain’s strategic position in the Middle East. In 1945, the Soviet Union’s foreign minister, Vyacheslav Molotov, pushed for a Soviet trusteeship over Tripolitania (northwest Libya).

The Soviet bid backfired. It forced American statesmen to put aside their distaste for extending the British Empire as they realized that denying the Soviets a naval base on the Mediterranean was a core U.S. interest. France and Italy, as pretenders to world-power status and interested parties in North Africa, also wanted to have their spheres of influence in Libya. Because the "Libya question" was so rancorously contested by all parties, it was deemed unsolvable by traditional great-power diplomacy. In 1948, it was passed onto the nascent United Nations.

By the late 1940s, U.S. President Harry Truman and British Foreign Secretary Ernest Bevin concluded that Libyan airfields were essential for Cold War defense. After Libyan independence in 1951, U.S. and British payments for basing rights formed the single-largest element of Libyan GDP until oil exports began in 1961. Even with the decline in importance of the fighter-bomber as a nuclear delivery vehicle, and thus the need for the bases, Libya’s strategic importance did not wane. Accordingly, U.S. and British diplomats attempted to court Colonel Qaddafi’s favor when he came to power in 1969. They acquiesced to his demand to abandon their air bases, supposing that eager compliance would encourage Libya’s new leadership from drifting into the anti-Western camp. They were wrong.

As Libya intensified its support for militant revolutionary causes — ranging from the Irish Republican Army to Ugandan dictator Idi Amin to various unsavory terrorist groups — throughout the 1970s, Western policymakers avoided reprisals against Libyan interests. Amazingly, from 1972 to 1977, U.S. imports of Libyan oil increased tenfold, and U.S. exports to Libya trebled. Qaddafi gratefully used the influx of dollars to undermine American interests in Africa and the Middle East.

The 1970s U.S. policy of bartering with a sworn enemy was abandoned under President Ronald Reagan. Convinced that Libya’s anti-Western orientation and geostrategic position made regime change a core U.S. interest, Reagan famously declared Qaddafi to be the "mad dog of the Middle East." However, unilateral U.S. sanctions in 1982 and then airstrikes in 1986 — as a response to the Berlin disco bombing — failed to produce the desired results. By the 1990s, it was clear that the United States could not unseat Qaddafi by itself. Libya’s threat to a stable post-Cold War world order was deemed significant enough that U.S. policymakers devised a way to enlist Europe in shutting Libya out of the international system. On flimsy evidence, Libya was found guilty of the devastating 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. Europe was finally on board for comprehensive U.N. sanctions of Libya, which endured from 1992 to 1999.

In 1999, feeling the pinch caused by his decaying oil infrastructure and declining revenues, Qaddafi turned over the two suspected Lockerbie bombers for trial in the Netherlands (only one, Abdelbasset Ali al-Megrahi, was later convicted). This action caused U.N. sanctions to be suspended. As more countries began trading with Libya, the U.S. policy dating back to Reagan of actively containing Qaddafi and hoping for his ouster was no longer feasible.

In the new millennium, U.S. and British negotiators intensified their covert dealings with Libyan diplomats, and in 2003, Qaddafi made his first payment of compensation to the Lockerbie victims’ families. At the same time, the colonel declared his desire to voluntarily give up his weapons of mass destruction program. The rogue was seemingly rehabilitated and multilateral action vindicated. Libya was tentatively permitted to rejoin the world community.

From 2004 to 2010, U.S. diplomats and businessman embarked on the long and hard road of normalization. Erratic Libyan behavior and electorally motivated grandstanding by U.S. congressmen — generally on third-tier issues like Qaddafi’s desire to pitch a tent in Central Park or Megrahi’s release from a Scottish prison for health reasons — frequently derailed progress.

In 2008, I changed my career as an academic of Syria to become instead a professional engaged in the American and European efforts to bring Qaddafi in from the cold and forward the agenda of pro-market economic reform and Western investment in Libya. My logic then was the same as it is now: Libya is too important in the world system to have Western strategic priorities in Libya unfulfilled and U.S. businesses shut out. This logic is grounded in history and is also best for the aspirations of the Libyan people. Over the last six decades, successive U.S. and British administrations have consistently concluded that the "Libya question" merited great economic and diplomatic sacrifices. It still does.

Today we face a familiar dilemma. Libya sits atop the strategic intersection of the Mediterranean, African, and Arab worlds, and its ability and track record in destabilizing those three areas is well documented. It is laudable that the international community has combined humanitarian and geostrategic rationales to unite under a banner of multilateral airborne intervention. This intervention must balance two equally important aims: to unseat Qaddafi and to ensure that the Libyan people have agency over their lives and political system. Hopefully, the West will play a supportive, yet decisive role in the ongoing conflict. Were Qaddafi to remain in power returning to his rogue-state glory days, it is unlikely that renewed U.N. sanctions could ever weaken his grip on power. The world needs Libya, but Qaddafi has become an expert at thumbing his nose at world opinion.

Much as we might pretend otherwise, oil is unquestionably part of the equation here. In the words of Armand Hammer, the late founder of Occidental Petroleum, Libya’s oil is "the world’s only irreplaceable oil." What makes Libyan oil irreplaceable is its proximity to Europe, the ease of its extraction, and the sweetness of its crude. Because many refineries in Italy and elsewhere are built to deal with sweet Libyan crude, they cannot easily process the heavier Saudi crude that would inevitably replace a Libyan production shortfall.

Since détente with Libya began in 2003, Western companies in the form of Repsol, Wintershall, Total, Eni, OMV, Shell, the Oasis Group, Chevron, Marathon, ExxonMobil, and BP have either rushed into Libya or intensified their existing operations. Those with political connections to the Libyan regime that predate sanctions have tended to fare better than others. All have an enormous stake in not losing their vast investments and being replaced by the Chinese, Indians, and Russians, were Libya to become a pariah state. Most crucially, though Europe would be hit hardest if Libyan production were to vastly diminish due to ongoing unrest or stagnate due to a lack of future investment, low production totals would have sustained negative effects on both the fragile world economy and the Libyan people.

For European countries, illegal immigration is another major concern. Starting in the 1990s, in an attempt to combat his international isolation, Qaddafi allowed all Africans visa-free access to Libya. After the Libyan populace rioted against the newcomers and no jobs were created for them, many attempted illegal crossings to Europe. The 2008 Italian-Libyan "Friendship Treaty" largely closed the spigot of illegal migration to a trickle. Any intensification of the human calamity, especially if combined with the closing of the Tunisian border, could open it to a flood. In the past, Qaddafi has frequently increased the flow of migrants when seeking to gain political concessions from Italy. Were Libya to become a failed/pariah state, there is no doubt that Qaddafi or those who would come after him could use the same tactic to pressure Europe.

Relative to the amount of oil wealth it possesses, Libya is a terribly underdeveloped country — the unhappy legacy of Qaddafi’s economic experiments of the 1980s and the U.N. sanctions in the 1990s. Despite having the highest per capita income in Africa, Libyan education levels and living conditions outside its big cities are on par with those of some of its sub-Saharan African neighbors. Only in the last 10 years has the Qaddafi family finally committed itself to real infrastructure development. In the last two years — global recession notwithstanding — the Libyan government spent $60 billion, with $160 billion more promised over the next five years. With global aggregate demand (especially in the construction sector) far below 2007 levels, Libya’s increase in post-2007 demand promised much-needed relief for U.S. and British firms, especially in the construction management and architectural-design sectors. If Libya becomes a failed state, Western firms will likely be excluded from future infrastructure projects. In that scenario, only countries like China and Turkey– with their greater tolerance for corruption and human rights abuses — will benefit from Libya’s billions.

Terrorism is a real concern. Although Qaddafi’s rhetoric that the rebels consist of "jihadists on drugs" is funny enough to be a big hit on YouTube, Cyrenaica has long been a productive recruiting ground for global jihadi causes. If the West abandons the Cyrenaican rebels, it will not be a surprise to see more Cyrenaican fighters returning to Iraq by 2012. In fact, Libyans formed the third-largest fighting contingent in Iraq until U.S. counterterrorism cooperation with Qaddafi began to stem the flow in 2006. Similarly, during his détente with the West from 2003 until 2010, Qaddafi proved himself a reliable ally against the trans-Saharan networks of al Qaeda in the Islamic Maghreb. Were the retro-rogue Qaddafi to remain in power post-2011 or should Libya become a failed state where nonstate actors could find easy cash and safe havens, the grave consequences would resonate from North Africa to the African Sahel region and the larger Islamic world.

The United States and especially Europe cannot afford a protracted Libyan civil war, a Libya ruled by a spurned Qaddafi, or a return to the 1990s situation in which multilateral sanctions largely removed Libya from the world economy, making it a breeding ground for dysfunctional governance and Islamic extremism. Libya is simply too big to be allowed to fail.