Exit the Colonel (18 page)

As always, personal touches were not lost on Gaddafi. Despite the fact that Gaddafi's squeeze of Occidental in the early 1970s resulted in billions upon billions of lost revenues to American oil, Ray Irani, Occidental's then CEO, took charge of negotiating the company's reentry into Libya, visiting Libya in 2005 to negotiate with Gaddafi face to face. While perhaps not a quid pro quo, the company heavily lobbied Congress and the Commerce Department for an exemption to the 2008 Libyan Claims Resolution Act. The strategy delivered what was expected: of the fifteen ESPA IV exploration
blocks, Occidental took nine—far more than its competitors. For his pains, Irani earned a record $460 million in total compensation from Occidental in 2006, much of which was assumed to be compensation for his role in securing the company's wins in Libya and associated booked reserves.
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Questions remain as to what it took to secure some of these potential windfall deals. In June 2011, four months after the uprising, the US Securities and Exchange Commission (SEC) began an inquiry into possible violations of the Foreign Corrupt Practices Act (FCPA) by a series of US oil companies, including ExxonMobil, ConocoPhillips, and Occidental, and a number of US investment banks, including Goldman Sachs. The SEC conducted the inquiry in parallel with an investigation by the Libyan general prosecutor's office into “possible irregularities” during the Gaddafi era, many of which allegedly involved influence peddling by entities controlled by Saif Al Islam. The SEC inquiry was soon expanded to cover the activities of France's Total and Italy's ENI.
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The assumption appears to have been that bribes for oil contracts had been embedded in deals with Libya's principal sovereign wealth fund, the Libyan Investment Authority (LIA).
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While US oil companies undoubtedly used Libyan deals to boost booked reserves and shareholder dividends, the companies en masse were also an instrument of US foreign policy. By securing substantial rights to current and future Libyan oil, the companies were enacting the US government's post-9/11 strategy of diversifying the sources of Middle Eastern oil.
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It looked like a good bet at the time, for the companies were in the market for new sources and sufficiently believed in the Libyan reform narrative that they were willing to pay big money. Within a short time, however, many (those whose compensation structure was longer term) were starting to ask themselves if this had really been such a wise idea.

For American diplomats, oil companies, and sundry others interested in the Libyan experiment, the first year back in Libya had been interesting, exhilarating, and exhausting—but largely hopeful. By the second year, the novelty had started to wear off, as both sides felt they were somehow not quite getting what they had bargained for.

Despite the fact that the USLO was still operating in a self-styled five-star hotel, conditions had become psychologically grueling. Embassy personnel were under constant surveillance. Hotel quarters, while well
appointed, were cramped, often unbearably hot, and almost hermetically sealed. A joke within the group was that Libya was “Iraq, but without the shooting—for now.” The combination of living conditions, “unaccompanied” status (no family members), difficulties in persuading the Libyan government to act on issues critical to moving the relationship forward, and mixed messages from a Washington completely preoccupied with the deteriorating situation in Iraq contributed to a sense of almost perpetual crisis. As a result, USLO gained a reputation within the department as dysfunctional. Key reporting and administrative positions remained unfilled from 2004 through most of 2005.

Of approximately two hundred forty diplomatic posts, the USLO's was rumored to be one with the highest curtailment (dropout or transfer) rate during these years. When questioned, a senior State Department official later said, “Frankly, I was not aware of this. All I can say is that we had our hands full, and while it took a bit of time, we ultimately got better resources out there.”
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The dropout rate, the criticism of Libya by those who left and came back and those who were managing them, and the unaccompanied status made it very difficult to induce anyone with significant Arabic skills to volunteer for Libya, other than on a temporary basis. Further, as the department was exerting stronger pressure on those with Arabic skills to serve in Iraq (many had initially refused on principle), many made the calculation that if an Iraq tour was going to be a condition for advancement within the Near East Bureau, they might as well bite the bullet, as a Libya tour would not count nearly as much when it was time for promotions. Thus, what one would have expected to have been, and in many ways was, one of the most exciting posts in the Near East Bureau, became a pariah post. Even those with serious competencies and the willingness to take risks were so overwhelmed with the magnitude of logistical problems, and complications to their personal life caused by Libya's “unaccompanied” status, that they quickly burned out.

During the first year, “diplomatic notes” (the formal diplomatic process for requesting and approving action) worked reasonably well. Western requests for information and action on a range of issues, even if not satisfied immediately, generated positive responses and some display of willingness to engage. A year later, many of the requests went unanswered, and Gaddafi's men made it clear that certain lines should not be crossed (with respect to human rights investigations and so on), and they reduced access to key ministers. Diplomats' occasional efforts to investigate conditions at Tripoli
prisons were met with stern warnings from the Libyan side and threats to make the inquiring officers persona non grata. One member of the team, frustrated with the narrow range of subjects on which he was authorized to report, penned a brilliant three-part essay on the socioeconomic milieu of Moroccan prostitutes in Libya. These cables, entitled “To the Whores of Tripoli,” were squelched by the clearing officer, and thus never made it to Wikileaks.

In the middle of 2005, much of the diplomatic community—the US's in particular—found that some of the Libyan government's early receptiveness (if not action) to requests for assistance on both high-level and more mundane administrative issues had been compromised, and that the Libyans were increasingly irritated with what they felt was an unwillingness on the West's part to recognize the “great sacrifices” Gaddafi had made in 2003.

Feeling ever unappreciated, Gaddafi began to chafe. “The more we give, the slower things go,” became the Libyan mantra. Officials began responding to perceived (and in some cases, real) slights by imposing quasi-reciprocal penalties on US diplomats and businesspeople. At a time when Libya was ostensibly trying to recreate its image to the West, well-heeled American adventure travelers on international cruises found themselves denied permission to set foot on Libyan soil. Visa restrictions continued to prevent the US from fully staffing the USLO, and often caused some of the larger American oil companies to operate locally using skeleton staffs.

Interestingly, the second EPSA IV auction round, for which twenty-six areas were on offer, resulted in a sweep, not for the Americans, but for the European and Russian firms and the Asian companies like Nippon and Japex. In the third round, covering fourteen areas, the Russians (Gazprom), Canadians, and Germans won exploration rights. ExxonMobil was the lone American company to pick up new real estate. The results likely reflected a message to the Americans from the Libyans that progress in the Libya-US relationship was not going as fast or as deep as Gaddafi wanted or expected. The results also showed the increasing feeling within the industry that Libyan terms (production-sharing demands and expectations of high signing bonuses, and subsequent demands for the incorporation of Libyan nationals in senior positions) were too harsh, given expected returns.

In early 2005, the foreign oil companies began holding collective monthly “awareness meetings” in which to discuss impediments to business that were not specific to any one company. Visas were always at the top of the list. Other issues included more or less incessant demands from the
Libyan government, via Matouk al Matouk, the Libyan minister of labor, for increased quotas in the hiring of Libyan nationals (the vast majority of whom were wholly unqualified). Several companies reported receiving lists of people they should hire directly from Matouk's office.

Frequent changes to tax and investment law as it applied to the oil industry activities were also issues, as were security around oilfields and transport logistics. (Saif Al Islam, for example, at one point canceled all the foreign oil companies' original aviation service contracts and required a Libyan company, whose equipment was not up to international safety standards, to provide service.)

Another issue was the Arab League boycott of Israel. According to a law passed by the US Congress in 1977, US companies would be fined for any collaboration with countries that implemented the boycott. While there was no blanket application of boycott's provisions to US firms at this time, officials within the Ministry of Trade and Investment would selectively put forth proof of compliance to US companies as a requirement for registering a representative office, which in turn would set off a flurry of diplomatic correspondence to Washington. Meanwhile, the General People's Congress began to churn out new, almost weekly, mutually inconsistent laws on various commercial topics, requiring considerable back and forth to determine which law applied and on whose authority.

In late 2006, chargé Gregory Berry, who had held the fort from USLO-to-Embassy for nearly three years, returned to Washington, to be replaced for the better part of the following year by former US Ambassador to Niger, Charles Cecil, as the US Ambassador-nominee Gene Cretz, sat in Washington awaiting clarity on his status, from both the Americans and the Libyans.

Cecil would recall that his time in Libya was marked by the (usual) endless arguments with the Libyans over the granting of visas for US official and business visitors. He described an atmosphere in which all US diplomatic personnel were very closely minded, and contact with ordinary Libyans limited—already a rather dramatic change from the previous three years, certainly since 2004. Cecil noted that the US-Libya relationship had come under tighter control in the months before his arrival, with day-today aspects of the relationship moved from the Americas Desk within the Foreign Ministry over to the European Desk, then under the direction of Abdelati al Obeidi, a prominent figure in the Gaddafi hierarchy. Nonetheless, Cecil was one of the very few US diplomats to visit Derna since the
rapprochement, and says he also saw no overt manifestation of extreme Islam: “The imam of the town's oldest mosque invited me to his office,” Cecil recalled, “The book I saw on his shelf was a copy of Paul Samuelson's introductory Macroeconomics textbook. We had a pleasant chat about the hopeful future of US-Libya relations.”
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The Western rapprochement coincided with a fateful demographic bulge within the Gaddafi family: the coming of age of many of Gaddafi's nine children. This proved a mixed bag indeed for Gaddafi, who up until now had enforced a near-complete ban on public appearances by or discussions of his immediate family.

While the Gaddafi children certainly had their issues, not all were sociopathic personalities in the Udai and Kusai Hussein mold. Each member of the family had a different persona, with varying degrees of socialization, and different uses for and relationships with Gaddafi himself. The younger sons received a fair share of international press for a range of bad behavior, which was known to have upset Gaddafi; the eldest, Mohammed, and the youngest, Saif Al Arab, got little press attention.

Saif Al Islam (born in 1972) was Gaddafi's second child and the first of his second marriage to Safia Farkash, of the eastern Obeidat tribe. Because of Saif's prominence as a political figure and the fact he was the most interesting, exposed, and public member of the Gaddafi family besides Muammar, Saif took a far greater role in the Libyan makeover than any of his siblings.

Gaddafi's firstborn son Mohammed (born in 1970), known as “The Engineer” for his profession and training, ran the Libyan Telecom and Technology Company (LTT) and on the side presided over the Libyan Olympic Committee and the Libyan Automobile Club. Many staunch opponents of the regime paid a certain respect to Mohammed, evincing grudging admiration for his professional competence and the fact that, for the most part, he managed to avoid politics, the limelight, and the scandals that dogged many of his brothers.

The foreign media painted Saadi (born in 1973) as the black sheep of the family, as it seemed unclear what he wanted to do with his Gaddafi connections. (Perhaps a better characterization would be that he was less wild than his brothers Hannibal and Mu'tassim, less idealistic than his brother Saif, and less focused than Mohammed.) Saadi made his public name early in his twenties as a soccer player, with a stint in the Italian club Juventus, of which the Libyan-Arab Foreign Investment Company (LAFICO) held a minority stake. Later on, he dabbled in film, putting $100 million into a remake of the German thriller
The Experiment
. Married to the daughter of one of the Colonel's senior military commanders, he was rumored to be the target of extortion by the Italian mafia, which allegedly attempted to blackmail him over compromising photos of a sexual nature. To the outside world, Saadi was best known for his partying and paid photo ops with celebrities such as Nicole Kidman.

Gaddafi's fourth eldest son, Mu'tassim Billah (born in 1977), was largely absent from public view from 2004 until 2006. Rumors running the diplomatic circuit held that Mu'tassim was under a heavy cloud, for his role in the alleged attempted coup in 2003 (despite this fact he had been reinstated with military rank shortly thereafter). An altogether more plausible explanation for Mu'tassim's absence was offered by a former senior Gaddafi official in the wake of the revolution: Gaddafi had in mind (again, due to his keen judge of character) that Mu'tassim should be the military backbone of the regime and wanted to send him to Egypt for staff training. He was concerned, however, that Mu'tassim might be the target of Egyptian radicals. He also saw an opportunity to confuse the radicals and potentially gain information about their activities within Libya by creating the impression that Mu'tassim might be “with them.” Had Mu'tassim actually been behind an attempted coup, one can surmise he would not have had the opportunity to confront the rebellion in Sirte with Gaddafi fifteen years later. For those who felt Saif was too soft to be Gaddafi's successor, Mu'tasssim was the perfect antidote.