By Kevin Bogardus - 03/01/11 11:35 AM EST
Business groups that have lobbied to lift U.S. sanctions on Libya in the past are now backing stringent measures designed to punish Moammar Gadhafi’s regime as the dictator oversees a brutal crackdown on protesters.
USA*Engage, a trade group that often battles against unilateral sanctions by the United States, said it is now backing the new penalties imposed by the United Nations and the European Union, calling them “a specific, clear and direct message to the Libyan authorities that the world is watching and is holding them accountable.”
The shift shows that a lobbying campaign to reconcile Libya with the West by business groups, oil companies and the country’s government is now in danger of falling apart.
Libya, one of the world’s biggest oil producers, began a gradual return to the international community in 2003 when Gadhafi abandoned his weapons of mass destruction program. In response, the United States removed the country from its state terrorism sponsor list and began to re-establish diplomatic relations.
That reconciliation has deteriorated markedly in recent days as Gadhafi has killed hundreds of protesters calling for him to leave power.
Bill Reinsch, president of the National Foreign Trade Council (NFTC), told The Hill that American business has been left in a “highly uncertain” position by Gadhafi’s actions.
“Libya never became the perfect good guy. It has always been a complicated, difficult relationship,” Reinsch said. “Doing business there has been an awkward experience. Some went in and got out, and some never went in.”
Like USA*Engage, NFTC lobbied to lift U.S. sanctions against Libya after the country dropped its weapons program in 2003. But now the group supports multilateral action against Libya due to its crackdown on the demonstrators.
The unrest in Libya has left U.S. companies wondering what to do next, and many are working hard to get their employees out of the country due to safety concerns.
The upheaval has also put a question mark on what had been a multimillion-dollar lobbying campaign to transition Libya into a business partner of the United States.
Since 2003, Libya’s government has spent more than $9.8 million on lawyers, lobbyists and public-relations experts, according to Justice Department records.
The Livingston Group, headed up by former Rep. Bob Livingston (R-La.), and Fahmy Hudome International, led by Randa Fahmy Hudome, a former Bush Energy Department aide, were among the lobby firms that worked to smooth Libya’s transition into a U.S. ally.
First hired in 2004, Hudome did not renew her contract with the Libyan government in 2007 after she helped lobbied successfully to remove the country from the U.S. state terrorist sponsor list. And Livingston canceled its contract when Libya celebrated the release and return of Abdelbaset Ali Mohmed al-Megrahi, the bomber responsible for the 1988 downing of Pan Am Flight 103.
One of Libya’s biggest concerns during this time of reconciliation was a measure added by Sen. Frank Lautenberg (D-N.J.) to the defense authorization bill in 2008. The measure by Lautenberg, who has been a relentless champion for the Pan Am 103 victims, allowed attorneys to seize hidden commercial assets of state terrorism sponsors to compensate the victims of attacks.
But the provision threatened U.S.-Libyan relations as lawyers for the terrorist victims were looking to seize funds from new oil contracts between the North African nation and American companies.
According to a leaked February 2008 diplomatic cable released by WikiLeaks, companies that had joint venture partnerships with Libyan national oil companies — like Occidental, ConocoPhillips, Marathon and Amerada Hess — were at the greatest risk from Lautenberg’s proposal.
The cable said the provision “caused concern among U.S. firms partnered with Libyan companies (especially in the energy sector), and provoked a sharply negative reaction from the [government of Libya.]”
In addition, “U.S. companies are attempting to clarify and reduce their potential exposure” under the law, according to the cable. Businesses lobbied to clear Libya from the law, an exemption the country later was awarded when Libya agreed to compensate victims of the terrorist attacks the country was suspected of sponsoring.
In a statement to The Hill, Lautenberg said Gadhafi’s recent actions show that the victims of Pan Am 103 were right to pursue the Libyan leader in the first place.
“The whole world is now learning what the families of the Pan Am 103 victims have known for decades — Gadhafi is a criminal and terrorist with no compassion or regard for the lives of others,” Lautenberg said. “The United States has joined with the international community to send an unequivocal message to Gadhafi: Your tyranny is over and you must free the Libyan people.”
Despite the current upheaval in Libya, lobbyists said it is too soon to say whether Libya will close for business once the unrest settles. Some said Libyans will likely want to open up their economy even more to help rebuild.
Reinsch said U.S. industry “is in suspended animation, waiting to see what is going to happen on the ground politically. It can go either way.”
“Whatever way it turns out politically, international companies will be welcomed by the Libyans to help build up their economy and get it back on the right track,” Fahmy Hudome said. “There is no way that these countries in the Middle East that are pleading for more openness are going to close down and become more isolationistic.”