The Wall Street Journal-20080125-Politics - Economics- Bill Might Slow Libya Thaw- Terrorism Victims Could Seek to Gain More Compensation
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Politics & Economics: Bill Might Slow Libya Thaw; Terrorism Victims Could Seek to Gain More Compensation
WASHINGTON -- U.S. legislation enabling victims of terrorist attacks to seek greater compensation from foreign governments could put a chill in the Bush administration's -- and corporate America's -- budding engagement with Libya.
Libyan diplomats say they fear the law could signal Washington's backsliding on a 2003 commitment to restore full diplomatic relations in exchange for leader Col. Moammar Gadhafi's shuttering of Libya's nuclear and nonconventional-weapons programs. Any significant cooling, say U.S. foreign-policy strategists, could tarnish one of the White House's biggest diplomatic successes.
"This is a very serious bill...that will not encourage American companies and businesspeople to do business in Libya," said Libya's ambassador to Washington, Ali Aujali, in an interview.
Tuesday, the Senate, following the House, voted 91-3 to approve a defense-authorization bill that includes provisions facilitating Americans' ability to gain compensation from state terror sponsors.
The legislation doesn't specify any states. But the White House amended an earlier draft of the bill to exempt Iraq from any claims potentially made against the government of Saddam Hussein. Libyan officials had hoped the Bush administration would make a similar exemption for Libya, which the U.S. removed from its list of state sponsors of terrorism in 2006.
In recent years, Col. Gadhafi's government reached multibillion- dollar compensation pacts with families of victims of terrorist attacks tied to Libya, including the 1988 bombing of a Pan Am jetliner over Lockerbie, Scotland, that killed 270. But claims tied to these cases and others remain outstanding. Democratic Sen. Frank Lautenberg of New Jersey spearheaded the legislation, arguing Libya has been tardy in resolving claims.
Supporters of the U.S.-Libya rapprochement fear the legislation could quell trade between the two countries by exposing Tripoli to potentially billions of dollars of additional claims. Any Libyan assets or payments made inside the U.S. could be potentially targeted by the claimants, say lawyers. And U.S. corporations making investments inside Libya might also see some of their assets frozen.
"It's still unclear how damaging this could be, but there's a huge litigation risk," said David Goldwyn, Washington-based executive director of the U.S.-Libya Business Association.
Since the lifting of U.S. sanctions on Libya in 2004, a number of U.S. energy companies have started operating in the north African country. The Oasis Group -- comprising Occidental Petroleum Corp., ConocoPhillips, Marathon Oil Corp. and Hess Corp., is one of the largest investors in Libya. Exxon Mobil Corp. and Chevron Corp. have expanded activities.
Bilateral trade between the U.S. and Libya grew to more than $3 billion last year from none in 2004, mostly reflecting Libyan exports to the U.S. that exceeded $2.6 billion.
The White House said it isn't going to veto the newly passed defense-authorization bill, which includes a 3.5% pay increase for U.S. troops. But a White House official said,"We would welcome the opportunity for a more comprehensive solution to address the problem [the legislation] poses to countries such as Libya and to U.S. investments in those countries."
Mr. Aujali said his government is studying the impact of the new law.
