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Wednesday, April 7, 1999 Published at 13:50 GMT 14:50 UK

Business: The Economy

UK exporters eye Libya

UK firms have enhanced Libya's water supply

UK companies have a new and potentially lucrative export market opening up to them now that UN sanctions against Libya have come to an end.


The punishing UN sanctions that isolated Libya from the world trade had been imposed in 1992 and tightened a year later.

The sanctions included an aviation and arms embargo and a ban on some oil equipment. Libyan funds and financial resources abroad were also frozen.

But the extradition of the Lockerbie bombing suspects to the Netherlands for trial means many British companies can now return to Libya to look for orders.

Some UK companies have been quick off the mark. British Airways has announced it will fly three times a week from London to the Libyan capital, Tripoli, beginning later this month if UK Government approval is given.

British Aerospace (BAe) held talks with Libyan officials even before the embargo was lifted and others are expected to follow.

Arms controversy?

William Butter, deputy editor of the Middle East Economic Digest, told BBC Radio 4's Today programme that the oil and aviation industries in the country desperately need spare parts and repair work carried out and will have to source both from overseas.

Middle East expert William Butter says oil and aviation firms have opportunities in Libya
BAe, for example, hopes to supply Libya with domestic aircraft and equipment worth a reported £6bn.

The company is even rumoured to have had talks with Libyan officials over the possible sale of military hardware, with the Eurofighter said to be top of its list. Such a move would undoubtedly be highly controversial and might prompt UK government intervention.

Meanwhile, independent UK oil producer Lasmo, which has continued non-embargoed activities in Libya, says it wants to pursue new exploration opportunities in the country.

Lasmo and other European oil firms will not have to compete with their US rivals. Companies like Mobil and Exxon are banned from trading with Libya by US laws enacted two years before the UN sanctions came into force.

UK exports hit

The sanctions have also been felt by hundreds of UK firms that used to trade with Libya before the UN embargo. In 1992 they generated exports worth £228m.

[ image: Roman ruins in Libya:  A future tourist attraction?]
Roman ruins in Libya: A future tourist attraction?
However, firms producing goods and services not on the sanctions list have continued to trade, despite huge barriers to commerce.

British companies, for example, played a central role in developing the country's water transportation infrastructure during the freeze in relations.

Graham James, export director of Liquid Plastics in Preston, had a number of orders from the Libyan sewerage industry in the past and says opportunities abound for foreign companies.

No direct contact

Exporter Graham James says winning Libyan contracts will be tough
However, he said there are enormous practical problems with doing business there. There is no British embassy presence and before the end of sanctions there were no direct flights. Visas are hard to get and have to be obtained from Saudi Arabia.

Mr James said his business trips involved a flight to Tunisia followed by a 1,000-mile drive across the desert to get to the Libyan city of Benghazi.

Competition from other countries, especially European nations, will also make it tough for UK companies to win contracts. The Italians have been quick off the mark and Libyan leader Colonel Gadaffi has promised to give them priority on contracts to upgrade oil installations.

Mr James wants the government to do more to help British companies get a foot in the door. But government officials say it is up to companies to make any trade decisions individually on commercial grounds.

Official support for companies looking to penetrate new markets is not available to trade with Libya, Mr James said.

Tourism opportunities

Meanwhile, with new tourist markets opening up rapidly in developing countries, there is speculation that some companies will soon organise tours to Libya.

The North African country boasts ancient treasures and Roman buildings seldom seen by Western tourists, along with what are said to be fine Mediterranean beaches.

Mr Butter of the Middle East Economic Digest says Libya may well now endeavour to develop a more market-oriented economy and that the tourism industry would be an obvious sector to develop.

Those with experience in Libyan markets say payment in advance via letters of credit should be sought by exporters. Nonetheless, the country's oil exports mean there is hard currency available so that local businesses can pay foreign suppliers.

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