COLD WAR LIBYA:ALL ABOUT OIL

by Lisa Reynolds Wolfe on March 24, 2011

oil is discovered in libya in 1959

When the Cold War began, Libya held little importance for either superpower. Yes, it was the home to Wheelus Air Force base, one of the major American bomber bases in the Eastern Hemisphere, but that’s about it. Leading exports were esparto, a type of grass used to make paper for currency bills, and scrap metal scavenged from the rusting tanks and trucks and weaponry that had been left behind by the Allies and the Axis powers.

The country gained some recognition when independence was declared on December 24, 1951. The Soviet Union had been stymied in its efforts to establish a Mandate over the country following the end of World War II. Now, Libya was the first country to achieve independence through the United Nations. It was also one of the first former European possessions in Africa to gain independence.

Proclaimed a constitutional and hereditary monarchy, the new United Kingdom of Libya was made up of three arbitrarily joined provinces: Cyrenaica, Tripolitania, and Fezzan. The kingdom formed a federal government with three capital cities.: Tripoli, Benghazi, and Al Bayda. Idris as-Senussi, the Emir of Tripolitania and Cyrenaica and the leader of the Senussi Muslim Sufi order, was declared king.

Two years after independence, on March 28, 1953, Libya joined the Arab League.

In the mid 1950s, Libya gained further significance with the growing suspicion that the country might produce oil.

The Libyan Petroleum Law of 1955 was designed to encourage oil exploration and development. Instead of the large concessions allowed by the countries of the Persian Gulf,  this law provided for much smaller concessions. As the Libyan petroleum minister explained: “I didn’t want my country to be in the hands of one oil company.”

The Libyan strategy — the strategy of diffusion — was to concession to smaller, independent companies who didn’t haven’t a stake in oil elsewhere. It was believed that such companies would want to explore and produce as rapidly as they could in Libya. The law also offered an incentive that would make  Libyan oil more profitable than oil from other countries. The central objective of the law was summed up in the short statement: “We wanted to discover oil quickly.”

The first round of negotiations in 1957 saw 17 companies bid for a total of 84 concessions. Early exploration results were disappointing, but this changed in 1959 when Standard Oil of New Jersey made a huge strike about 100 miles south of the Mediterranean coast. The US State Department summed it up: “Libya has hit the jack-pot.”

By 1961, 10 good fields had been discovered, and Libya was exporting oil — a very high-quality “sweet” or low sulfur — crude. As Daniel Yergin notes in his book The Prize:

In contrast to the heavier Persian Gulf crudes, which provided a large proportion of fuel oil, Libyan crudes could be refined into a much higher proportion of gasoline and other light, “clean” products, perfect for the growing automobile fleets of Europe and excellently suited to the dawning age of environmentalism.

Aside from “sweetness,” the other thing Libyan oil had going for it was location. North Africa was not as far afield as the Middle East, so the oil did not have to be transported through the Suez Canal or travel aound the Horn of Africa. From Libya it was just a quick journey across the Mediterranean to the oil refineries in Italy and on the southern coast of France.

By 1965, Libya was the world’s sixth-largest exporter of oil, responsible for 10% of all petroleum exports. In 1969, its output actually exceeded that of Saudi Arabia.

While the Libyan government at that time was friendly — or at least neutral — toward the United States, the Libyan business environment was hostile, permeated with corruption.

Soon the political environment would be hostile as well. On April 25, 1963, the federal system of government was abolished and the name of the country was changed to the Kingdom of Libya.  More far reaching changes were soon to come.

The monarchy ended on September 1, 1969 when a group of military officers  staged a coup d’état against King Idris while he was in Turkey for medical treatment.  The coup was led by a 28 year old army officer named Mu’ammar Abu Minyar al-Qadhaffi. King Idris was exiled to Egypt.

The new regime, headed by the Revolutionary Command Council (RCC), abolished the monarchy and proclaimed the new Libyan Arab Republic. The new RCC’s motto became “freedom, socialism, and unity.” It pledged to remedy “backwardness”, take an active role in the Palestinian Arab cause, promote Arab unity, and encourage domestic policies based on social justice, non-exploitation, and an equitable distribution of wealth.

The new government soon negotiated with the Americans to evacuate the Wheelus Air Base from Libya. The agreement had just two more years to run. In December 1969, the US agreed to vacate the facility by June 1970.

A new, more unpleasant, chapter would soon begin.



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