[HCCN] Libya: Get in Quick
judy at robbinsandrobbins.com
Fri Sep 23 18:30:55 EDT 2011
Published on Friday, September 23, 2011 by Reuters <http://www.reuters.com>
Special Report: How to Win Business in Libya
by Emma Farge, Lorraine Turner and John Irish
BENGHAZI, Libya - In August, as rebels fought forces loyal to President
Muammar Gaddafi, two representatives of a British business consortium took a
"rather long and arduous ferry journey from Malta" to the North African
"To describe it as a ferry would be very polite," according to an executive
at a London-based global engineering company, whose interests the two men
represented. "I think it was a trawler."
The men traveled to Libya at the invitation of the rebel administration.
Britain, along with France and the United States, had given political and
military support for the uprising against Gaddafi and sponsored the rebel
leadership, the National Transitional Council (NTC). This was a chance to
close some deals.
"We had people on the ground in Misrata," said the businessman, who spoke by
phone on condition of anonymity. "You could still hear ordnance from the
center of Misrata, so it was very much an ongoing situation. But they were
already talking about training and equipping fire brigades, training and
The visitors keep coming. In the lobby of the Tibesti Hotel in the rebel
stronghold of Benghazi, opportunists mix with diplomats, journalists and aid
workers. With NATO's help, the rebels have deposed Gaddafi and now control
Tripoli, the capital. Elsewhere fierce fighting continues and Gaddafi
remains holed up. The country has yet to pay its workers, write a new
constitution or even name a transitional government. But it is a land with
deep pockets, and plenty of new friends.
French President Nicolas Sarkozy and British Prime Minister David Cameron
received a heroes' welcome last week when they became the first western
leaders to visit since Gaddafi's ouster. Interim leader Abdel Jalil said the
rebels' allies could expect preferential treatment in return for their help.
It was a clear signal that countries which had not backed the NATO bombing
campaign, including Russia, China and Germany, or which were slow to
denounce Gaddafi, like Italy, stand to lose out.
But if French and British politicians are tallying up the contracts,
business executives are leaving little to chance. Foreign companies withdrew
from Libya at the outset of the NATO bombing campaign; sanctions imposed on
Gaddafi's regime since February have added to the difficulty of doing
Despite this, dozens of executives from France, Britain, Italy and other
countries have spent months building ties with potential Libyan partners. In
a country fractured by tribe and politics, they say it is relationships that
will prove decisive.
The potential profits are huge. While there are pockets of damage to
infrastructure and former Gaddafi command centers, the country is in far
better shape than Iraq was after the fall of Saddam. At the same time, Libya
needs new investment in everything from schools to services. According to
the French business federation, Libya should offer around $200 billion in
investment opportunities over the next 10 years. With a population of just
over 6 million and Africa's largest oil reserves, it has plenty to spend. Up
to $170 billion worth of frozen Gaddafi-era assets alone should help pay for
Here's how companies are playing this new front in the latest scramble for
GET IN QUICK, IF YOU DARE
Western firms, including trading houses Vitol, Trafigura and Gunvor have
already been busy. A London-based team for Vitol sold oil products to the
rebels in large volumes as early as April, and helped ship their first crude
oil cargo. Trafigura expressed interest, although it is not clear if any
deals were concluded.
France landed executives in Benghazi in June and July, according to Michel
Casals, head of the Franco-Libyan Chamber of Commerce.
"There's no point going when people are not ready, but we can't go in six
months when everybody has already been there," says Thierry Courtaigne,
director general of French business lobby Medef International, which
represents the interests of France's top companies overseas.
At the same time, some firms remain wary of doing business with the rebels
in case they break international sanctions. Though those sanctions are now
easing -- Europe and the United Nations have eased theirs -- U.S. firms in
particular are hesitant. One engineering executive expressed optimism about
the potential in Libya "once things get going" and said he has been
attempting to rekindle old relationships. But he, along with another U.S.
company official, said sanctions left them unsure about how much they can
do. Many told Reuters they are waiting for guidance from Washington.
CONSIDER A FIXER
There are ways to work as you wait. These include employing free agents
known as "fixers," who offer on-the-ground intelligence, security,
networking, and deniability in case of a legal challenge. Often former
British military men, fixers are widely used by companies in resource-rich
countries with weak governments. In Libya you can find a small community of
them in hotels like the Tibesti -- Benghazi's main networking hub.
One of their number is a former senior officer in Britain's SAS special
forces. In his early 60s and with a mane of salt-and-pepper hair, John
Holmes is often seen with two other men at the Tibesti. He spends much of
his time in the lobby, trying to catch the ear of NTC officials who could
help open doors in the oil sector.
NTC officials say Holmes is working on behalf of British firm Heritage Oil,
trying to finance field security and maintenance work in return for a stake
in the country's oil production. He refused to talk to Reuters, describing
himself as a private person. Heritage also declined to comment on whether
the firm had hired him. "They've been very aggressive, going out on a limb,"
said one rival.
Others are more approachable, but still decline to be identified or say who
they are working for because of the sensitive nature of their work. Many
fixers are fresh from similar assignments in Iraq. One, dressed in desert
camouflage and smoking British Lambert & Butler cigarettes, was responsible
for liaising with local Iraqis. He doesn't speak Arabic but says he has a
mantra for life: have respect, be courteous and don't promise something you
The job includes giving clients a flavor of local conditions and pinpointing
opportunities. In one memo sent by a fixer and seen by Reuters, the author
details meetings with Libyan officials and discusses a strategy for gaining
access to remote oil facilities to check out the wartime damage. Such
information could be priceless to oil companies weighing Libya's
still-considerable risks against the huge potential rewards.
GET GOVERNMENT HELP
Political support can help with access, and with the law. Sarkozy has hotly
denied talk of "under the table deals for Libya's riches", including reports
that in return for French help, oil group Total will be given preferential
access to Libyan oil. Nonetheless, Paris has been frank about the payback it
expects in return for spearheading NATO's mission.
"The President took political and military risks, and all that creates an
environment where the Libyan authorities and the people know what debt they
owe France," French Trade minister Pierre Lellouche told a September 6
symposium on the NTC arranged by the Franco-Libyan chamber of commerce. "We
aren't going to get embarrassed by helping our companies benefit from this
In April, when Vitol shipped out rebel-produced oil, it had backing from the
office of British Foreign Secretary William Hague, oil and diplomatic
A special group referred to by UK media as a secret oil cell, backed by
British Prime Minister David Cameron, was staffed by a handful of officials
and supported by Britain's MI6 secret intelligence service, a diplomatic
A European diplomatic source told Reuters members of the unit are also
involved with smoothing the way for major oil companies to get back into
Libya. The firms need advice on security, who to speak to and the life
expectancy of the new administration, the person said.
A UK government spokesperson contacted for this report confirmed the oil
"Oil was central to Gaddafi's war machine," the spokesperson said in a
statement. "Disrupting the supply and constricting his ability to raise
revenue through sales hindered his ability to brutalize Libyan civilians.
The Oil Cell also worked on how to support the resumption of the Libyan
energy sector post-conflict and fed into broad planning, given the
importance of this in providing a sustainable revenue source and meeting
Libya's own fuel needs."
Asked about the government's cooperation with Vitol, the spokesperson said:
"The UK policy supported the supply of fuel to the NTC. The oil cell
provided the same information on supply of fuel to a broad range of
companies, but advised them to take their own independent legal advice on
whether any activities would be contrary to any applicable laws."
Other companies have since moved in, but Vitol alone is estimated to have
supplied around 20-25 shipments, mainly of diesel over the past two months,
according to a Reuters survey of industry sources, primarily sources in the
shipping industry. The total bill for the fuels Vitol has delivered exceeds
$1 billion, NTC sources say.
For Italian oil and gas group Eni, Libya's biggest foreign oil operator,
Silvio Berlusconi has been less of an asset. The Italian Prime Minister's
friendship with Gaddafi meant Rome switched allegiance to the rebels much
later than other western capitals. Berlusconi said turning on his old friend
made him feel "very bad".
"April was a critical time and Eni wasn't there from the beginning. Oil and
politics are mixed," said a source at Benghazi-based oil firm Agoco. "If we
have two companies, Chinese or French, of course we choose the French. When
the revolution started the Italians thought Gaddafi would win. They made a
Eni has since made regular contact with the NTC, hoping its dominant
position in Libyan oil production makes it indispensable, at least in the
short term, says a person familiar with the company and its thinking.
Italy's foreign minister Franco Frattini says he recently met rebel leader
Mahmoud Jibril, and expects him to visit Italy soon.
Eni's chief executive joined top oil officials for a beachfront lunch in
Benghazi in August and Nuri Berruien, the chairman of Libya's National Oil
Corporation, told Reuters the two firms had installed a "floating hotel" to
provide accommodation for workers on an offshore gas field.
Russian firms face a similar bind. Moscow was highly critical of the west's
backing for the rebels and only recognized the NTC as Libya's legitimate
authority a few weeks ago. In August, Russia called a French arms drop a
"crude violation" of the U.N. weapons embargo.
State arms exporter Rosoboronexport, previously a major supplier to Gaddafi,
has estimated its losses as a result of the change of regime at $4 billion.
The chairman of the Russia-Libya business council described the fall of
Gaddafi as a disaster for Russian business interests, which extend into
infrastructure projects and energy.
But by the end of August -- before Moscow had recognized the NTC -- Russian
refined products had already been sent to Libya through Swiss-based trading
house Gunvor, co-founded by Russian businessman Gennady Timchenko, according
to market sources.
State-controlled gas export monopoly Gazprom, meanwhile, last week signed an
option with Eni giving the Russian firm the right to acquire half of Eni's
33 percent stake in the Elefant oilfield in Libya, Gazprom sources said.
That option essentially keeps Gazprom's oil arm in the game until the
China recognized the NTC last week. In March, it stopped short of using its
U.N. Security Council veto power to block the NATO bombing campaign, but
condemned the expansion of strikes and repeatedly urged both sides to
After Gaddafi fled Tripoli earlier this month, reporters found documents
indicating that state-owned Chinese arms companies had offered to sell
rocket launchers, anti-tank missiles and other arms worth a total of some
$200 million to Gaddafi's forces, despite the U.N. ban on such sales. (The
documents also showed the United States and Britain had helped Gaddafi
persecute dissidents.) Beijing said the companies had gone behind its back
and the arms were never shipped.
Yet Chinese companies, like many U.S. firms, say they are waiting for the
green light from their government to return to Libya, where the country's
construction industry had been heavily involved building railways, water
plants and communication facilities. Before the conflict, China State
Construction Engineering Corp and China Metallurgy Group were building
25,000 government-subsidized affordable apartments.
"The government pulled all of us back and now we would be looking out for
the government's leadership for moving us back," said an official at a
Chinese state firm with investments in Libya.
Another executive at a major Chinese energy firm is concerned that China's
policy of non-intervention in the affairs of other countries may
increasingly conflict with the country's economic interests. "If you have
enough business interest to protect, you should take greater responsibility
as a major economic power," the executive told Reuters.
According to one European envoy, the NTC's Minister of Transport and
Communications is receiving daily calls and emails from the Chinese.
If Chinese companies are frustrated at missing out in Libya, at least they
aren't there to see the French move in. Casals of the Franco-Libyan Chamber
of Commerce says about 20-30 French companies were involved in fact-finding
missions to Benghazi in June and July. Earlier this month he said he would
soon be traveling to the country "as a sort of boy scout".
In the Gaddafi era, just under 50 French firms operated in Libya. In early
September, when Paris hosted a symposium about the NTC for entrepreneurs,
about 400 executives attended, rushing in and out with briefcases and
notepads at the ready.
Attendees included an A-Z of the top names in the Paris CAC-40, law firms,
architects, the postal service, wheat companies, printers, tobacco firms,
and insurance firms. The meeting, organized by the Franco-Libyan chamber of
commerce, was described by Courtaigne, the business lobbyist, as "focused
and extremely studious".
Jean-Jacques Royant, head of international cooperation at GEP, a lobby for
French oil and gas services companies, said foreign trade minister Lellouche
had told them that the big energy players should take the smaller ones under
their wings to help them win contracts. Sarkozy may be pleased with his
efforts, but no one is taking anything for granted.
"I don't believe in favoritism," Royant said. "There will be a reality on
the ground. There are needs and then there will be companies that are better
placed than others to service these needs. ... We have a lot of work ahead
to rebuild our networks and address books."
IT'S THE RELATIONSHIPS, STUPID
There are sure to be further shifts in Libya's political landscape. "We are
making it very clear that these are commercial deals -- you do this, this
and this and then goodbye. We are a transitional council and we cannot make
decisions that last," said one NTC source.
Little wonder companies are spreading their bets wide. "If someone's head
office has been shelled, if it's someone you've been working for in the
past, you might just want to get in there and do a bit of hard marketing and
fix something for them in terms of the fabric of the building and get close
to them again and get talking," said the chief executive of one British
"It's going to be close relationships and contacts in an environment like
that that gets you work ... If you've got close relationships, you're going
to be months ahead."
French telecoms firm Alcatel-Lucent and drugs company Sanofi are already
working on the cellphone network and donating drugs;
France has promised cabins so students can begin school and the NTC has
signed contracts with a French grain firm for wheat worth $22 million.
Whatever the politics, real connections will be decisive. Easy to rekindle
and hard to erase, they clinch deals that high-level diplomacy can only help
set up. The British business representatives who traveled by trawler to
Misrata were "hugely well received," said the engineering executive in
London. "They were invited to go because of the relationships we've
established in Libya."
Antoine Sivan, France's envoy to Benghazi, puts it this way: "France is
going through a love story here. To the French entrepreneurs who come and
meet me, I say: 'They (the NTC) so far don't have any money so do not expect
to sign a contract right away, but put your foot in the door. Trust them.'"
Trust is priceless in any society. In Libya, it is lost at your peril. The
country's small population makes for a very close society, says a person in
the Libyan oil industry.
"Six degrees of separation in Libya is more like 1.3," said the person, who
spoke on condition of anonymity. "There's a certain bedouin culture where it
takes time to build up trust and, once you have it, you risk being burned if
you mess it up.
"People are so interconnected that any Libyan on the street will be somehow
connected to five members of the NTC."
(Emma Farge reported from Benghazi; Lorraine Turner from London and John
Irish from Paris. Additional reporting by Mohammed Abbas and Alex Dziadosz
in Libya; Sarah Young, Keith Weir and Barbara Lewis in London; Marie Maitre
and Caroline Jacobs in Paris; Stephen Jewkes in Milan; Andrew Quinn in
Washington D.C.; Aizhu Chen and Su Dan in Beijing; Nick Zieminski in New
York and Braden Reddall in San Francisco. Writing by Paul Hoskins; Edited by
Sara Ledwith, Christopher Johnson and Simon Robinson)
© 2011 Reuters
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Article printed from www.CommonDreams.org
Source URL: http://www.commondreams.org/headline/2011/09/23-9
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