Why Libya Wants In

By Adam Zagorin/Washington

During his visit to South Africa in March 1998, Bill Clinton was enjoying a scheduled lunch with Nelson Mandela when an unscheduled visitor was suddenly invited in. It was none other than Prince Bandar bin Sultan, Saudi Arabia's maverick ambassador to Washington. The prince gets around--Clinton had asked him over for a movie and popcorn at the White House--but here he seemed far afield. Yet as a bemused U.S. President sat and listened, Bandar suddenly began to press him on an unwelcome and delicate topic: Libya. Then Mandela joined in.

The point of this tag-team effort? To persuade Clinton to support an easing of U.N. sanctions on Libya imposed after the destruction of Pan Am Flight 103 over Lockerbie, Scotland, a decade earlier. That, in turn, would be a first step toward allowing American companies back into a country that the U.S. officially labels a terrorist nation. Caught off guard by the unscripted arm twisting, the President offered no reply. But the forceful appeal appalled several staff members, notably National Security Adviser Sandy Berger.

The episode offers an inside glimpse of the enormous sensitivity that still surrounds the murder of 270 people in the Pan Am bombing. A reckoning of sorts now looms: on May 3 the two Libyans charged with blowing up the aircraft will stand trial in the Netherlands. Once that trial concludes, the long ban on U.S. commercial activity with Libya could be lifted. Says Ronald Neumann, the top State Department official in charge of Middle East affairs: "Change can now be imagined." Indeed, a quiet but intense lobbying campaign for detente has been launched by U.S. businessmen with ties to both the current Administration and that of former President George Bush.

Chalk it up to Colonel Muammar Gaddafi's charm offensive. The Libyan leader has not only agreed to cooperate with the Pan Am trial; he has also signaled through official and unofficial channels that he is ready to do business with Washington. For starters, he has booted a number of radicals out of his country, including the infamous Abu Nidal. It may come as a surprise to those who remember the '80s--when Libya was implicated in the bombing of a discotheque in Germany that killed two American servicemen--to hear a senior U.S. official say, "At this moment, [Gaddafi is] out of the terrorism business."

Corporations are always quicker to forgive than countries. And Gaddafi has thrown out a welcome mat for hundreds of executives from Britain, France, Italy, Russia, China and Canada. Lured by the country's nearly $12 billion in annual oil revenue, they've flocked to Tripoli's few good hotels looking for deals--big ones. One of many companies on the ground is Airbus, the European aircraft consortium, which is primed to sell 24 passenger jets worth at least $1.5 billion to Libya's national carrier. That kind of uncontested sale does not sit well in Seattle, where Boeing is based.

Bandar has emerged as a central figure in any Washington-Tripoli rapprochement. Prompted by an appeal from U.N. Secretary-General Kofi Annan, he and Mandela spent months persuading Gaddafi to release the two suspects for trial. The Clinton Administration thanked Mandela and Bandar for their efforts. For the South African leader, easing Libya's isolation helped repay Gaddafi for political support provided during Mandela's decades of imprisonment in apartheid jails. For the Saudis, Bandar's mediation was designed to ease Libya, a fellow Arab nation and OPEC oil producer, back into the international mainstream. At the same time, it helped the U.S., Saudi Arabia's most important Western ally, see two alleged terrorists brought to trial.

Bandar's efforts on Gaddafi's behalf have borne fruit. Economic sanctions are easing. Last year, in response to Gaddafi's release of the two Lockerbie suspects for trial, the White House endorsed the suspension of U.N. sanctions against Tripoli, allowing sales of U.S. food and medicine.

For U.S. farmers hard hit by low grain prices, Libya looks like a valued customer. Plans are currently under way to ship 20,000 tons of durum wheat there, and a senior U.S. agribusiness executive recently back from Tripoli says tens of millions of dollars in additional contracts could begin to roll in later this year.

American oil companies, forced to abandon operations in Libya after U.S. sanctions were imposed in 1986, stand to benefit even more. The Clinton Administration has quietly allowed Occidental Petroleum Co. and Oasis, a consortium including Conoco, Marathon and Amarada Hess, to survey wells they once operated. At a recent private session, a Conoco representative offered to provide logistical support and help make appointments with Libyan government officials for a group of Congressmen who continue to explore plans to visit Libya.

Unofficial contacts have also eased tensions between the U.S. and Libya. A senior State Department official told TIME that when Libya's Foreign Minister visited the U.S. in the fall of 1998, about the time of the U.N. General Assembly, he mistakenly received a visa without the travel restrictions usually imposed on diplomats from terrorist nations. This allowed the Libyan to roam freely, a privilege he took full advantage of. The "screw-up" was discovered only after the minister had left the U.S. Spooks and domestic U.S. agents were left to painstakingly piece together his itinerary, which seems to have taken him to Texas, home of the oil industry, and to Aspen, Colo., where Bandar keeps a lavish winter-vacation house. Moreover, a nonprofit "U.S.-Libya dialogue group" last year organized an offshore, three-day meeting with senior Libyans and recommended that Tripoli hire a public relations firm and develop the support of American business "to change policy on sanctions."

Herman Cohen, President Bush's point man on Africa, has also conducted a series of little-noticed recent visits to Tripoli. Cohen's travel was partly underwritten by an Arab businessman, Kamel Ghribi, who has retained former Bush State Department Middle East policy chief Robert Pelletreau as his Washington lawyer. On one of his sojourns, Cohen and a fellow Washington consultant treated the Maximum Leader with extraordinary deference. As Gaddafi denounced Israel, they listened. When he expressed eagerness to do business with U.S. companies, they offered encouragement.

Cohen also conferred with Gaddafi's brother-in-law Abdullah Senussi, who last year was convicted in absentia in a French court for the 1989 midair destruction of a plane in which 171 people, including the wife of an American diplomat, were killed. The Americans never mentioned that incident. "What was the point of bringing this up?" asks the consultant who traveled with Cohen. "We wanted to establish a dialogue."

Washington is a city in which commercial opportunities often foreshadow shifts in government policy. This doesn't mean restrictions on doing business with Libya will end immediately, and certainly not before the trial concludes. And the verdict, whether guilty or innocent, will not erase the scars that terrorism inflicted over Lockerbie. But U.S. corporations were late getting back into Vietnam, and they never had a chance in Cuba. To them, Libya is looking less like a terrorist nation and more like another potential customer in the great global economy.

--With reporting by Brian Doyle/Washington

With reporting by Brian Doyle/Washington