German Firms Applaud Libya Deal

With Libya's inviting domestic market and huge oil reserves in mind, a special government committee on Thursday pieced together an agreement that would guarantee credits for German exports to the northern African country.

The door to stronger economic relations between the two countries was opened only two days before when Libya agreed to pay $35 million in what it called a “humanitarian gesture“ to non-American victims of the 1986 bombing of a Berlin discotheque. But the North African country has not admitted it was behind the bombing.

German business, which is continually seeking new export targets because the domestic market remains in a coma, applauded the deal between officials of Libya's International Qaddafi Charity Foundation and lawyers representing German victims of the attack on the La Belle discotheque, which killed two U.S. soldiers and a Turkish woman, and injured 229 people.

Walter Englert, the head of the German-Libyan economic forum, said he expected Tuesday's agreement to give economic relations between the two countries a significant boost.

And Chancellor Gerhard Schröder said he would visit Libya's leader, Colonel Muammar el-Qaddafi, as soon as this autumn. Government spokesman Bela Anda also promised that Germany would help modernize Libya's economy.

“The rapid processing of the compensation payments agreed to by the Libyan side will make it possible to further extend and strengthen German-Libyan relations,“ said Anda.

Germany is already Libya's second biggest supplier of goods after Italy so business here see a lot of room for growth. In 2003, for example, Germany exported goods worth EUR526 million to Libya. Englert said that despite recently lifted international embargoes against the oil-rich country, German and Libya enjoyed “consistently good to very good economic relations.“

Libya is especially attractive for German engineering and technology companies because the country is in dire need of infrastructure improvements including its highway system and ports.

Libya is Germany's biggest non-European supplier of oil and is sitting on an estimated 36 billion barrels of reserves. The country exports EUR2 billion to EUR3 billion in oil annually to Germany. Only Russia and Norway supply more oil to Europe's biggest economy.

To minimize risks and promote German business in Libya, Schröder's government wants to enact the so-called Hermes credit guarantee on German exports to the northern African country as soon as possible. These guarantees are expected to go into effect before the German-Libyan business forum planned in Libya's capital Tripoli for Nov. 28-30.

The compensation for the attacks on La Belle, which was a popular hang-out for U.S. soldiers, is part of continuing efforts by Qaddafi, to repair relations with Europe and the United States. Still, there has yet been an agreement between Libya and the United States regarding the two killed U.S. soldiers and 41 Americans who were wounded in the attack.