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US may lift sanctions on Libya soon

The US aims to lift many economic sanctions on Libya soon, possibly this week, dramatically easing its embargo to allow US firms to invest there and buy Libyan oil, US officials said on Monday.

The shift, which could slip to next week or beyond, would let US companies resume most commercial activities in Libya and reflects Washington's desire to reward Tripoli for giving up weapons of mass destruction.

Libya's surprise Dec. 19 announcement that it would abandon the pursuit of chemical, biological and nuclear weapons and its Aug. 15 admission of responsibility for the 1988 Lockerbie bombing have ushered in a new era in US-Libyan relations after decades in which Washington treated Tripoli as a pariah.

US officials said the main sanctions imposed on Libya under the International Emergency Economic Powers Act (IEEPA) and the Iran-Libya Sanctions Act (ILSA) were expected to be removed soon.

Asked what this would mean, one official said: "It would be termination of ILSA [and] modification of IEEPA to allow resumption of most commercial activities, financial transactions and investments."

"US companies will be able to buy Libyan oil and products. US commercial banks and other financial service providers will be able participate in and support these transactions," one official said.

Among the biggest beneficiaries would be the US oil companies in the Oasis Group of Marathon Oil Co, Amerada Hess and ConocoPhillips, which were forced out of Libya by US sanctions in 1986.

"It's a very big deal ... because it essentially removes the major roadblock that currently bars US companies from engaging in investment and trade with Libya across the board," said Wynn Segall, an attorney with the Akin Gump law firm.

The Iran-Libya Sanctions Act allows the US president to punish non-US firms that invest more than US$20 million annually in the energy sectors in Libya or Iran.

However, officials said Libya would remain on the US list of "state sponsors of terrorism," which bars it from receiving US arms exports, controls sales of "dual-use" items with military and civilian purposes and limits US economic aid.

Although officials said the economic sanctions could be removed by tomorrow -- a deadline setting payments to families of the 270 people killed when Pan Am 103 was blown up over Lockerbie, Scotland -- they also said a decision might slip.

When it took responsibility for the bombing in August, Libya turned over US$2.7 billion, or US$10 million per victim, to be paid out to the victims' families under a phased deal tied to the lifting of sanctions.
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