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INTERNATIONAL DIPLOMACY & POLITICS : JERRY M. ROSENBERG SPEAKS OUT ABOUT THE RELATIONSHIP BETWEEN ITALY & LIBYA.

ITALY COULD BRING PROSPERITY TO THE MARE NOSTRUM

Jerry M. Rosenberg, Ph.D.


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Henry Kissinger used to say that nations do not have permanent friends or enemies but only interests.

And so goes the relationship between Italy and Libya affecting the region’s stability, economic growth and peace.

The challenges facing Italy lean on the prospects of turning long-term ties with its southern neighbor into an opportunity to create Mediterranean stability, across North Africa and the Middle East (the Mare Nostrum is the Roman name for the Mediterranean Sea).

If monitored carefully, with a vision of peace and profit, it could end the stalemate of differing cultures and religions.

Should dedicated politicians envision the potential for cross fertilization that can evolve with primarily Catholics and Muslims, the world would offer its praises again and again.

If rendered a success world religions will applaud repeatedly the courage of diverse backgrounds. 

And it will happen in the cause of “interests,” creating “win-win” situations for all.

A long-standing myth is that you can only win, with a loss to another.

Not true. Masterfully applied, both and all sides can benefit.

The two neighboring littoral nations (that part of the sea, lake or river that is closest to the shore) where the model can work is born out of an historical tie of more than 100 years.

Libya needs Italy, and Italy needs Libya. 

No other western country has stronger ties with Libya than Italy.

They have enjoyed a privileged relationship for more than forty years.

Trade has survived even the most acute political controversies.

Yes, Italy wanted Libya’s oil and gas but Libya needed Italy, as their fundamental contributor to the stability of the “rentier state”, based on the redistribution of oil income. (In political science and international relations theory a “rentier state” is a state which derives all or a substantial portion of its national revenues from the rent of indigenous resources to external clients.)

Italy is the main importer of Libyan oil and the income gained from it enabled Gaddafi to distribute it among the population, creating civil service jobs, pursuing a policy of state-controlled prices and establishing a system of subsidies for primary goods.

And Italy in turn, would become the country with the know-how in the petroleum business, and beyond. Even ISIS hesitates to destroy the oil fields of Libya.

Libya generates more than 90 percent of its revenues from gas and oil, making it possible to pay its troops, distribute money and import cash.

The historic connection began with the Italian colonization of Libya began in 1910, when coastal Tripolitania and Cyrenaica were conquered from the Ottoman Empire during the Italo-Turkish war.

On October 3, 1911 Italy attacked Tripoli, arguing that it was liberating the Ottoman Wilayat from Istanbul’s rule.

Their relationship flourished when the Ottoman sultan ceded Libya to the Italians by signing the 1912 Treaty of Lausanne.

On October 25, 1920, the Italian government recognized Sheikh Sidi Idris as the hereditary head of the nomadic Senussi, as Emir of Cyrenaica, an invented title extended by the British at the end of World War I.

In 1934, Italy chose to pursue imperial status, and created “Libya’ as the name of its colony.

Fighting would spread following the accession to power of Benito Mussolini.

Starvation, murders, forced migration, disease, deportation would become active betrayals of the new dictator.

Estimates are that 80,000 people perished.

Following the end of World War II, the Emir of Cyrenaica became King of the free Libyan state.

At this time there was no state which could guarantee petroleum exploring firms the rights to what they might find.

With the 1947 peace treaty, Italy relinquished all claims to Libya.

Meanwhile the Libyan economy had flourished and 2,400 miles of train track were built with Italian funds and 2,400 miles of new roads spread across the country.

Both nations established diplomatic relations in 1947.

Once Libya declared itself as an independent kingdom in 1951, mineral rights relationships were arranged through international petroleum companies.

By 1953, Libya granted prospecting permits to eleven petroleum firms.

The government was determined to keep the market for exploratory permits in Libya and not grant a concession to one company or a consortium of several organizations.

Regulations demanded that oil firms would have to pay a 12.5 percent royalty on their revenues and a 50 percent tax on profits.

Throughout, Libya remained an attractive investment primarily because it rested on the Mediterranean Sea, and at that time was believed to have a stable, pro-Western government.

It worked, and by 1959 six major oil fields were uncovered.

The following year Esso was convinced that it was now time to build a pipeline and export terminal.

By 1961, Libyan oil shipment reached an astonishing seven million barrels.

In 1967, as an example of prosperity, Occidental Oil brought in a well that produced forty thousand barrels each day.

All would be disrupted, when in 1969 a group of military officers carried out a coup d’etat,  deposing the king and shaking up the nation’s oil industry.

Throughout the following four decades rule of Muammar Gaddafi, Italy, more than any other European country, maintained close ties with Libya, purchasing a significant quantity of its oil.

Libya possesses the largest proven oil reserves in Africa, and for more than 60 years, since the founding of its powerhouse ENI, Italy has led the way in exploiting these resources.

Libya’s hydrocarbons account for more than 60 percent of GDP and a whopping 95 percent of its revenues.

Her crude oil is abundant and generally light and sweet, that is, low on density and sulfur, a favorable formula for importers. This prize to Italy benefited all.

ENI (AGIP’s giant – Azienda Generale Italiana Petroli  became ENI) at one time, imported an average of 550 thousand barrels per day from its southern partner, and planned to invest $25 billion in their extensive oil operations throughout Libya.

Over the past decades, Italy has relied on Libya for 25 percent of its oil and gas needs, some believe to have been purchased, at a most favorable price.

France, Switzerland, Ireland and Austria received 15 percent of their oil imports from Libya.

While Libya was declared a pariah by most of the international community under Gaddafi’s domination, Italy maintained close diplomatic relations with Libya, continuing to receive large quantities of oil from its southern neighbor.

Following the 1988 Pan Am jet bombing, US and British oil firms withdrew from Libya while ENI was rewarded with more oil contracts by Gaddafi for ignoring the incident.

Gaddafi’s government owned an estimated 49 billion Euros in the Italian stock market, including 7.5 percent of Italy’s largest bank Unicredit and 2% of ENI.

Relations between the two nations warmed in the first decade of the 21st century, when they entered cooperative arrangements dealing with illegal immigration into Italy.

Libya agreed to aggressively prevent migrants from using the nation as a transit route to Italy, in return for foreign aid with Italy’s successful attempts to have the European Union lift its trade sanctions on Libya.

Another strategic play by the government.

In 2009, Gaddafi visited Italy for the first time in his 40-year rule.

At the end of August 2010, Colonel Gaddafi was honorably welcomed by the Italian Prime Minister, Silvio Berlusconi to celebrate the tenth anniversary of the signing of the Treaty of Friendship.

Rome continued to support Gaddafi as most of Europe opposed his regime.

On the international scene Rome proposed itself as a privileged European partner of Libya.

Italy felt itself marginalized by Europe and rapidly found that it had lost its leverage with Libya.

The hope of becoming the international mediator was disappearing.

Losing its influence, Rome took action to protects its strategic interests as best it could and finally went to war against Gaddafi.

The Italian government jumped ship and became fully involved in NATO’s operations.

With the death of Gaddafi, Italy recognized the National Transitional Council as the government of Libya.

Italy’s role now was to stabilize Libya, no easy task.

As Libya was now surviving without Gaddafi, the Arab Spring followed.

Italy was forced to turn its back on Libya, siding with its European allies

On September 26, 2011 ENI announced it had restarted oil production in Libya for the first time since the beginning of the 2011 Libyan civil war, reflecting positive relations.

The disruptions of recents years continue to harm both Libya, Italy, and other European nations. 

Four years after an international coalition intervened to force the overthrow of Gaddafi, Italy’s government pressed for new military intervention.

In 2014, Libya became more divided. Fighting between rival militias displaced hundreds of thousands of people. The internationally recognized government fled the capital to the eastern city of Tobruk, with a rival authority springing up in the capital.

Both sides remained, supported by outside planners.

Oil facilities would become a bargaining chip for militias and their political backers.

In February, 2015, ISIS  suddenly released a video showing the beheading of 21 Egyptian Coptic Christians.

“Today, we are on the south of Rome, on the land of Islam, Libya….We will conquer Rome, by Allah’s permission, the promise of our Prophet, peace be upon him,” ISIS vowed in the video.

Tensions grew.

By March 2015 Rome was urging support from the public to confront the rising influence of Islamist militias, and the threat to its oil and business interests.

The Italian Defense Minister Pinnotti declared that a military mission in Libya was “urgently required” and would send 5,000 troops to Libya.

The day prior all diplomatic personnel were withdrawn from Tripoli.

Italy remains one of the few European nations which still has an embassy in Libya.

As ISIS and other rival groups continue their conflict, Libya’s crude output has been reduced to 352,000 barrels a day.

Historically, Italy and Libya’s long term cozy relationship faltered as billions of dollars in oil profits were caught in the crossfire.

By mid-April, as Libya faced disintegration, an optimistic choice of unity was being considered calling for unconditional negotiations and reciprocal concessions.

Public payroll costs had tripled to $24 billion in 2014 from $8 billion in 2011.

The 2015 deficit was more than $40 billion, quickly burning through its foreign reserves of about $90 billion.

Oil output was down to some 500,000 barrels a day, from as much as 1.7 million at its peak. Nevertheless, its sales are the only thing keeping the country afloat.

Today, only stability and cessation of violence will it be possible to reinstate Italy’s potential role as both arbiter and negotiator between the European Union and the Arab world.

Other North African and Middle East nations are watching the unfolding of events.

In addition, the coordinated effort to control illegal immigration from across the Sea will define any future unity of the E.U.

Each year, for the past fourteen years, I have spent lecturing at Italian universities attempting to encourage their government and other officials to develop a master plan for the gradual evolution of a 27 Middle East nation integrated economic community,  with trade and job creation as goals.

Modeled on the European Union design, it would benefit all.

To be considered would be a reinvented and modified multinational Marshall Plan to advance the process.

Italy could take a dramatic leadership position in forging a North African and Middle East economic arena, based on her historic and continuing relationship with the region.

No other nation has so much invested in the area and increasingly, no other nation can influence the Arab world in seeking ways to stabilize the region by strengthening bonds of cross border cooperation than the government in Rome.

There are many possible models to be considered.

Here’s how one might work.

 

A. Italy takes the initiative by leading the way to enforce the Barcelona Process, launched in November 1995.

It aims to establish a common area of peace, stability and prosperity in the Mediterranean, with 28 members of the EU and ten southern Mediterranean States.

The intention is to generate an area of shared affluence through the gradual development of a free trade area.

Its declared hope is to implement appropriate economic cooperation to be funded by the EU’s financial assistance to its partners.

Primary concentration would include investment and internal savings, industrial    cooperation and support for small and medium-sized enterprises, environmental cooperation, dialogue and cooperation in the energy sector, cooperation in the  area of water-resource management, and modernization and reform of agriculture.

 

B.   Working with the target nations, Italy implements the “Union of the  Mediterranean,” an initiative launched by French President Nicolas Sarkozy in the  Fall of 2007.

This Union, by design, builds on the Barcelona Process.

 

C.  The Euro-Mediterranean Partnership is implemented, to encourage the free  movement of goods, services, and capital, originally scheduled to commence in 2010.

The objectives include the gradual reduction of tariffs and non-tariff barriers for industrial products.

The Partnership calls for a progressive liberalization of trade in agricultural products by reciprocating preferential access to their respective markets.

 

D.  Italy encourages or leads the United Nations Economic Commission (formed in 1947) to promote greater economic integration and cooperation among the nations by urging sustainable development and economic prosperity.

Interregional cooperation, accountability and transparency play a major role in this activity.


E.   The proven model of economic integration in the European Union, should be studied and adapted for nations across the Mediterranean.

The procedures and challenges can be found by studying my book “Aftermath of the Arab Uprising: TheRebirth of the Middle East” which brings forth concepts of a reinvented Marshall  Plan for the region and the structural and administrative means for implementing an eventually community of nations.

 

Ultimately, under Italy’s primary leadership, a new dawn is possible.

Once the ravages, chaos, mistrusts, and distress are controlled, and Libya’s civil strife is retained, the process can be fully activated.

Along with E.U. support, Italian know-how and her experience of 100 years with Libya, this rebirth can spread across the 26 States.

The rewards for Italy are numerous, including the pride in reusing the ancient Roman name for the Mediterranean Sea – the Mare Nostrum.

 

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Jerry M. Rosenberg, Ph.D. is Professor Emeritus of International Business, Founder and Director of the Center for Middle East Business Studies at Rutgers University Business School.