Libya’s golden begging bowl filled with oil

Press, 9 August 1982, Page 12

Libya’s golden begging bowl filled with oil

From “The Economist”,. London

Slowness in paying his bills may be costing Libya’s Colonel Gadaffi his few friends in the west. Spanish, Italian, and French bankers and businessmen gripe that Libya is now more than $2 billion in arrears on payments due to them.

As a result, Spain has suspended payments to Libya on $230 million of oil imports. Coface, the French export credit agency, has shelled out $47 million to French . businesses owed monet’ by the Libyans. It now shies at offering export guarantees for further French sales to Libya. Last month, Italy made fresh purchases of Libyan oil conditional on the repayment • on some regular ’basis of $1.4 billion already due from Libya. Italy now claims the 'first payment ($lO5 million) has been missed.

The colonel sent his prime minister. Major. Abdusalam, Jalloud, to Europe to ask for $1 billion in debt relief. That request (promptly turned down in Paris, Rome' and Madrid) left western banks and govenrments looking at their Libyan debts in a new light. Nobody fears Libya is about to join the formal queue of countries trying to reschedule debts already fallen due, but bankers can no longer assume that Libya’s oil revenues are more than enough to meet the $l2 billion it owes the west; Most of this debt consists of private trade credits about half of which are guaranteed by national export credit agencies. There is a small amount of direct governemnt-to-govem-ment debt, mostly Italian. Two thirds of the the $4.6 billion Libya must repay the west this year was due before August 1. Libva’s problems arise partly out of Colonel Gadaffi’s attempts to buy influence in Africa through gifts of lots of barrels of oil to countries like Ghana, Mali and Chad. The colonel can ill afford to do this; he needs oil revenue for his ambitious development plans and for everyday use. So he has been asking for more than many of his recessionridden customers will pay. Western oil companies have reduced their take of Libyan oil from a high. in 1981 of

around 1.7 million barrels a day to a low in April, 1982, close to ' 500,000 barrels. America has banned all imports from Libya. The loss of revenue was not allowed to precipitate a credit squeeze in Libya. Instead, Colonel Gadaffi put off paying selected foreign bills. He paid promptly only to big buyers who had. not cut back on purchases from Libya, during the oil glut. West Germany,

which imported a record amount of Libyan oil in 1981, has had $7lO million in debt due so far this year paid on time Austria, too, has no quarrel with Libya over late payments. France and Italy have agreed to buy more Libyan oil, but at the world price and not at Libya's official rate. They argue that Libya’s cash shortfall would disappear if its oil became competitive again on world markets.