Sanctions Against Libya
US Sanctions in 1980s
A general souring of relations during the 1970s between Gaddafi's Libya and the US resulted in a series of sanctions imposed through the 1980s. In 1981 the State Department invalidated the use of US passports for travel to Libya. In 1982 they went on to ban imports of Libyan oil and a number of other exports to Libya. These measures were implemented principally in reaction to Libya's alleged support for terrorist activities. The Arab-Israeli conflict was another pointed source of tension, and Gaddafi's security services were accused of providing support, training and safe harbour for Palestinian terrorist groups.
In 1986 the scope of the sanctions were broadened to include a total ban on direct import and export trade, commercial contracts and travel-related activities with Libya. This followed the bombing of a Berlin disco that killed two US servicemen and a Turkish woman and wounded 229 people, including 79 Americans. The US held the Libyan regime accountable for these attacks. 
Under the original sanctions, all Americans and American companies were to cease commercial dealings with Libya by the 1 February 1986 and all American citizens, except journalists and those with special humanitarian permission to remain, were ordered to leave Libya. However, several American oil companies operating in Libya (including Occidental, Hess and ConocoPhillips) voiced concerns to the US administration that new regulations would imply turning over equipment and assets to the Libyans valued at over US $1 billion, as well as an annual income of more than US $150 million. This led to considerations of granting licenses to some US oil companies to permit them to continue to receive income from Libya despite sanctions, in order to avoid a "substantial economic windfall to Libya." Nevertheless, it was later announced that these exemptions would not be extended beyond the 30 June 1986.
UN Sanctions 1992-3
On the 21 December 1988 a bomb exploded on Pan Am flight 103 en route from London to New York, killing all 244 passengers and 15 crew on board, as well as a further 11 people in the town of Lockerbie, Scotland. In 1991 the US and Scotland indicted two Libyan intelligence agents for their alleged roles in the bombing: Abd al Baset Ali al-Megrahi and Al Amin Khalifah Fhimah. Under a UN-negotiated agreement, Fhimah and Al Megrahi were tried on murder charges under Scottish law in The Hague, beginning in 1999. Fhimah was acquitted but al-Megrahi was convicted and was sentenced to serve a life sentence in a Scottish prison.
As a consequence of the Libyan regime's alleged involvement in such terrorist attacks, the UN imposed a set of sanctions against Libya in 1992 under Resolutions 731 and 748, which expressed deep concern over the suppression of acts of international terrorism and the subsequent threats to international peace and security. These were reaffirmed in 1993 by UN Resolution 883, addressing Libya's failure to respond fully to the previous resolutions. Under Resolution 883, all countries were required to freeze Libyan funds or other financial resources in the territory, though noted that 'this would not apply to funds or other financial resources derived from the sale or supply of petroleum and petroleum products, natural gas and gas products, and agricultural products.' Despite the sanctions, Libyan oil production grew to 1.4m barrels per day (bpd) in 1990, compared to 1.16m bpd in 1989. and remained at that level until the the turn of the century.
In 1995, in a renewed effort to toughen sanctions, Madeleine Albright (Chief US delegate to the UN) urged other nations to join in an embargo on Libyan oil exports.
Economic Impact of Sanctions
There are conflicting assessments as to the economic impact of the UN sanctions and the US embargo. Prior to the 1982 sanctions, US oil imports form Libya were approximately 150,000 barrels per day (bpd), down from 700,000 bpd in 1981, due to the economic environment at the time. In 1981 US oil company assets in Libya were valued at $500m and US companies accounted for one third of Libyan production.
When American international oil companies (IOCs) suspended operations in Libya following the 1986 sanctions, oil production in Libya was reportedly maintained by European oil companies. According to the Peterson Insitute for International Economics, the effect of the UN resolution on exporting oil appeared to be minimal. It banned the sale to Libya of pumps and other equipment used to load crude oil for shipments abroad, an obstacle they deem not difficult to overcome. They see the sanctions as 'a nuisance to both government and population', and report that they delayed some investment in the oil industry and contributed to a rise in inflation due to the increased cost of imports. However Colonel Gaddafi's economic policies and the fall in oil prices led to much of the deterioration in economic life.
In 1999 Libyan state estimates put the cost of the sanctions at some US $33 billion, however the World Bank estimated that sanctions had cost Libya around $18 billion in lost revenue, mostly as a result of underinvestment in oil.
- “Libya: Background and U.S. Relations ”. Congressional Research Service, 18 February 2011.
- “Timeline: Libya sanctions”. BBC, 15 October 2004.
- “U.S. to lift final sanctions against Libya”. CNN World, 17 September 2004.
- “Oil Firms May Get Exemption On Libya”. Chicago Tribune, 13 January 1986.
- “Case Studies in Sanctions and Terrorism”. Peterson Institute for International Economics, retrieved 14 October 2011.
- “Libya: Background and U.S. Relations”. Congressional Research Service, 18 February 2011.
- “UN Resolution 731”. Official Documents System of the United Nations, retrieved 14 October 2011.
- “UN Resolution 883”. Official Documents System of the United Nations, retrieved 14 October 2011.
- “Statistical Review of World Energy 2011”. BP, retrieved 25 October 2011.
- “Everything You Need To Know About The Libyan Oil Industry”. Business Insider, 22 February 2011.
- “Security Council Extends Libya Sanctions”. New York Times, 31 March 1995.
- “Case Studies in Sanctions and Terrorism: Economic Impact”. Peterson Institute for International Economics, retrieved 14 October 2011.