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WEEKLY NEWSLETTER
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Libya
Index
Since 1985 direct foreign investment has not been permitted in
Libya. Until 1984 Libya had had a negative direct investment
balance for every year since 1971, indicating that Libyan
investment overseas far outstripped foreign investment in Libya.
Existing foreign investment was concentrated in the petroleum
sector. In 1986 the United States ordered all American companies to
liquidate their Libyan investments. It was not clear at that time,
however, whether this action would result in a decline in the
overall level of foreign investment in Libya, or whether the
affected companies would merely transfer their Libyan investments
to non-American subsidiaries.
Libyan investment abroad was made through the Libyan Arab
Foreign Bank (LAFB) and the Libyan Arab Foreign Investment Company
(LAFICO). Libyan investments have been particularly high in Italy,
the best known being LAFICO's 15 percent share in Fiat, which it
finally sold in September 1986. Other significant Libyan
investments in Italy have included the LAFB's 1986 acquisition of
70 percent of the ailing Tamoil petroleum distribution company and
the acquisition of 50 percent of LAFICO's Chempetrol. Chempetrol
supplied about half of Italy's methanol imports in 1986. Libyan
assets in the United States were frozen in early 1986, but the
action had little impact because of the negligible funds involved.
At the time of the freeze, the Central Bank held only about 10
percent of its assets in the United States.
Libya has also given and received foreign aid. On the receipt
side, Libya consistently has sought to barter oil for long-term
technical assistance agreements. During the 1970s, many cooperation
agreements were conducted on this basis--particularly with East
European nations. Yugoslavia, in particular, has been instrumental
in providing Libya with timely aid. Yugoslav contractors were
granted about 11 percent of the total volume of projects under the
1976-80 development plan in return for oil and some Libyan
financing of several projects in Yugoslavia. In 1986, because of
payment arrears on civil works contracts, Yugoslavia agreed to
accept increased oil shipments valued at US$20 million. Much of
Libya's debt for the military assistance it received from the
Soviet Union has similarly been paid for with oil. In 1985 foreign
observers estimated that Libya was sending 125,000 bpd of oil to
Moscow to cover its arrears.
By 1984 Libyan assistance to other countries had fallen
dramatically from levels at the beginning of the decade. Libyan
foreign aid allocations peaked in 1980 at US$376 million. They
declined in 1981 to US$262 million before dropping sharply in 1982
to only US$43 million. A recovery occurred in 1983, as Libyan funds
earmarked for foreign aid rose again to US$142 million, only to
plummet in 1984 to US$17 million. This latter figure represented
only .06 percent of GNP, well below the OPEC average for foreign
assistance of 1.16 percent.
Libyan bilateral assistance programs have concentrated on
countries where Libya has substantial strategic interests. Many of
these countries are located in the Sahel region of sub-Saharan
Africa. Throughout the 1970s, Libyan aid projects were mainly
concentrated in Chad, Mauritania, and Niger. Since 1980, with the
general decline in foreign assistance allocations, promises of
Libyan aid to sub-Saharan Africa have not always lived up to the
expectations they created and have resulted in discontent on the
part of recipient states.
Data as of 1987
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