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Libya
Foreign Aid and Investment
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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