LIBYA: IMPACT OF ECONOMIC SANCTIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001403550028-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: May 16, 2007
• Sequence Number: 28
• Publication Date: December 22, 1981
• Content Type: SNIE

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Secret
Director of
Central
Intelligence
Secret
SNIE 36.5-2-81
22 December 1981
342
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Libya: Impact of Economic
Sanctions
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LIBYA: IMPACT OF ECONOMIC
SANCTIONS
Information available as of 22 December 1981 was
used in the preparation of this Estimate.
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and
the Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
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SCOPE NOTE
This Special National Intelligence Estimate considers the near-term
impact on Libya of the call by the United States for a withdrawal of US
citizens from Libya and the possibility of other US economic sanctions.
It discusses the economic and political implications of these moves and,
where possible, speculates on Libya's likely reaction. In formulating
judgments, it takes account of the hostile relationship between the
United States and Libya and assumes that successively applied econom-
ic sanctions would be played out in an increasingly charged political
context.
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KEY JUDGMENTS
None of the unilateral economic levers against Libya available to
the United States would have appreciable short- or long-term effects on
that country. This judgment applies to sanctions such as withdrawal of
personnel, a pullout of operating companies, a blocking of Libyan assets
in the United States, a unilateral embargo against imports of Libyan oil,
and an embargo of exports to Libya.
If the United States were joined by other countries in imposing
comprehensive economic sanctions, Libya's economy would be dis-
rupted within several months. In the longer run, however, even these
sanctions-impossible to obtain under current circumstances-would
have only a minimal impact.
An effective blockade or quarantine ' of Libyan ports-which
would be legally unprecedented, unlikely to garner the support of the
international community, and difficult to implement-would have the
most serious disruptive effect on the economy. Libya's basic import
requirements could still be met via land and air routes, however. A
quarantine would be interpreted as an act of war and would risk major
escalation and a broadening of the dispute to involve third parties.
World reaction to US imposition of economic sanctions against
Libya would vary according to their severity. In any case, the United
States would be unable to obtain West European support and would
incur the opposition even of the friendly Arab states. Moscow could
utilize the confrontation to enhance its economic and military relation-
ship with Libya.
' The term "quarantine" was coined in an attempt to appear less belligerent and to avoid the accepted
international legal restrictions on naval "blockades." The difference between the "quarantine" concept and
a naval "blockade" was never spelled out, nor has the concept of "quarantine" been applied since the 1962
Cuban missile crisis. It has no precise meaning or standing under international law, and force used in
applying a "quarantine" could be justified only if it occurred in legitimate self-defense or pursuant to a
United Nations decision taken under the UN Charter. The country subject to a "quarantine" might consider
it an act of war.
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DISCUSSION
The Setting
1. Oil is the mainstay of Libya's economy and the
ultimate source of its international political and eco-
nomic influence. Oil revenues account for virtually all
export earnings, for half of gross domestic product
(GDP), and 85 percent of government revenues. De-
spite Libya's heavy reliance on oil, it is not especially
vulnerable to actions directed against the oil sector.
The majority of the country's small population is
relatively undemanding in economic terms and has
been conditioned by Colonel Qadhafi's chaotic revolu-
tionizing of the private sector to endure prolonged
dislocations in the availability of goods and services.
The government's grandiose development schemes are
largely irrelevant to the life of the average Libyan and
cutbacks in spending in this area are not likely to have
any serious ramifications. Moreover, Qadhafi's secu-
rity services and his ability to manipulate internal
propaganda would allow him to control domestic
reactions to a US economic program directed against
him.
2. Libya, which produces a premium crude of high
gasoline yield, accounts for about 2.5 percent of oil
supplies outside the Communist world. In the current
soft market, other suppliers have the potential readily
to make up for a loss of Libyan oil.
also have equity interests in Libya. Production by US
companies has recovered from a low of 398,000 barrels
a day in September to between 765,000 and 815,000
b/d currently, the result almost entirely of Libya's
belated willingness to cut its oil prices.Iis2C1
largest single producer, with production currently
running 500,000 b/d. As a result of the increase in
productio otal Libyan produci5p(1
probably is running just un er 1.2 million b/d. (See
25X1
4. This increase in production, if maintained in the
wake of the withdrawal of US personnel, will substan-
tially lessen the cash flow problems Libya has been
facing in recent months. Tripoli's current account fell
into deficit in July, and despite substantial foreign
exchange reserves, cash flow problems began to de-
velop. Tripoli began to delay payments to foreign
firms, to cut back on luxury imports, and to trim its
ambitious five-year development plan. These cuts had
minimal impact on imports in 1981 and net cash
outflows peaked at $1.1 billion in October. If imports
of goods and services remain at the October level, cash
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25X1
25X1
outflows will be $500 million by January given the
recent increase in oil exports. Foreign official reserves
are sufficient to cover this level of outflows for two
years.
5. Libya is considering further price discounts of
around $0.50 to $1.00 per barrel for January in order
to boost production further. It needs a production level
of around 1.6 million b/d to meet its current foreign
exchange expenditures. With the end of the inventory
drawdown and increased worldwide demand for
OPEC oil likely to occur in mid-1982, Libya should be
able to boost production to its capacity of around 2.0
million b/d if it implements the January price cut.
Economic Sanctions
6. The potential economic levers available to the
United States to bring pressure on Libya are:
- The already ordered withdrawal of US personnel
in Libya.
- The withdrawal of US oil companies.
- A partial or complete unilateral trade embargo
against Libya.
- The blocking of Libyan assets.
- A collective embargo by the United States and its
major allies.
- A quarantine or blockade of Libyan imports and
exports.
As sanctions became more severe, the greater the
impact on Libya; but also greater would be the possi-
bility of escalation and reprisal and of adverse reaction
from third parties.
Withdrawal of US Personnel From Libya
7. The vast majority of the S citizens esti-
mated to be in Libya during the second week of
December 1981 were associated with the oil sector,
staff of foreign personnel tote Libyan petroleum
sector, but most of these technical supervisors and
workers are non-US citizens-largely from We2XY.1
Europe and Canada. In most cases, Libyan personnel
back up this staff. Although the overall
capability of Libyans does not match in quality that of
Western workers, Libyans probably are readily able to
substitute for foreign personnel in most daily oper-
ational assignments, except for some specialized jobs in
areas such as oil well completions. The Libyan Nation-
al Oil Company itself is one of the largest operators in
the country, operating oilfields with a capacity of
roughly 500,000 b/d.
9. The impact of the departure of US personnel will
be largely psychological. If a stable work environment
is maintained, other foreign workers could be brought
in to fill these jobs. Under normal operating condi-
tions, oil companies have some difficulty recruiting
and retaining US workers in Libya. Therefore, many
of the most important functions are already performed
by non-US personnel.
10. Libya has thus far responded to the US call for
the withdrawal of US citizens by facilitating their
departure. We have no evidence to suggest that the
withdrawal is disrupting the work environment or that
the Libyan Government is encountering any difficul-
ties in arranging for the replacement of US techni-
cians. Europeans and Canadians appear to be the
Libyans' first choice for taking over from Americans.
For a variety of reasons, the withdrawal of Ameriga sX 1
is likely to take weeks if not months; this should allow
the replacement process to proceed relatively smooth-
ly. Moreover, to speed up the process, Libya has
waived its visa requirements for third-country workers
who will replace outgoing US personnel.
Pullout of US Firms
11. Should the US companies be pulled out of
Libya, Tripoli initially would have problems maintain-
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ing operations, and exports probably could not be
brought up to current capacity levels. In the event of a
complete pullout by US oil companies, not supported
by other governments, Libya would be able to negoti-
ate to substitute European companies as operators or
as contractors for a variety of services. US oil company
officials believe that French and Italian integrated oil
companies have already approached Libya about tak-
ing over US-operated oilfields. The Soviet Union and
other Bloc countries that provide assistance in other
oil-exporting countries such as Iraq could also step in.
Among the critical factors influencing foreign oil
companies' decisions to replace US firms would be
guaranteed access to crude, Libyan oil prices, legal
aspects of such turnovers, stability of the work envi-
ronment, and international political considerations.
12. A shift to non-US companies in the petroleum
sector would have its biggest impact in the area of
marketing. It can be assumed that the US companies
would lose their access to Libyan oil and would not
regain their current privileged position. Those foreign
companies replacing US firms would not necessarily
have the same markets into which to move oil. Given
the current world oil market, Libya probably would
have to settle on a lower price for its oil unless demand
rebounds significantly more than we now expect.
13. On the technical side, as long as Libya can
obtain replacement skills and services, it should be
able to maintain production at or above current
production levels once the initial confusion associated
with the pullout were overcome. Even without access
to US technical expertise, Libya could maintain a
relatively high productive capacity level.
14. Allowing for serious unanticipated problems in
a transition period, a worst case for initial operational
capacity would be in the range of 1.0-1.4 million b/d.
We assign a relatively low probability, however, to this
range. In the unlikely event that production were held
to this range, Libya would be forced to draw down its
foreign exchange reserves and reduce spending on
white elephant development projects. Projects and
imports that directly affected the daily lives of Lib-
yans could be continued. The last areas to be cut
would be military-related expenditures. A more rea-
sonable range for initial capacity would be around 1.4-
1.8 million b/d. This level of production is sufficient to
cover Libya's current financial requirements.
15. A complete absence of Western support would
result in a degradation of capacity over time, but this
would not be crippling. On lstin2kp
that if the 1,800 Europeans working for US firms were
withdrawn, maximum possible production would be
roughly 1.4 million b/d until new foreign workers
were brought in. While such estimates are conjectural,
they still imply that Libya would be able to increase
production about 20 percent above current levels.
Denial of Western expertise in areas such as reservoir
engineering, development planning, and well-test
analysis could result in less than optimal efficiency.
But most of the impact of a withdrawal of services
would be long-term. The denial would be an inconve-
nience more related to future development and capac-
ity than to current operational production perform-
ance.
16. The foregoing analysis assumes a reasonable
technical adjustment but does not incorporate the
possible psychological and internal political effects of a
withdrawal. Moreover, Libya could face a major
problem in the event of serious unanticipated physical
damage to critical elements in the petroleum facilities
network. US-manufactured equipment and services
would be required to expedite repairs in such a
contingency.
17. The Libyans value their longstanding relation-
ship with US companies, which they have used as an
unofficial means for communicating with US govern-
ment and industrial leaders and for demonstrating
their "friendship" with the American people, if not
their government. A US demand that the companies
withdraw from Libya would thus be interpreted by
the Libyans as a signal of dangerous US intentions
toward them-a final break that might be a prelude to
more hostile actions. Since such action would have
been preceded by the withdrawal of American citi-
zens, the Libyans almost surely would assume that the
United States wanted to strip Libya of any "protec-
tive" US presence. In such circumstances Colonel
Qadhafi might consider a variety of actions, which
could include asking for Soviet protection from further
US actions, efforts to mobilize a serious anti-US effort
among other Arabs, particularly oil producers, and
prevailing on European countries to block the US
"campaign" against Libya.
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18. This reaction might also include expropriation
of oil company assets with an estimated replacement
value of $2.5 billion. Although current book value is
substantially lower-probably less than $900 million-
the companies also would lose their equity interests in
Libyan oil reserves. The withdrawal of US firms or
workers could lead Libya to declare breaches of
contracts, enabling it to avoid paying for work already
done and to draw down performance bonds posted by
US contractors.
19. We do not anticipate that any strong economic
actions will be taken by the other Arab producers
against the United States as a result of a US Govern-
ment-ordered withdrawal of US firms. During the
recent OPEC meeting in Abu Dhabi, Libya sought an
OPEC boycott of American oil and oil-related com-
panies leaving Libya. The Libyan proposal was report-
edly supported by the United Arab Emirates, Algeria,
Iraq, and Iran. The Saudis argued that the US-Libyan
dispute was a political matter and therefore not a
legitimate topic for discussion at the OPEC confer-
ence. The Saudi position was supported by Kuwait and
Qatar. OPEC, however, reportedly is examining the
feasibility of providing technical assistance to Libya in
the event of a US pullout and, according to press
reports, Iran, Kuwait, and the UAE have already
offered Libya such assistance. Because of severe man-
power limitations, such assistance would be minimal.
A Unilateral US Oil Boycott
20. A US prohibition against imports of Libyan oil
is likely to have little economic effect on Libya
beyond a short-term disruption of its export patterns.
In the event of a US boycott of Libyan oil, Tripoli
would seek out alternate oil markets. This could be
accomplished rather easily if Libya were willing to
lower its oil prices to competitive levels. US efforts to
prevent West European countries from purchasing
Libyan oil would probably not succeed, given these
countries' interest in maintaining their ties with Libya
and their reluctance to disrupt their own trade unnec-
essarily. Provided the price is right, Libya could also
find a ready market in the less developed and the
Communist countries. Moreover, it would be difficult
to prevent Libyan oil from entering the United States
through Caribbean oil refineries.
21. Tripoli would respond to a US boycott of
Libyan oil by trying to prevent US buyers from
replacing the low-sulfur oil with purchases from Alge-
ria, Nigeria, and the North Sea. The Libyans could
achieve a fair amount of cooperation from Algeria, a
fellow member of the Steadfastness Front. Libya
reportedly has already asked Nigeria not to increase
production. Nigeria would be eager to increase sales to
the United States, but its response would be tempered
by the political risks involved in angering Libya and
other Arab producers.
22. Libya would play on the fears of Arab and
other oil-producing countries in an effort to create a
common cause in the face of the US "threat," presum-
ably in hopes of engineering an embargo against the
United States. The chances that such a ploy would
succeed are slim, but oil producers not normally
sympathetic to Libya are nervous at the prospect of
revolt on the part of a leading consumer country and
might consider applying some kind of leverage against
the United States.
An Embargo of US Exports
23. Libya imported $500 million worth of goods
from the United States in 1980. This represents less
than 5 percent of Libya's total imports. Most of this
was machinery and transportation equipment. The US
exports nothing to Libya that could not be replaced by
imports from other sources. Washington has already
banned the export of military equipment and high-
technology items with military applications.
24. Oil equipment is available from a wide variety
of sources and it is unlikely that a denial of US
equipment would cripple Libyan production capabili-
ties. Libya probably could circumvent the sanctions,
moreover, and gain access to US equipment. While
Libya could turn to European manufacturers for most
or all of the equipment needed, it would lose its place
in the manufacturers' queue, so that some time delays
might be experienced.
Blocking of Libyan Assets
25. Washington has very little leverage over Libya's
investment and financial needs. An insignificant
amount of Libya's estimated $12 billion in official
foreign reserves is in the United States, mostly in
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government securities and short-term bank accounts
sufficient to facilitate trade and other financial trans-
actions. As of May 1981, Libya had official foreign
reserves of around $15 billion, of which 85 percent-
$13.1 billion-was held in foreign exchange accounts.
In addition, Libya held $1.7 billion in gold and about
$300 million in liquid IMF reserve accounts.
26. We know very little about the location of
Libya's official assets outside the United States. We
assume about three-fourths are in European and Japa-
nese bank accounts. As occurred in US attempts to
block Iranian assets, these banks would be extremely
unlikely to join the United States in blocking Libyan
assets. Deposits with overseas branches of US banks
have been reduced sharply since mid-1981, and Lib-
yan accounts with these banks have occasionally been
overdrawn since August.
27. An attempt to block Libyan assets probably
would lead to the nationalization of US company
assets. A US blocking move, moreover, would probably
trigger a storm of protest from US allies and Libya's
fellow Arab countries and would reinforce doubts
surfaced during the Iranian episode about the reliabil-
ity of the United States as a safehaven for foreign
depositors. Blocking Libyan assets could precipitate
some short-term movement of Arab funds from the
United States, and would slow future placements.
Multilateral Economic Sanctions
28. Comprehensive economic sanctions involving a
trade embargo strictly adhered to, a blocking of
Libyan financial assets, and a total embargo of Libyan
oil exports would begin to disrupt Libya's economy
within several months. International cooperation on
such a range of sanctions seems out of the question,
however. We need only look at the US efforts to
impose sanctions on Iran to find a case history of the
difficulties associated with gaining international sup-
port for sanctions and of the ease with which such
sanctions can be circumvented.
29. A handful of developed countries, led by Italy
and West Germany, supply about 36 percent of
Libya's imports. As Libya's major source of imported
food and other goods in 1980, Italy provided over $2.5
billion or 23 percent of total imports. West Germany,
Libya's next largest supplier provided almost $1.3
billion in goods. While trade with individual countries
drops off sharply thereafter, the OECD countries as a
whole provided over 70 percent of Libya's 1980
imports. The Communist Bloc provided 20 percent,
half of which was military goods.
30. Libya probably would be most vulnerable to a
disruption in supplies of imported foodstuffs, which
provide about 50 percent of domestic consumption.' In
1978 the OECD supplied slightly more than 60 per-
cent of total Libyan food imports; Italy was the largest
food supplier, providing 16 percent. Other important
OECD suppliers were Turkey and Greece. The re-
mainder of Libya's 1978 food imports came from the
Communist Bloc-mainly Romania and East Ger-
many-and developing countries.
31. Almost all of Libya's imports of manufactured
goods come from the OECD. Italy again is the largest
supplier among the OECD 19, having supplied 25
percent of total manufactured goods imported by
Libya in 1978. While Libya prefers Western technol-
ogy, substitutes for many manufactured goods could
be obtained from the Communist Bloc. In response to
current cash flow problems, Libya has already restrict-
ed the import of some luxury consumer goods, includ-
ing cars, and has postponed some development proj-
ects that require imported manufactured goods.
32. Assuming-however unrealistically-that the
United States could convince the OECD countries to
go along with a trade embargo, we believe the impact
on Libya would be minimal. Sanctions would cause
delays in the receipt of needed imports, increase the
cost and complexity of import trade, and hamper
economic development. Trade sanctions would entail
little belt tightening in the short run, however, if food
were excluded from the embargo-as has traditionally
been done for humanitarian reasons when sanctions
have been imposed on other countries. An embargo of
manufactured goods could serve to relieve Tripoli of
the responsibility for shortages and delayed develop-
ment plans, shifting the focus of any popular discon-
tent to foreign powers.
33. Furthermore, after some initial confusion and
delay, Libya should be able to overcome the sanctions.
It could turn to Third World countries to act as third-
' The latest comprehensive data available are for 1978, but no
major shifts in trade patterns have occurred.
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party purchasers of Western goods. The altering of
ship manifests is another easy means of circumventing
trade sanctions. In addition, the Libyans would readily
turn to Soviet Bloc countries for help in overcoming
sanctions.
34. Widespread West European support of a
Libyan oil boycott would severely limit Libya's short-
term ability to export oil. It is highly unlikely, how-
ever, that a significant number of Libya's West Euro-
pean trading partners could be convinced to join such
a boycott; probably the most that could be expected
would be a general agreement to discourage such
imports.
35. Even in the event of a boycott, Libya could find
other markets for its crude, particularly if it further
lowers its price. Libya could increase direct sales to
developing countries and to some East European
countries. Alternatively, it could have these countries
act as intermediaries in marketing Libyan crude in the
West, as the Soviets and others have done in the past.
36. Because relatively large volumes of high-quality
Libyan crude would be easily identifiable, however,
Tripoli would have to arrange to refine much of the
crude to disguise its origins and circumvent a boycott.
Sufficient excess refinery capacity currently exists in a
number of developing countries, notably the Carib-
bean, and in Eastern Europe to carry out such ar-
rangements. Several of the OPEC countries might
even be willing to assist Libya in such refining and
marketing arrangements.
Military Quarantine/ Blockade
37. An effective maritime quarantine 3 of Libyan
ports would have the most serious disruptive effect on
the economy. Libya probably could import basic re-
quirements by air and through established highway
links with Algeria, Tunisia, and other neighboring
countries. Such an action by the United States would,
however, be unprecedented and would require justifi-
cation beyond the legal rationale used during the
Cuban quarantine of 1962. During the Cuban missile
crisis, the United States had photographic evidence that
Soviet offensive missiles had been introduced, thereby
9 This Estimate does not consider the impact of an overall air
blockage, as the extensive military activity requisite to implement-
ing such a move places it outside the sphere of economic sanctions.
enabling it to garner the backing of the Organization
of American States for the maritime action. The
current Libyan situation lacks both hard evidence of a
significant offensive threat to the United States and
support by the international community.
38. The establishment of a US naval quarantine,
moreover, would pose a significant challenge for US
naval forces; the 6th Fleet has already been reduced in
order to meet Arabian Sea commitments. If sufficient
forces were made available, the Navy could detect and
intercept virtually all Libya-bound merchant ships as
they approached Libyan ports. In the event of a naval
quarantine, US and Libyan units would be operating
in close proximity, and we could anticipate a hostile
engagement, with the potential for subsequent air and
naval attacks by either side.
39. Although a quarantine would have the greatest
impact on Libya's economy, it would be interpreted as
an act of war and is the most likely of the options to
result in a broadening of the dispute to third parties. In
response to a blockade, the USSR could augment its
naval forces in the Mediterranean, provide the
Libyans with information on US naval activity, and
use Soviet vessels to trail and intermingle with US
combatants. It is possible that some Soviet ships would
enter Libyan waters or visit Libyan ports, or that
Soviet reconnaissance or combat aircraft would deploy
to Libya. This activity would serve Moscow's efforts to
deter the United States by keeping it uncertain of
Soviet intentions. Moreover, if the Soviets were willing
to risk direct confrontation with the United States,
they could attempt to escort Soviet or Warsaw Pact
merchant ships through the blockade.
Political Repercussions
Regional Reactions
40. The Qadhafi regime is attempting to exploit the
US-Libyan confrontation to rally support. It will use
the United States as a scapegoat for any economic
dislocations, and direct popular anger against Wash-
ington. The success of this tactic will depend on the
severity of the US actions. Should sanctions against
Libya progress to quarantine-let alone a military
strike-the result will be the generation of significant-
ly greater popular support for what is, at this point, an
increasingly unpopular regime.
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41. Most measures short of these extremes, how-
ever, may fail to elicit much response unless Qadhafi
pulls out all propaganda stops and whips up anti-US
sentiment. It is possible that some of the milder US
options could stir up resentment among the Libyan
people toward Qadhafi and his policies for having
brought the country to such a pass. It is more likely
that only those already opposed to Qadhafi-the
remnants of the better informed, sophisticated middle
classes, who have suffered most from his "reforms"-
will react in this fashion.
42. Most of the proposed US moves, even the mild
ones already undertaken, will generate some criticism
on the part of friendly Arab states-particularly oil
producers. As the US moves grow more severe, criti-
cism will sharpen. Saudi Arabia has already demon-
strated uneasiness at the prospect of a potential con-
sumer boycott against an OPEC state, however
unpopular, viewing it as a dangerous precedent. Block-
ing Libyan assets would make all the oil producers
extremely nervous, complicating relations not only
with the Saudis but also with the Algerians. The oil
states never approved of the US blocking of Iranian
assets, even though provocation was clear. The reac-
tion would be even sharper in the case of Libya, a
fellow Arab state, against which the US case is not
clear. Indeed, in many quarters the confrontation is
perceived as one of a superpower bullying a small,
defenseless country.
43. Although many friendly Arab states would like
to see Qadhafi vanish from the scene, they view the
current highly publicized US campaign against a
fellow Arab state as serving to strengthen the radical
Arab bloc, engender anti-US sentiment within a broad
Arab constituency, and seriously complicate efforts to
be cooperative with the United States on far more
important security issues. The friendly Arabs' predica-
ment would be significantly intensified now that US
moves against Libya would follow on the heels of the
Israeli annexation of the Golan Heights.
44. Virtually all regional states would view the US
moves, particularly any steps beyond those already
taken, as a prelude to military action. One recipient of
the fallout would be Egypt, which would be perceived
as in collusion with Washington-adding a further
burden to the Camp David process. The Syrians
especially will seek to rally Arab support for Libya and
probably will offer Qadhafi military aid and troops.
Importers of Libyan Oil
(1,000 barrels a day)
Fourth Quarter
1981 (estimated)
Total ...........................................
1,735
710-815
United States ..............................
715
150
Western Europe .........................
895
515
West Germany .......................
310
150
Italy .........................................
250
105
Spain .......................................
95
65
Turkey ....................................
45
100
France .....................................
40
40
Switzerland .............................
20
25
Greece .....................................
55
15
Austria .....................................
20
15
Other .......................................
60
Other countries ..........................
125
West European Response
45. The major West European allies have been
trying in recent months to improve their relations with
Libya, and have resisted US requests for more strin-
gent restrictions on sales other than weapons. They are
not likely to cooperate with further restrictions be-
cause they see no overriding political reason to change
their policies and damage their energy and other
commercial interests. In fact, they believe that politi-
cal imperatives point the other way: although they see
Qadhafi as influenced by the Soviets, they believe that
Libya would be more dangerous if it were isolated
from the West and "forced" into the Soviet Bloc. If an
effort were made to blockade imports and/or exports
to Libya, not only would the allies decline to cooper-
ate, but they also would protest vehemently a policy
that would strike at their own commerce. 25X1
Unless the Libyans initiate some violent an appar-
ently unprovoked action, the increased tensions be-
tween the United States and Libya are unlikely to alter
the desire of the allies for a more stable relationship
with Libya.
The Soviet Perspective
46. No matter what the eventual mix of US econom-
ic pressures on Libya, the USSR will point to it as
"imperialist" bullying of a Third World nation and will
attempt to exploit the tensions to increase its influence
in Tripoli. The Soviets would readily respond to Libyan
requests for economic assistance in overcoming sanc-
tions. Their assistance, however, would be more
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symbolic than real. The USSR's grain shortage would
prevent it from helping Libya much in the area where
it would be hurt most by a complete trade embargo-
food supplies. Moscow could mount a highly publi-
cized "relief mission" designed to portray the USSR as
a reliable friend in a time of need. It also would be
likely to sign new economic agreements with Tripoli,
possibly providing for Soviet technicians and machin-
ery to be sent to assist in the Libyan oil sector. In
return for whatever aid they provided, the Soviets
would attempt to encourage Libya to supply oil on a
barter basis to their East European allies.
47. If Washington should attempt to impose a
quarantine on Libya, Moscow would try to avoid a
military confrontation with the United States. Moscow
would concentrate its efforts on providing political
and diplomatic support to Tripoli and would seek to
orchestrate widespread international condemnation of
the US action-particularly in Western Europe and
the Third World.
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 Approved For Release 2007/05/16: CIA-RDP84B00049R001403550028-9 25X1
Approved For Release 2007/05/16: CIA-RDP84B00049R001403550028-9