From 2004 to 2010, U.S. diplomats and businessman embarked on the long and hard road of normalization. Erratic Libyan behavior and electorally motivated grandstanding by U.S. congressmen -- generally on third-tier issues like Qaddafi's desire to pitch a tent in Central Park or Megrahi's release from a Scottish prison for health reasons -- frequently derailed progress.
In 2008, I changed my career as an academic of Syria to become instead a professional engaged in the American and European efforts to bring Qaddafi in from the cold and forward the agenda of pro-market economic reform and Western investment in Libya. My logic then was the same as it is now: Libya is too important in the world system to have Western strategic priorities in Libya unfulfilled and U.S. businesses shut out. This logic is grounded in history and is also best for the aspirations of the Libyan people. Over the last six decades, successive U.S. and British administrations have consistently concluded that the "Libya question" merited great economic and diplomatic sacrifices. It still does.
Today we face a familiar dilemma. Libya sits atop the strategic intersection of the Mediterranean, African, and Arab worlds, and its ability and track record in destabilizing those three areas is well documented. It is laudable that the international community has combined humanitarian and geostrategic rationales to unite under a banner of multilateral airborne intervention. This intervention must balance two equally important aims: to unseat Qaddafi and to ensure that the Libyan people have agency over their lives and political system. Hopefully, the West will play a supportive, yet decisive role in the ongoing conflict. Were Qaddafi to remain in power returning to his rogue-state glory days, it is unlikely that renewed U.N. sanctions could ever weaken his grip on power. The world needs Libya, but Qaddafi has become an expert at thumbing his nose at world opinion.
Much as we might pretend otherwise, oil is unquestionably part of the equation here. In the words of Armand Hammer, the late founder of Occidental Petroleum, Libya's oil is "the world's only irreplaceable oil." What makes Libyan oil irreplaceable is its proximity to Europe, the ease of its extraction, and the sweetness of its crude. Because many refineries in Italy and elsewhere are built to deal with sweet Libyan crude, they cannot easily process the heavier Saudi crude that would inevitably replace a Libyan production shortfall.
Since détente with Libya began in 2003, Western companies in the form of Repsol, Wintershall, Total, Eni, OMV, Shell, the Oasis Group, Chevron, Marathon, ExxonMobil, and BP have either rushed into Libya or intensified their existing operations. Those with political connections to the Libyan regime that predate sanctions have tended to fare better than others. All have an enormous stake in not losing their vast investments and being replaced by the Chinese, Indians, and Russians, were Libya to become a pariah state. Most crucially, though Europe would be hit hardest if Libyan production were to vastly diminish due to ongoing unrest or stagnate due to a lack of future investment, low production totals would have sustained negative effects on both the fragile world economy and the Libyan people.
For European countries, illegal immigration is another major concern. Starting in the 1990s, in an attempt to combat his international isolation, Qaddafi allowed all Africans visa-free access to Libya. After the Libyan populace rioted against the newcomers and no jobs were created for them, many attempted illegal crossings to Europe. The 2008 Italian-Libyan "Friendship Treaty" largely closed the spigot of illegal migration to a trickle. Any intensification of the human calamity, especially if combined with the closing of the Tunisian border, could open it to a flood. In the past, Qaddafi has frequently increased the flow of migrants when seeking to gain political concessions from Italy. Were Libya to become a failed/pariah state, there is no doubt that Qaddafi or those who would come after him could use the same tactic to pressure Europe.
Relative to the amount of oil wealth it possesses, Libya is a terribly underdeveloped country -- the unhappy legacy of Qaddafi's economic experiments of the 1980s and the U.N. sanctions in the 1990s. Despite having the highest per capita income in Africa, Libyan education levels and living conditions outside its big cities are on par with those of some of its sub-Saharan African neighbors. Only in the last 10 years has the Qaddafi family finally committed itself to real infrastructure development. In the last two years -- global recession notwithstanding -- the Libyan government spent $60 billion, with $160 billion more promised over the next five years. With global aggregate demand (especially in the construction sector) far below 2007 levels, Libya's increase in post-2007 demand promised much-needed relief for U.S. and British firms, especially in the construction management and architectural-design sectors. If Libya becomes a failed state, Western firms will likely be excluded from future infrastructure projects. In that scenario, only countries like China and Turkey-- with their greater tolerance for corruption and human rights abuses -- will benefit from Libya's billions.
Terrorism is a real concern. Although Qaddafi's rhetoric that the rebels consist of "jihadists on drugs" is funny enough to be a big hit on YouTube, Cyrenaica has long been a productive recruiting ground for global jihadi causes. If the West abandons the Cyrenaican rebels, it will not be a surprise to see more Cyrenaican fighters returning to Iraq by 2012. In fact, Libyans formed the third-largest fighting contingent in Iraq until U.S. counterterrorism cooperation with Qaddafi began to stem the flow in 2006. Similarly, during his détente with the West from 2003 until 2010, Qaddafi proved himself a reliable ally against the trans-Saharan networks of al Qaeda in the Islamic Maghreb. Were the retro-rogue Qaddafi to remain in power post-2011 or should Libya become a failed state where nonstate actors could find easy cash and safe havens, the grave consequences would resonate from North Africa to the African Sahel region and the larger Islamic world.
The United States and especially Europe cannot afford a protracted Libyan civil war, a Libya ruled by a spurned Qaddafi, or a return to the 1990s situation in which multilateral sanctions largely removed Libya from the world economy, making it a breeding ground for dysfunctional governance and Islamic extremism. Libya is simply too big to be allowed to fail.