09-08-02 President Mugabe may be forced to give Libya much of the prime land he is seizing from white farmers in order to pay for an oil deal with Colonel Gaddafi, diplomatic sources said. The full extent of the bizarre arrangement between the Zimbabwean and Libyan leaders was revealed hours before Mr Mugabe’s midnight deadline for 2,900 white farmers to leave their properties.
The sources said that Mr Mugabe owed Libya so much for imported oil that he was preparing to give thousands of acres to his “friend”, Colonel Gaddafi, to repay his debts and to stay in power. The net result would be to negate Mr Mugabe’s avowed goal of returning land to Zimbabwe’s black population.

The extent to which Mr Mugabe is “in hock” to Colonel Gaddafi was not an issue apparently discussed with Mike O’Brien, the Foreign Office Minister, who returned last night from Tripoli after meeting the Libyan leader in the desert for talks about Lockerbie bomb compensation and the war on terrorism. Mr Mugabe depends on Colonel Gaddafi for supplying his country’s oil needs -- about 800,000 barrels a month. Seventy % of that comes from the Libyan oil company Tamoil, whose ultimate owner is the Libyan Arab Foreign Investment Company.
Last December Mr Mugabe visited Tripoli to secure a deal with Colonel Gaddafi under which oil worth $ 360 mm would be supplied to the National Oil Company of Zimbabwe. However, for 21 days in May, Tamoil turned off Zimbabwe’s oil because Mr Mugabe had failed to pay for the fuel supplies. According to oil industry sources, the desperate Zimbabwean leader contacted Colonel Gaddafi to plead for the oil supplies to be resumed.
One diplomatic source said: “Colonel Gaddafi has always had this dream of being the leader of Africa and he has engineered it so that Mugabe is totally dependent on him. So he agreed a special discounted rate for the fuel, which was disastrous for Tamoil. It was only Colonel Gaddafi’s personal intervention that forced Tamoil to resume oil supplies.”

While the oil company is now having to face the consequences of the arrangement between Mr Mugabe and Colonel Gaddafi, the Libyan leader is spreading his influence and his investments in Zimbabwe.
As part of the deal fixed in Tripoli, Libya agreed to provide the fuel in exchange for shareholdings in Zimbabwe’s state-run companies. Libya now has a controlling stake in the Jewel Bank, formerly the Commercial Bank of Zimbabwe, as well as the state travel company, Rainbow Tourist Group.
It is now believed that as part of the deal to pay back the Libyan leader for his generosity, Mr Mugabe will hand over some of the most valuable farms to Colonel Gaddafi. Sources said that Colonel Gaddafi’s “misguided support” for Mr Mugabe had brought Tamoil to the verge of bankruptcy. Tamoil’s European investors and creditors -- the company has offices in Monaco, London, Milan and Geneva -- had also been placed in a vulnerable position by the Libyan leader’s political manoeuvres, the sources said.

Mr Mugabe’s acceptance of the special oil deal with Colonel Gaddafi, for which he could not pay, had also left Zimbabwe exposed as the Libyans tried to seize assets and recoup losses. The other 30 % of Zimbabwe’s oil needs are supplied by IPG of Kuwait and overland from South Africa.
In the past Libya has granted Zimbabwe a 120-day moratorium after every delivery, which amounts to $ 30 mm worth of fuel each quarter. The Libyans set three conditions: cash payment, investment in properties and businesses or bilateral trade in exchange for fuel. If the conditions were not met, the fuel was cut off.
The diplomatic sources said that with Colonel Gaddafi now having such a hold on Mr Mugabe, Zimbabwe was facing the equivalent of “colonial bankruptcy”. The Libyan leader, with his ambition of becoming a pan-African leader, has been engaged in acquiring substantial assets in Zimbabwe for some time.

It was reported earlier this year that Colonel Gaddafi had acquired a significant shareholding in Noczim, Zimbabwe’s state-owned energy company. He was also given a controlling interest in the oil pipeline that runs to Zimbabwe from Beira in Mozambique and in two of the country’s biggest oil refineries.
Colonel Gaddafi had also made it clear that he wanted shares in a state-owned hotel at Victoria Falls and the Sheraton Hotel in Harare, the capital. He was also understood to have presented a gift of £ 1.3 mm to Mr Mugabe’s Zanu (PF) party, even though there was supposed to be a ban on any political party receiving foreign donations.
Mr Mugabe was alleged to have given 10,000 Zimbabwean passports to Libyan citizens, making it easier for them to travel abroad. Up to 1,500 Libyans were said to have been given homes, work permits and jobs in Zimbabwe. The diplomatic sources said that the Libyan leader’s wholesale asset-grabbing in Zimbabwe was part of his dream of spreading his personal power and influence in Africa.

One of the consequences of the deal with Mr Mugabe was that Tamoil now faces a serious problem in funding an upgrade of an oil pipeline which runs from Genoa, in Italy, to Collombey, in Switzerland. The Swiss authorities have said that they want the 212-mile pipeline moved deeper because at present it is only one metre below road surfaces and runs close to the St Bernard tunnel. After the recent fires in the Mont Blanc and St Gothard tunnels, the Swiss are concerned that Tamoil’s pipeline might pose a risk.
The diplomatic sources said that Tamoil might not be able to afford the upgrade, because of Colonel Gaddafi’s deal with Zimbabwe. An official at Tamoil in London said he was concerned only with “business matters” and was not involved in the politics of the industry.