With friends like these: whisky and gin or fresh camels' milk and water

by Fraser Nelson and Brian Brady

It was only lunchtime but the whisky and gin were flowing from the British Embassy in Tripoli. Fresh camels' milk and water had been on offer outside Colonel Gaddafi's tent, and the returning diplomats went straight for something stronger.
The mood was of mild but universal shock. Even those who had for weeks recited the political rationale of the meeting found themselves stunned at the sight of a British prime minister lunching with one of the world's most notorious dictators.

Tony Blair called it extending the "hand of partnership". For one embassy guest, this was more than a soundbite: Malcolm Brinded, Shell's head of exploration, had just signed a £ 110 mm deal to hunt for gas off Libya's coast.
Britain's diplomatic invasion of Libya was a beautifully orchestrated coup which has stolen a march on America. In the 15 weeks since Gaddafi agreed to surrender his nuclear and chemical weapons programme, London has not missed a beat.

While Washington has refused to lift trade sanctions and boasts about "moving the goalposts", Blair has succeeded in positioning Britain's defence industry alongside Libya while returning Shell to the country after a 30-year absence. This is neither a fortuitous side-effect nor a cynical attempt to make money. Blair deployed a carefully crafted model where business is the agent of regime change. It was peace, tailor-made for a country with 30 bn barrels of proven oil reserves.
Even by Blair's own standards of jet-set diplomacy, the trip was quite extraordinary. The itinerary was itself a narrative of terrorism: Belfast, Madrid, Lisbon, Tripoli then Brussels. Each city told part of Blair's story.

Northern Ireland showed that negotiating with terrorists can deliver a real, if tortuous, peace process. Madrid's stunning state funeral for the 190 victims of the train bombs was a warning on terrorism which needed no political amplification.
The European Union summit in Brussels was to be the arena where Blair would hammer these lessons home to prevaricating EU leaders. Seeing the European Constitution leap from the grave was only a small stain on an otherwise flawless plan. The first step was to consult families of the 1988 PanAm bomb, which killed 270 when it exploded over Lockerbie in what a court found to be a Libyan attack. Blair dispatched ministers to consult the bereaved and ask for their blessing. When this was granted, Blair had the moral authority needed to go to Tripoli.

Next, Blair's officials started to reinvent Gaddafi. His decision to give up banned weapons, it was argued, meant it was time for a fresh look at the man Ronald Reagan so memorably called the "mad dog of the Middle East".
"So what do we know about him?" a senior British official began in a briefing as he reeled off a revised biography quite unlike that of the Gaddafi the West had come to know.
His seizure of power in 1969 was a "revolution" rather than a coup d'etat. Britain was "encouraging the Libyan government down the path of economic reform" and found Gaddafi "very forward on the role of women in Libya" and a religious man to whom "Islam is an important influence". The word "dictator" was absent. This, it is hard to remember, is the man considered the Osama bin Laden of his day who probably ordered the Lockerbie bomb, certainly armed the IRA and may know who killed a policewoman shot outside the Libyan embassy in London in 1984.

The path of economic reform is also a long one for a country whose quasi-Marxist economy was ranked the most repressive in Africa or the Middle East by the Heritage Foundation in its world index. Libya in 2004, it says, is worse than Zimbabwe. Back in London, some of Blair's closest aides privately acknowledged the dilemma.
"We know the problems surrounding this trip," one told. "But these things don't just happen overnight. "People forget Gaddafi condemned the [IRA] bombing of Manchester. He also supported the Good Friday agreement." After an embarrassed silence, he added: "Granted, we didn't makemuch of a song and dance about that at the time."

Now things are different. Gaddafi is "viscerally opposed to al-Qaeda and has given no quarter to Libya's own fundamentalist groups -- understandably seeing them as the main threat to his own regime". What's more, his country is rich, but has no one to trade with: Gaddafi is a man we can do business with.
"We don't want the Libyans to think we're just flying in, then flying out," said one official. "We're leaving behind solid signs of our commitment."

One such sign is Major General Robin Searby, former commanding officer of British forces in Bosnia, now appointed UK defence co-ordinator for Libya. His task is to oversee a "new military relationship" between Tripoli and London.
Advice on military strategy will come from the Ministry of Defence. Libyan soldiers will train at the Royal Military Academy in Sandhurst, England -- an offer designed to resonate with Gaddafi, who himself trained with the British military in 1966. This offer is all the moreextraordinary because the last military relationship of any note between the countries was in April 1986, when American jets left British airbases to bomb Tripoli -- aiming at Gaddafi's home and killing his adopted daughter.
Britain argues that, having handed over 20 tons of mustard gas, Libya will need a new set of conventional weapons. Or, in the diplomatic language of Blair's officials, Libya needs to "adjust to the world it finds itself in".

Enter British Aerospace (BAe)
After a miserable few months, with delays and cost overruns with its Typhoon Eurofighter project, BAe has suddenly emerged in pole position to rearm Gaddafi, thanks to Blair's negotiations.
Downing Street let slip that BAe is in "advanced negotiations" with Libya -- forcing the company to admit to "civil aviation infrastructure and things like modernising airport systems". It stressed that defence work is "not at present" on the agenda. And with good reason. Such deals remain outlawed by an EU arms embargo, which Britain wants to lift. Only then can BAe offer to modernise the fleet of dilapidated Soviet-era MiGs which were parked on the tarmac when Blair touched down in Tripoli.

BAe, which has several unsold Typhoon Eurofighters it would like to offload, would not be drawn on this obvious next step. But the link between civil aviation deals and military follow-ups is well established. No such inhibitions face Shell, which has for years been watching Libya's gas fields with envious eyes.
"They've been stalking the Libyans ever since relations thawed," said Bruce Evers, analyst at Investec Securities. Then Shell pounced.

Libya is especially rich in LNG -- where Shell believes the future of energy lies. Libya's reserves amount to barely a quarter of Iraq's, but present a much lower security risk.
"Libya's oil wells and fields are just sitting there decrepit because they don't have the resources anymore to exploit the oil," said Rime Allaf, Libya analyst at the Royal Institute for International Affairs in London. Indeed, Libya was until recently the only OPEC member not to have an oil ministry -- typical of the chaos under Gaddafi. Its quota is 1.3 mm bpd; and it will push to increase this nearer to its 1.6 mm bpd capacity.

It now has National Oil Co, a state-owned firm which plans to offer foreign firms the right to bid on five areas for exploration. Tarek Haasa-Beck, its planning director, expects bidding this summer. By then, he is sure the Americans will have dropped their sanctions.
"We will be running out of space in our hotels. Perhaps the best investment would be to build more hotels."

The Iran-Libya Sanctions Act of 1996 is due for renewal. But Libya remains on the US State Department's list of terrorist sponsors -- and removal from the list is not a formality.
While this political split exists, it buys a head start for British companies, watched enviously by counterparts in the US, who were pumping 850,000 bpd of crude out of Libya before Reagan's 1986 embargo froze their assets. There are signs that America is making things happen. Two days before Blair's visit, William Burns, US assistant secretary of state, became the highest-level official to visit Libya in more than 30 years.
Americans are now allowed to visit Libya, but a blanket import and export ban remains in place. This leaves all the more breathing space for the UK government's trade delegation.

Perhaps even more significant than any economic progress is the prospect that the developments will have a momentous impact on the Middle East. After the announcement that Libya had agreed to give up its illegal weapons, the British government was already in talks with other "pariah states" in a bid to win a similar breakthrough.
Downing Street sources admitted that discussions with Syria and Iran were continuing. Eric Stanley, an expert on Middle East affairs, said the rewards were economic as well as political, and potentially enormous.

"The way the Libya situation has opened up so quickly has been remarkable, and it showsthat there was an appetite on both sides for big changes," he said. "It is to be hoped that this can be repeated across the Middle East, not least because bringing other powerful voices in from the cold will stabilise the region and make it easier to progress the road map for peace.”
"But it is not a simple process. States like Syria might see the Libya example as a path to follow, but all these states have different issues. There will be a domino effect, but it will take some time. Trade is an important driver in all of this."

Rumours abound about Gaddafi's health
Some reports from the area say the 62-year-old was diagnosed with terminal throat cancer two years ago. No 10 is keenly aware that succession in military dictatorships is not clear-cut: "We are not placing all our chips on Gaddafi."
Or as another official put it: "Politics brings countries close, but trade brings them closer. We want both politics and trade to work in Libya." The classic libertarian argument -- free trade stops wars -- is being used for regime change.

There are also basic human rights conditions for Britain selling arms to any country: if Gaddafi does want to buy from BAe, he will have to change his regime accordingly. In this way, it is argued, guns can also be a force for good.
The next step is for Libya to join the so-called Barcelona Process, an EU initiative aimed at abolishing trade barriers with 12 states along the Mediterranean. To do this, Libya needs to recognise Israel. After the tent talks, Britain believes Gaddafi may well agree.
"Libya has indicated that it will accept," said a UK official.

So Downing Street aides were euphoric as they returned to Brussels. All pitfalls had been avoided: Gaddafi turned up, none of his officials disputed guilt over Lockerbie and they had taken care to denounce al-Qaeda.
When Blair walked into the EU ministers' meeting, explained one No 10 official, his fellow leaders were queuing up to ask how the Libya meeting had gone that morning and whether it is safe to let Gaddafi, the dictator, in from the cold. As a prime minister who is increasingly behaving as if the history books are his prime audience, Blair must now hope Gaddafi repays the trust placed in him.

Speed bumps on the road to peace
The reinvention of Colonel Gaddafi and the removal of Saddam Hussein are two significant steps in addressing the historic instability in the Middle East. But Tony Blair knows he still has much more to do.

Syria:
President Assad has already responded to the changed atmosphere, and the persistent rumours that his nation is a possible target for American action in the future, by launching a diplomatic offensive on Turkey and the European Union.
But further progress into the international community will only come about if he caves in to demands for him to follow Libya's lead, submit to weapons inspections and, if necessary, disarm.

Iran:
Another pariah state that featured on President Bush's "Axis of Evil", Iran has also moved quickly toimprove its relations with the West.
In line with Libya's renouncement of WMD, Iran has also allowed tougher inspections of its nuclear sites by the International Atomic Energy Agency, and accepted American humanitarian assistance after the earthquake in Bam.

Israel:
Hostility towards Israel is a fundamental reason for international suspicion of the likes of Syria and Iran, but the EU and, to a lesser extent, the Americans remain concerned about Tel Aviv's commitment to the peace process.
Both Washington and Brussels defend Israel's right to exist, but Prime Minister Ariel Sharon has increasingly been identified as an obstacle to the road map to peace in the region.