Eyes Wide Shut: Italy and the Libyan Revolt

Libya Protests
By Sebastiano Sali

Since the beginning of the revolt in Libya, the Italian government has been under pressure for its role in the management of the crisis. Its behaviour has been assiduously scrutinised by international observers. The shared history of Italy and Libya has bound the two countries in a special relationship, sometimes positive, other times negative. Libya’s grudge towards its colonial past has tarnished Italy’s image in the country. For this reason, Italian governments have progressively increased the level of bilateral cooperation with Tripoli in recent decades. Moreover, both left and right-wing Italian governments have supported Colonel Gaddafi’s re-entering the international political stage, gaining him some credibility and legitimisation as a “not-as-bad-as-the-others” African dictator.  The apogee of that policy has been the signature of Italy-Libya treaty in Benghazi on 30 August 2008.

What is the effect of this special relationship with Colonel Gaddafi on the Italian management of the Libyan crisis? Is it helping or worsening the Italian position? And lastly is it true, as the Italian government keeps suggesting, that Italian businesses and people are still safe in Libya?

It is certainly true that being a friend of Gaddafi’s right now does not seem to be much of an asset among the Libyan population. On the other hand, it is also true that unlike France and the UK, Italy did not immediately join the international intervention force against the governmental army, only later stepping in at the same level of participation as the other partners. However, regardless of how the Libyan civil war will end, it will surely be very difficult for the Italian government to prevent the dismissal of its previous ally from being seen as some kind of withdrawal, if not betrayal, in the eyes of Gaddafi’s supporters.

Although the Rais himself spoke about the Italian Prime Minister as his “old friend” Silvio Berlusconi when offering peace talks to the Europeans, the Italian Foreign Minister Franco Frattini was very clear in stating the urgency of stopping Gaddafi and his men killing their own people with all available means. If Gaddafi is seriously intending to pursue negotiation, then perhaps Italy might play an important role of mediation. Nevertheless two obstacles remain to prevent such a situation from occurring. Firstly, the UN and Gaddafi’s plans for post-war Libya are not compatible, simply because most actors in the coalition want the Colonel to leave; secondly, in order to play such an important role Italy should have asserted its prominence within the coalition from the very beginning by not allowing France and the UK to openly lead the game.

Italy’s dubious position was proven by its stance towards the Libyan rebel movement. Rome was among the last European capitals to recognise the Benghazi government and thereby to hold an official meeting with one of its representatives. The initial uncertainty in providing full military support to the rebels led to the waving of the Union Jack and of Le Tricolore in the streets of Benghazi and to the assault of the Italian consulate.  Unless sudden and dramatic changes take place, it seems very unlikely that Italy can enjoy a better relationship with the rebels than it had with the Gaddafi regime. Thus, maybe a Libyan government without Gaddafi will not dismiss Italian business, but it surely will miss the growing and almost exclusive opportunities of improvement that the Rais was offering to Italian companies.

Ignoring for a while the future settlement of Libya after the conflict, what is the current situation of Italian business in the country? Should Italian citizens and firms stay calm, as the government has been suggesting since the outbreak of the clashes? The verdict seems to be very unclear.

Regarding economic ties, more often than not Libya is connected to Italy over the issue of energy industry and supplies. To be sure, Tripoli is Italy’s main oil supplier, providing 27 per cent of its total imported oil. It is also its third natural gas supplier, supplying 12,5 per cent of Italy’s entire demand. The Italian Minister for Industry and Development, Paolo Romani, is reassuring about the future of Italy’s energy stockpile. However, his reasoning seems opportunistic and short-sighted. Indeed, if the Italian ENI has become the major foreign oil company in Libya, getting 14 per cent of its total production from the Libyan soil and signing a 20-year long agreement in 2008 for €28 billions, it was exactly in virtue of that special relationship between the Italian government and the Gaddafi regime which is now at risk. Whereas it might lend some credibility to Berlusconi’s short-term policies over Libya, such a self-confident and reassuring behaviour can become a time-bomb in terms of the enterprising capacity of the ENI group and Italian businesses in general.

However, despite being a big business, energy represents only one slice of the Italian-Libyan business cake. Indeed, it is very important to remember that Italy does not only do business in Libya, but so does Libya in Italy. In fact, through the Libyan Investment Authority (LIA), the Libyan state owns 7,5 per cent of the Unicredit Banking Group, thereby being the second largest shareholder, after Mediobanca, of the biggest Italian bank. At the same time, the LIA also has stocks worth US$500 million dollars in the Mediobanca group.

In the industrial sector, the LIA owns 2 per cent of the FIAT group, the biggest Italian industrial company. It also holds the same percentage of Finmeccanica, Italy’s second largest industrial group, that deals with everything in the sensitive defence sector ranging from automation to military security. The Libyan state also holds 26 per cent of the firm Olcese, in the weaving sector. Moreover, through the Libyan Post, Telecommunication and Information Technology Company, Tripoli is a major shareholder owning 14,7 per cent of Retelit, the company awarded a contract to build the WI-Max infrastructure throughout the Italian peninsula. The Gaddafi family also participates in the famous Juventus Football Club from Turin, holding 7,5 per cent of its stocks.

Limiting Italy’s concerns to the energy issue, or being too complacent about the security of business relations between Italy and Libya could therefore imply big losses for Italian industry. The economic Italian-Libyan relations cover in fact a wide range of business typologies in both Libya and in Italy. To confirm the reality of such danger, the Chamber of Commerce for Italy-Africa Relations forecasts a reduction in stock values of about 100 billion Euros for Italian firms at the end of the conflict. These indications, in a sense, have already been proved right in February 2010, when Gaddafi seemed ready to run away to Venezuela. Following those rumours, Italian firms investing in Libya had a terrible day at the stock exchange: ENI -5 per cent, Impregilo -6 per cent, Ansaldo -4 per cent, Sapiem -3,9 per cent, Finmeccanica -2,3 per cent, Unicredit -5,4 per cent.

It is clear that Italy has more than energy interests to defend in Libya. Considering the general poor economic performance of the country, the Italian government should perhaps embrace a more proactive stance, rather than following France and the UK, by double-checking oil and gas stockpiles and sending reassuring words on the safety of Italian business. There are approximately 180 Italian firms, with a total investment of about €2,7 billion at stake. Miscalculations, a laissez-faire attitude and negligence are unacceptable behaviours for a country suffering from a general economic crisis. However, that does not necessarily mean that Italy must suddenly withdraw from all the military action or, the other way round, start lobbying for upgrading to land operations in order to lead them. Instead the Italian government should realise that there is no margin to gain any benefits, from oil to migrants, in this particular moment. Rather it should start thinking, along with all the other actors involved, of what will happen after the conflict, preparing the grounds for peace talks, democratisation and reconstruction of the country. Such a policy will turn out to be even more fruitful for Italy: in fact it will protect not only economic assets, but also it will directly involve Rome in the management of the migratory flows that are impacting Italian coastal regions so badly. It is then time for Italy to activate its diplomacy to its maximum potential, in order to get a better starting point for the second set of the match. The opening of an Italian consulate on 31 May might be the best way to start. But surely much more needs to be done.


Sebastiano Sali is an MPhil/PhD candidate at the Department of War Studies Department - King’s College London. He researches on identity and foreign policy in AKP’s Turkey where he was Visiting Researcher at the M.E.T.U. of Ankara.


23 June 2011


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