The following is an excerpt from Targeting Libya: How Canada went from building public works to bombing an oil-rich country and creating chaos for its citizens by author, journalist, and Canadian Dimension columnist Owen Schalk, released in October by Formac Lorimer. For more information, visit www.formaclorimerbooks.ca.

---

After a lifetime in engineering, SNC-Lavalin CEO Jacques Lamarre retired in 2009. Under his tenure, the company’s global investments had continued to expand, and nowhere as much as Libya. In the two years before Lamarre’s retirement, the company secured a $500 million contract to build the Benghazi airport, a $9 million contract for drilling in Sarir, a $201 million contract to rehabilitate Lake Benghazi, a $56 million contract for drilling in Kufra, and a $320 million contract to construct a prison. Across the world, SNC-Lavalin was booming. A Globe and Mail headline from 2010 read, “SNC on a roll,” after the company won the half-billion-dollar Benghazi airport contract and a $587 million contract in British Columbia within a 48-hour period.

Libya continued to be SNC-Lavalin’s golden goose. In 2010, the company broken ground on a new project: the “Guryan Judicial City,” a prison outside Tripoli that SNC-Lavalin described as “the first detention centre to comply with international human rights standards.” Libya’s imprisoned population had been growing since the early 1990s, and through the Guryan contract, SNC-Lavalin would provide the government with additional space to house future prisoners.

Like past contracts, this one resulted from the company’s close relationship to Colonel Muammar Qadhafi’s son Saadi. Over the previous few years, SNC-Lavalin had helped Saadi establish the Libyan Corps of Engineers, a civilian-military unit involved in “military duties” and “construction works in general.” The Canadian company granted its services to the Corps of Engineers, offering Saadi advice from the former head of Canada’s navy, Vice-Admiral Ron Buck. Ultimately, SNC-Lavalin and the Corps of Engineers signed a joint agreement to build the Guryan facility. The project was to be completed by 2012.

While SNC-Lavalin and the Libyan government continued their collaboration, the relationship between Libya and the broader West deteriorated to such an extent that Qadhafi brought back a word that haunts the nightmares of Western governments and executives: nationalization.

After the overthrow of the Libyan monarchy in 1969, the new government had nationalized oil assets as part of a development program aimed at reversing decades of underdevelopment resulting from Italian colonialism and US neocolonialism. In the late-2000s, Qadhafi’s nationalization threats obtained an extra dimension of international politicking. For example, he threatened nationalizations of US oil companies not as part of a national liberation program, but in the hopes that these companies would lobby Washington to alter its approach toward Libya. As Washington Post contributor Steven Mufson noted, “relations with Gaddafi had soured. The Libyan leader demanded tough contract terms. He sought big bonus payments up front. Moreover, upset that he was not getting more US government respect and recognition for his earlier concessions, he pressured the oil companies to influence US policies.” Qadhafi’s threat to nationalize Petro-Canada’s holdings had a similar tone.

The nationalization threat came in 2009, after Lockerbie bombing convict Abdelbasat al-Megrahi was released from a British prison on compassionate grounds due to terminal prostate cancer. Megrahi returned to Libya, where he was welcomed by Saif Qadhafi and thousands of cheering Libyans. As NBC News noted at the time, “In Libya, al-Megrahi is seen as an innocent scapegoat the West used to turn this African nation into a pariah, and his return is a cause for celebration.” Following Megrahi’s celebratory welcome in Tripoli, condemnations spilled out of Western governments, including Canada. Conservative Prime Minister Stephen Harper, who had taken office in 2006 after 13 years of Liberal Party rule, said that the welcome “constituted an insult to all the victims who died, including Canadians.” Qadhafi had previously been planning a stopover trip in St. John’s, Newfoundland, but when Ottawa announced its intention to send Foreign Affairs Minister Lawrence Cannon to personally chastise him, the visit was cancelled.

Diplomatic cables published in the media spurred questions about whether Canada’s public outrage over Megrahi’s release was more political than moral. One month before Qadhafi’s planned visit, Canadian Ambassador Sandra McCardell informed the Libyan government that Qadhafi was not welcome in Canada, not because of any particular action by Libya, but because there was a federal election later that year and “[Harper’s] minority government feared the impression a reception of the Libyan leader would leave on voters.” This recalls Chrétien’s decision to delay granting a visa to Saadi Qadhafi until after the 2000 election because he was concerned that associating with the Qadhafis would hurt the Liberal Party at the polls.

The Libyan response was swift. Feeling that Libya had been disrespected, the country’s National Oil Company summoned the chairman of Petro-Canada and warned that unless Ottawa issued a formal apology, the Libyan state would nationalize the Canadian company’s assets. When no apology came, Libya cut production in half at fields operated by Petro-Canada. In response, the company withdrew some of its Canadian staff. On October 25—safely after the federal election—Cannon travelled to Libya and tried to smooth things over with Qadhafi.

While Petro-Canada publicly refuted the possibility of nationalization, leaked cables show that their frustration with Tripoli had grown to nearly intolerable proportions. One Petro-Canada official claimed he was ready to tell the Libyan government, “Do whatever you want with us.” The official also said that Petro-Canada had received reports that Libyan authorities were planning to “raid” the company’s offices in Libya, and as a result, Petro-Canada “had prepared contingency plans for repatriating its Canadian staff.”

Tripoli’s threats against Petro-Canada were part of a larger change in Libyan policy toward securing additional profits from the oil sector. Over the previous year, the Libyan government had taken advantage of high oil prices and renegotiated contracts with major investors like Petro-Canada, Occidental, OMV, and Eni, raking in an extra $5.4 billion in revenue as a result. As industry magazine Offshore Technology noted, “With the fall in the crude oil price [in 2009] and OPEC putting further restriction on oil quota, Libya’s de facto leader Muammar Al-Qadhafi has started looking into the possible nationalisation of the country’s oil and gas industry.”

The Libyan government’s flirtation with nationalizing assets troubled Washington. As a US government cable read, “Regime rhetoric in early 2009 involving the possible nationalization of the oil sector… has brought the issue back to the fore.” Another cable noted, “Libya’s moves against Petro-Canada… left the expatriate business community on edge.”

Shortly after the Petro-Canada conflict, the Libyan government purchased oil fields owned by Canada’s Verenex, effectively nationalizing the company’s assets. Verenex had wanted to sell its Libyan assets to China National Petroleum Corp., but the Libyan state intervened, preventing the sale and purchasing the fields at a lower price. Verenex protested, seeking help from authorities in Canada, Britain, and the US. Ken Hillier, who served as Verenex’s chief financial officer during the dispute, later claimed, “I don’t believe diplomatic pressure helped [the company] at all.”

By July 2010, New York’s Petroleum Intelligence Weekly reported on growing tensions between the Libyan government and foreign oil investors. The article reads, “All signs point to a growing disconnect in Libya over the health of the oil sector, with Tripoli mostly offering encouraging words… while oil companies take a notably less sanguine view.” As a result, Qadhafi’s Libya was “test[ing] confidence to the limit.” The magazine specifically noted production cuts at Petro-Canada operations as an example of Libya pushing Western investors “to the limit.”

In January 2009, Qadhafi assumed the chairmanship of the African Union, the continent-wide alliance founded in the Libyan city of Sirte ten years earlier. A US cable marked “secret” read, “His February election to the African Union chairmanship provides al-Qadhafi with a high-profile platform from which he can trumpet his vision of Africa and rail against Western interference on the continent and serves as confirmation of his regional importance.”

In the late 2000s, the Libyan government invested huge sums into development projects across the continent. Libya bankrolled projects worth hundreds of millions of dollars in Uganda, Liberia, Mali, Mauritania, Niger, the Central African Republic, Chad, Burkina Faso, Gambia, Guinea, Zambia, Zimbabwe, Tanzania, and Egypt. “Entire hospitals and mosques” were named after Qadhafi because of the Libyan government’s largesse. At the same time, hundreds of thousands of workers from surrounding countries went to Libya to find work.

Qadhafi remained critical of the US military’s role in Africa. Following AFRICOM’s founding in 2007, the US government wanted to headquarter the command on the continent. However, Libya led the opposition to AFRICOM being stationed in Africa. As a result, it was headquartered in Stuttgart, Germany. US Ambassador Gene Cretz warned that Qadhafi was “suspicious of US Africa Command’s potential ulterior motives and wary of how those could complicate his own efforts to strengthen his leadership role on the continent.” He added that the Libyan leader had a strong aversion to “the presence of non-African military elements in Libya or elsewhere on the continent.”

In a meeting with AFRICOM Commander William Ward, Mutassim Qadhafi expressed “concerns” about the US military’s Africa Command and the presence of US bases on the continent. Following the meeting, Ambassador Cretz wrote that Libya “continues to espouse a rejectionist public line—‘Africans reject AFRICOM’—characterizing the Command as a vehicle for the United States to promote neo-colonial policies on the continent.” Qadhafi instead promoted common African institutions, including a unified African military, as the solution to the continent’s security problems.

Within the Libyan government, fissures deepened. By this point, it was clear that the balance of power in the Libyan government remained on the side of Qadhafi’s faction, that is, those who endorsed limited economic reforms as a means of stabilizing the Jamahiriya system. Those who sought the effective dismantling of the Jamahiriya system—whether through the introduction of a multiparty political structure or sweeping economic reforms such as far-reaching privatizations and the primacy of market liberalization—or those who simply disagreed with the general direction of the Qadhafi government either resigned in frustration or were fired. Two reformist ministers, Mustafa Abdeljalil and Mahmoud Jibril, lost their positions in 2010. Abdeljalil resigned in protest of the Libyan government’s failure to release more Islamist prisoners. Jibril, whom US Ambassador Cretz called “a serious interlocutor who ‘gets’ the US perspective,” suffered the same fate as reformist Prime Minister Shukri Ghanem: He was removed from his post after clashing with less reform-minded individuals in government. And on December 16, 2010, Saif Qadhafi retired from politics and vowed to focus more on charitable activities.

Of Muammar Qadhafi’s children, Saif al-Islam had been the most involved in the reform process. With his resignation, the most politically active of the Libyan leader’s children had exited the public stage. Furthermore, the most prominent advocate for neoliberal reform in the country had effectively thrown in the towel, dashing the hopes of the reformist camp.

Across the region, the threat of Islamist violence grew, and Libya was no different. While the Libyan Islamic Fighting Group had been smashed in the 1990s, the Libyan government’s decision to release hundreds of imprisoned members in a gesture of goodwill to the West replenished the group’s ranks. By the dawn of 2011, the Libyan Islamic Fighting Group was threatening a return to violence. A Canadian intelligence report described Libya’s east, the stronghold of anti-Qadhafi sentiment, as an “epicentre of Islamist extremism.” It was a startling situation, and there were indications that the Islamists were forging connections with more secular anti-Qadhafi forces. As the Italian ambassador to Libya warned, “Islamic radicalism [had] joined forces with domestic opposition.”

Going into 2011, the Libyan government faced many challenges: growing divisions in government, a rise in Islamist activity, worsening commercial relations with the West, and a US administration irritated by Qadhafi’s Pan-Africanist ambitions. These threats converged in early 2011, ultimately proving fatal for the Jamahiriya and Muammar Qadhafi himself.

Owen Schalk is the author of Targeting Libya: How Canada went from building public works to bombing an oil-rich country and creating chaos for its citizens, an exploration of Canada’s pivotal yet little-known role in Libya’s history, now available from Lorimer Books.