In the same period that the Libyan government entered into negotiations with oil companies, there were other negotiations taking place between the British government and the Libyan government to resolve the outstanding issues between the two sides. The negotiations between the Libyan government and oil companies have, from the start, been significantly affected by the outcome of negotiations between the British government and the Libyan government on outstanding issues.
At the beginning of 1970, Major Jallud warned the British government that, if there was a failure to reach a solution satisfactory to both parties with respect to the outstanding issues, British interests in Libya would be in danger and that the Libyan Government would take a tough roadblock against these interests. Jallud went on to say ‘Unless the British government gave the Libyan Government satisfaction over the major issues outstanding between the two governments, the Libyan government would
134 take action against British interests in Libya’.356
The relationship between Britain and Libya is thus very complicated. Libya linked its cooperation with Britain in every field, especially in the oil business, to reach a solution to outstanding issues. In the light of this, there were two trends for the British–Libyan cooperation, particularly in the oil field. The first was to settle the outstanding issues and this would lead to comprehensive cooperation in all fields and save the British oil interests in Libya. The second trend was the opposite of this and, especially, there was no guarantee that, if the British government settled its dispute with the Libyan government, this would save the British interests in Libya. Also there was no guarantee that Gaddafi would take no action against the British.357 In a letter from the North African Department (NAD) to the FCO, in the early 1970, Hope-Jones warned Ellingworth of FCO saying that:
It has become increasingly clear in recent weeks that HMG will have to pay a high price in order to attain their various policy objectives in UK/Libyan relations. The price will probably be higher than they are prepared to pay, and we therefore need to assess just how important these various objectives are. One of our principle objectives is of course that the export of Libyan oil to Britain and Western Europe by British companies, among others, should proceed without hindrance.358
Differences between the two governments, especially regarding the settlement of outstanding issues of arms deals between the two sides, affected the ongoing negotiations between the Libyan government and the oil companies. They made the position of the Libyan government with regard to these companies inflexible and
356 TNA, FCO 67/436, Planning paper on British interests in Libya, from P G P D Fullerton to Mr. Hope-
Jones
357 TNA, FCO 39/1111, Libya/BP, letter from A. J. M. Craig, North African department, to Mr J. P.
Tripp CMG British Embassy Tripoli, 31 January 1972
135
rigid.359 The Libyans’ differentiation between BP and other companies can be seen in
the light of the fact that the British government's shareholding in BP made the Libyans view BP as a way of influencing the British Government in regard to the defence agreement.360 Thus, the British oil interests were not outside the bargains that were
used by the Libyan government in order to force the British government to settle the outstanding issues of arms, but it does not appear that the Libyan policy succeeded. The Libyans told the British Government several times that, if they got a satisfactory settlement on the issue of outstanding arms contracts between the two sides as well as on outstanding financial issues with respect to renting the British base that existed in eastern Libya before 1970, and on the Libyan cooperation with Britain in the various disciplines, there would be no limit to the cooperation between the two countries in the future. However, failure in this would lead to counter-productive results.361 R. C. Hope-Jones again stated ‘If we (the British Government) fail to give the Libyans satisfaction over current problems, there will be various courses of action open to them. They might for instance nationalise part or all of the production interests of BP and Shell’.362
After March 1971, and the Libyan rejection to the offer package of £14 million the British concerning increased, in light of the lack of progress in finding a solution to the problem of the outstanding issues between the British and Libyan governments, it was
359 TNA, FCO 67/434, Record of a meeting held at the Foreign and Commonwealth Office, 26 August
1970
360 TNA, FCO 39/1082, Mr Sandy’s visit to Tripoli, letter from Cromer to FCO, 20 January 1972
361 TNA, FCO 67/436, The value of British interests in Libya, paper for ministers, from R. C. Hope-
Jones to M. P. V. Hannam, Tripoli and planning staff, oil department, 2 December 1970
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quite likely that the Libyan government would take some harsh measures against the British oil companies operating in Libya.363 Hope-Jones explained that ‘We (the British) cannot exclude the possibility that if the outstanding problems cannot be resolved, the Libyans may take discriminatory action against British oil interests. This might well take the form of nationalisation or expropriation’.364
The FCO also expressed concerns that the Libyan move would be in the form of harsh procedures against oil companies. However, presenting an appropriate and acceptable offer to the Libyans would probably make the Libyan government more flexible in its negotiations with oil companies. The British ambassador in Tripoli indicated that Libya was already engaged in simultaneous negotiations with two parties: the oil companies and the British government on the outstanding issues. The Libyan government desperately needed to get positive and satisfactory results with one of the negotiating parties; otherwise, any reaction would be counterproductive and violent but the progress of negotiations between the two countries, with respect to the outstanding issues, would allow for positive results in favour of the oil companies.365 The Ambassador added that ‘It is not impossible that a reasonable attitude on our part in the present context could contribute to an oil settlement rather to our disadvantage’.366
363 TNA, FCO 67/606, Anglo-Libyan relations, minutes of 25 February, from R. C. Hope-Jones to Dr
Michael Hart, Ministry of Defence and Mt. Hudson, Cabinet Office, March 1971
364 TNA, FCO 67/606, Anglo-Libyan relation, minutes of 25 February
365 TNA, PREM 15/1066, Anglo-Libyan relations, DOP 71 7th meeting, 16 March 1971
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