U.S. firms eye Libya for big contracts

Major U.S. companies are jockeying for tens of billions of dollars in infrastructure and other big projects in oil-rich Libya, as ties between the former foes warm.

Boeing Co, the top U.S. exporter, hopes to expand on an initial sale of three 737 airliners to Buraq Air, Libya's first private airline. Boeing began delivering those aircraft in October, 2006.

Libyan Airlines, the state-owned carrier, "is a good prospect for future business, as their aging fleet will soon be in need of replacement aircraft," said Peter Conte, a spokesman for Boeing commercial planes. He said the company would "actively compete" for Libyan business.

Lockheed Martin Corp, the Pentagon's No. 1 supplier, joined Boeing and about 20 other U.S. companies last month on a trip to Libya sponsored by the National U.S.-Arab Chamber of Commerce.

The purpose was to explore business opportunities ranging from airport upgrades to border-security work and other infrastructure projects, said Thomas Jurkowsky, a Lockheed spokesman.

Citing information-technology know-how and experience in putting together big jobs, Lockheed said it also could offer logistics, engineering and operation and maintenance services.

"The opportunities to leverage that expertise in Libya cannot be overlooked," said Jurkowsky. "We welcomed the opportunity to explore the commercial opportunities that exist in that country."

Lockheed, Boeing and Raytheon, also on the trip, are no doubt eyeing longer-term opportunities to sell billions of dollars of advanced arms to Libya, which entered good U.S. graces after giving up weapons of mass destruction in 2003.

"They are looking at a 10- to 15-year time horizon for building relations" that could culminate in arms deals, said Joel Johnson, an expert on international military trade at Teal Group, a Fairfax, Virginia, aerospace consultancy. U.S. policy currently prohibits the sale of weapons to Libya, although some nonlethal military items and defence services can be authorized on a case-by-case basis.

Foreign Minister Mohammed Abdel-Rahman Shalgam of this week became Libya's highest-ranking official to visit Washington in 35 years, meeting Secretary of State Condoleezza Rice on Thursday.

"We don't speak anymore about war or confrontation or terrorism," Shalgam said after signing a U.S.-Libyan science and technology cooperation pact. "No, the contrary: Wealth of the people, cooperation, investments, peace and stability."

Libya has largely rehabilitated its relations with westerns powers after years of isolation following the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, for which two Libyan agents were convicted.

Bilateral trade with the United States has grown rapidly in the past five years.

U.S. imports of Libyan crude oil and other, mostly petroleum, products totalled $2.5 billion (1.27 billion pounds) in 2006, compared to zero just three years before.

The United States exported $434.9 million worth of civilian aircraft, machinery, drilling equipment and farm goods to Libya last year. Before 2003, it sold only a small amount of farm goods and medicines that were exempt from sanctions.

The potential for growth is enormous, said David Hamod, president and chief executive of the National U.S.-Arab Chamber of Commerce. Libyan authorities had spoken of plans to spend $40 billion on infrastructure and housing projects in the next few years, he said.

"For decades, they have not been permitted to work with U.S. companies and it's a whole new world," said Hamod, who led the trip to Libya last month. "They're eager to start building relationships."