“War is a racket. It always has been.” These words are as true now as they were when Major General Smedley Butler first delivered them in a series of speeches in the 1930s. And he should have known. As one of the most decorated and celebrated marines in the history of the Corps, Butler drew on his own experiences around the globe to rail against the business interests that use the U.S. military as muscle men to protect their racket from perceived threats. From National City Bank interests in Haiti to United Fruit plantations in Honduras, from Standard Oil access to China to Brown Brothers operations in Nicaragua, Butler pointed out how intervention after intervention served the business interests of the well-connected even as American taxpayer money went to foot the bill for these adventures. The names and places may have changed, but the old adage holds: the more things change, the more they stay the same.
The National Transitional Council that is nominally in charge of what is left of Libya announced this week that they're beginning a probe of foreign oil contracts brokered during Gaddafi's reign by his son, Saif al-Islam. Libya is sitting on the largest oil reserves in Africa, and it is no coincidence that within weeks of the start of the NATO campaign last year the rebels had already secured the country's oil ports and refineries on the Gulf of Sidra and established their own national oil company for negotiating contracts with the invading forces. Although the oil contract probes are supposedly meant to show the transparency of the new “government” and their willingness to root out the graft and kickbacks inherent in the old regime, it's quietly acknowledged that the process will be used to reward the nations that most visibly supported last year's invasions and punish those who were more reticent.
Surprising, then, that the first companies on the block are Italy's Eni and France's Total. Both countries fostered close ties with the NTC last year and France was the first country to officially recognize them as the government of Libya. But now Libya's general prosecutor is reviewing documents related to these companies for possible financial irregularities. The SEC is getting in on the act, too, requesting documents relating to both companies' Libyan operations to check for suspected violations of the Foreign Corrupt Practices Act. The potential blow to the European giants' share in the Libyan market is especially painful in light of the upcoming Iranian oil embargo that threatens to squeeze the crude imports of Greece, Italy and Spain. Now, as Libya ramps up oil production to pre-war levels the obvious potential winners in the probe are the American and British majors, who could end up eating up some of Eni and Total's share in Libya's oil production should the investigation lead to charges.
China may also have reason to be wary of their standing with the new government. Chinese-Libyan ties were increasingly close in the years leading up to Gaddafi's ouster, with trade volume having reached $6.6 billion in 2010. In 2007, as the US was beginning to put AFRICOM together and the competitive scramble for African resources was heating up, Gaddafi delivered an address to the students of Oxford University where he praised China's hands-off approach to investment in Africa. At the time, Gaddafi suggested that Beijing was winning the hearts and minds of Africans with its reluctance to interfere in local politics, while Washington was alienating the population with their heavy-handed interventions. In the wake of the NATO bombing the would-be government of Libya is singing a different tune and relations with China have cooled down. Last August a senior NTC official suggested that China would be punished when it came time to award reconstruction contracts in Libya because of their initial reluctance to support the rebels. Although the statement was downplayed, it was revealed earlier this month that Chinese companies are still waiting to begin negotiations on losses to frozen and outstanding contracts worth $18.8 billion. Relations are still cordial, though, and the Libyan government is assuring China that the contracting companies will be in a better position to resume negotiations after national elections in June.
