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Research Report

U.S.-Libyan Relations:: An Analytic Compendium of U.S. Policies, Laws & Regulations

Kenneth Katzman
Copyright Date: Aug. 1, 2003
Published by: Atlantic Council
Pages: 170
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Table of Contents

  1. (pp. v-vi)
    Christopher J. Makins

    The recent agreement between representatives of the Pan Am 103 victims’ families and the Libyan government to create an escrow account for $2.7 billion in expected compensation is likely to pave the way to the permanent lifting of UN sanctions and could trigger a U.S. review of its long-standing policy of isolation of Muammar Qadhafi’s regime. Should the U.S. administration at some stage decide to begin improving U.S. relations with Libya, it will have to grapple with the policies, laws and regulations that prevent most U.S.-Libyan trade, ban the use of U.S. passports for travel to Libya, withhold portions of...

  2. U.S. Policies, Laws & Regulations

    • (pp. 1-4)

      President Reagan issued this Executive Order banning U.S. trade and some financial transactions with Libya. At the time the order was issued, President Reagan cited Libyan support of international terrorism as an extraordinary threat to U.S. security. The order was issued ten days after the December 27, 1985 terrorist attacks against the Rome and Vienna airports, conducted by the Abu Nidal organization, which was receiving material support from Libya at the time of those attacks. Of course, by that time, the United States and Libya had already clashed on several occasions since 1981, including the August 19, 1981 air battle...

    • (pp. 5-6)

      The following publication is in the Federal Register, reporting a final rule amending the U.S. ban on trade with Libya, which was discussed in the previous section.

      As noted in the final rule, in April 1999, shortly after Libya’s handover of the Pan Am 103 suspects, President Clinton modified the U.S. trade bans in effect for Libya, Iran, and Sudan. The modification permitted U.S. firms to apply to the Office of Foreign Assets Control (Treasury Department) for specific licenses to sell agricultural and medical products to the three countries. The products must be sold on a commercial basis; nothing in...

    • (pp. 7-8)

      One day after issuing the trade ban, President Reagan issued another Executive Order blocking all Libyan government property and interests held in the United States. The blocking of assets typically has been undertaken to give the United States some financial leverage over the sanctioned country, and to deny it funds with which it could presumably support activities contrary to U.S. interests.

      Section 11 of this compendium, which contains the text of the current U.S. sanctions imposed on Libya, contains numerous provisions relating to the disposition of blocked Libyan property.

      According to the “Terrorist Assets Report” for 2001, produced by the...

    • (pp. 9-14)

      Two provisions are of note in this legislation:

      Section 2371 of the Foreign Assistance Act of 1961 (22 U.S.C. 2371, corresponding to section 620A of the law, P.L. 87-195, as amended) states that the United States shall not provide foreign assistance, including any agricultural assistance or credits and Export-Import Bank credits, to any state on the U.S. list of state sponsors of terrorism. These restrictions are for assistance under the Act itself as well as under other statutes, including the Agricultural Trade Development and Assistance Act of 1954, the Peace Corps Act, or the Export-Import Bank Act of 1945.


    • (pp. 15-16)

      The latest applicable foreign assistance appropriations – the appropriation for FY2002 (P.L. 107-115) – contains two relevant sections. These two sections ban U.S. direct and indirect assistance, respectively, to the countries named in those sections. The named countries correspond to the countries on the U.S. terrorism list, although there is no requirement of such correspondence.

      The ban on direct assistance has been applied to Libya in every foreign aid appropriation since fiscal year 1988. Since 1990, the provision has specified that direct assistance applies to direct loans, credits, insurance, and Export-Import Bank guarantees. No waiver is provided for.

      The indirect...

    • (pp. 17-24)

      The key provision of the Arms Export Control Act that applies to Libya is Section 40 (22 U.S.C. 2780). The provision prohibits U.S. export, by sale, lease, loan, grant, or other means, of any item on the U.S. Munitions List to countries on the U.S. terrorism list. U.S. credits, guarantees, or financial assistance for any terrorism list country arms purchase, as well as U.S. licensing or co-production agreements for or with that country, also are prohibited. The Act provides for a presidential waiver if the President deems such a waiver to be in the national interest.

      The Antiterrorism and Effective...

    • (pp. 25-38)

      Targeted at no specific country, this Act (P.L. 104-132) contains a number of provisions that apply to countries on the terrorism list, including Libya. While some sections are largely symbolic, many set forth substantial penalties, including a number of “secondary sanctions” aimed at persons and countries that assist or arm Libya and other terrorism list countries.

      Section 221 of the Act allows victims of terrorism to sue, in U.S. courts, a country alleged to have provided material support for a terrorist act or for the group that conducted the act. The Act provides no mechanism for the collection of any...

    • (pp. 39-56)

      The Iran-Libya Sanctions Act (ILSA, 104-172) is the only major piece of legislation that targets Libya specifically (along with Iran), rather than simply affecting Libya as a result of its designation as a state sponsor of terrorism. The law was intended to deter foreign firms from making new investments in the energy sectors of Iran and Libya by imposing sanctions against those firms. For firms determined by the Administration to have violated ILSA’s provisions, the President is to impose at least two out of a menu of six sanctions listed in Section 6 of the Act. They include: (1) denial...

    • (pp. 57-74)

      As noted earlier, the termination of ILSA with respect to Libya is linked to a determination by the President that Libya has fulfilled the requirements of UN resolutions 731, 748 and 883. ILSA states:

      The requirement under section 5(b) to impose sanctions shall no longer have force or effect with respect to Libya if the President determines and certifies to the appropriate congressional committees that Libya has fulfilled the requirements of United Nations Security Council Resolution 731, adopted January 21, 1992, United Nations Security Council Resolution 748, adopted March 31, 1992, and United Nations Security Council Resolution 883, adopted November...

    • (pp. 75-80)

      This section cites the authorities for the imposition of a “ban” on the use of U.S. passports for travel to Libya. The passport restriction, which first came into force on December 11, 1981, was extended on November 22, 2002 for another year. In the final year of the Clinton Administration, there reportedly was discussion of dropping the restriction. Accordingly, a team visited Libya to assess the security situation for U.S. citizens. In the end, the decision was made to extend the restriction.

      As noted in the attached U.S. government order, U.S. passports are not valid for travel to Libya “unless...

    • (pp. 81-122)

      The Office of Foreign Assets Control (OFAC) issues regulations that specify how, in practice, the executive agencies will implement laws and Executive Orders. The regulations “operationalize” the laws and Executive Orders discussed throughout this compendium. For example, CFR Sections 550.569 to 550.573 detail procedures, requirements and limitations for U.S. sales of agricultural and medical products to Libya under the April 1999 Executive Order modification to the U.S. trade ban. The complete text of the current Libyan sanctions regulations is provided.

      In another example, Sections 550.203 and 550.207 of the regulations discuss a prohibition on any services or transactions by any...

    • (pp. 123-126)

      Despite significant pressure from the U.S. Government, the seven designated state sponsors of terrorism – Cuba, Iran, Iraq, Libya, North Korea, Syria, and Sudan – did not take all the necessary actions to disassociate themselves fully from their ties to terrorism in 2002. While some of these countries have taken steps to cooperate in the global war on terrorism, most have also continued the very actions that led them to be declared state sponsors.

      Although Cuba is a party to all 12 international counterterrorism conventions and protocols, and Sudan is a party to 11, both nations continued to provide support...

    • (pp. 127-142)

      The United States has no official presence in Libya. Information on the human rights situation therefore is limited; this report draws heavily on non-U.S. Governmental sources.

      The Socialist People’s Libyan Arab Jamahiriya is a dictatorship that has been ruled by Colonel Mu’ammar Al-Qadhafi (the “Brother Leader and Guide of the Revolution”) since 1969, when he led a military coup that overthrew King Idris I. Borrowing from Islamic and pan-Arab ideas, Qadhafi created a political system that rejects democracy and political parties and purports to establish a “third way” superior to capitalism and communism. Libya’s governing principles are derived predominantly from...

  3. (pp. 143-152)

    As discussed in the foregoing sections, Libya is subject to one of the strictest U.S. sanctions regimes currently in place. Should there be a political decision to improve relations with Libya, applicable sanctions and other restrictions would need to be removed in order to allow for normal U.S.-Libyan commerce, U.S. investment in Libya, U.S. support for international development assistance, cultural linkages and travel to Libya with a U.S. passport. The purpose of this essay is therefore to outline how existing restrictions on U.S.-Libyan relations might indeed be eliminated under the appropriate circumstances and at an appropriate time.

    In theory and...