25. Memorandum From the Assistant Secretary of State for African Affairs (Newsom) to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • NSSM 185—U.S. Policy toward Libya: Follow-on Options Paper

The National Security Council ad hoc Interdepartmental Group designated to respond to NSSM 185 has approved the attached follow-on options paper requested in the Senior Review Group meeting on August 14.

David D. Newsom

[Page 80]

Attachment

Follow-on Options Paper to NSSM 185

Washington, undated.

NSSM 185—U.S. POLICY TOWARD LIBYA

Follow-on Options Paper

I. Introduction

This memorandum supplements the response to NSSM 185—Libya, as requested by the Chairman of the SRG in its meeting on August 14. It describes the three policy options available to the United States with respect to Libya. These options are based on the following assumptions: a) the United States still has significant, although sharply reduced, financial interests in Libya which it should seek to preserve; b) an uninterrupted flow of Libyan oil is essential primarily to Western Europe and important to the United States; c) the Qadhafi regime is the one with which the United States will have to deal in at least the short-term future.

II. Key US Interests and Objectives in Libya

A. Petroleum

US concern with Libya stems basically from the importance of Libyan oil. In 1972, the net book value of the American investment in the Libyan oil industry was approximately one billion dollars, and this investment made a contribution of $400–$500 million to the US balance of payments. In that year, Libyan oil accounted for 14 percent of OECD European oil imports and about 4 percent of US oil imports. This oil is of particular importance because of its low sulphur content and would be difficult to replace at this time.

In June, Libya nationalized Bunker Hunt over the opposition of the company. In August, it forced Occidental and Oasis to yield 51 percent of their concessions on the threat of total nationalization. On September 1, it nationalized 51 percent of the remaining American oil companies (with the possible exception of Murphy Oil, a partner in a four-member consortium having only a small production). The book value of American assets in Libya was estimated before the nationalizations to be one billion dollars; since June, they have been cut therefore approximately in half.

B. Counter Libya’s Extremist Foreign Policy

Libya pursues an extremist but carefully calculated foreign policy, one in which its priorities are clearly defined and supported by Libyan [Page 81]economic resources and tough negotiating stances. It opposes the existence of Israel, argues for its liquidation by military means, and seeks to counter a negotiated settlement in any form. This posture, bolstered by the regime’s vast financial resources, leads Libya to exert a disruptive influence in the Middle East, the Mediterranean and Africa. Libya supports subversion, insurgency and terrorism in the Arab States and elsewhere, and advocates the use of Arab oil resources as a political weapon to undermine western and particularly US support of Israel. It supports Palestinian terrorism as a legitimate weapon in the “Arab battle” against Israel. Libya’s machinations have increasingly isolated Israel diplomatically. (See Appendixes B and C to NSSM 185.)

III. Alternative Strategies Toward Libya

A. Option 1: Stall

Under this option the United States would make no special effort to improve relations with Qadhafi, but at the same time would seek to avoid reactions which could inflame the situation further. This would be fundamentally a waiting tactic on the assumption that one of two developments may occur in our favor in the next year or two: either that Qadhafi’s mercurial leadership will generate enough indigenous opposition to cause his ouster; or that under an eventual Egyptian-Libyan merger some of the more extreme aspects of Qadhafi’s anti-US policies will be submerged by a more moderate Egyptian approach.

In effect, this would be a continuation of our present policy. Under it, we would retain the flexibility to move to either a more punitive or more forthcoming policy if circumstances warranted. Moreover, under this option, while Qadhafi undoubtedly will go ahead on taking over more and more of the oil resources, it does not necessarily follow that the oil will be denied to the American market. Under this option the United States would make no special effort to approach the Libyan regime with the objective of seeking a basis for a less hostile relationship. Nor would the United States take actions hostile to the Libyan regime such as the termination of military sales and the supply of spare parts. In effect, our present policy would continue unchanged.

Specifically, we would:

—continue to allow the flow of spare parts and ammunition for the US military equipment already in the Libyan inventory.

—not formally turn down the Libyan request for eight C–130’s, but inform Lockheed that it should tell the Libyan Government that the lack of a positive decision by the US Government forces Lockheed to seek another buyer for the aircraft in the event the decision is negative. (Libya may regard this notification by Lockheed as the equivalent of an official US turndown; if so, a confrontation between the United States [Page 82]and Libya affecting the remaining US interests in Libya may become unavoidable.)

—renew the Lockheed maintenance contract every six months on an interim basis.

—not authorize sale of an air defense-radar system to Libya, but make no effort to instruct the interested companies to cease their discussions with the Libyan Government. Advise the companies, however, that sale of equipment that would compromise equipment used by the United States and its allies would not be authorized.

—work out a practical compromise on the Arabic-in-passports problem should this prove necessary to keep a modest US official presence in Libya and enable the oil companies to continue operations. If this can be worked out, we would continue to issue visas for Libyan students to come to the United States.

—continue our present policy of support for the US oil companies, including any legal efforts by them to block the sale of “hot” oil.

—continue to run periodic US military flights through Libya’s proclaimed “restricted” area if required for intelligence purposes or in support of the US right to fly over international waters. We would avoid to the maximum extent consistent with attainment of the foregoing limited objectives flight tracks which could precipitate a confrontation with Libya.

—seek to keep a small mission going in Tripoli, but do not accredit a new ambassador.

—not seek the good offices of other Arabs.

B. Option 2: Trade Off

This option would involve informing the Libyan Government that the United States is prepared to send a high-level special emissary to explore with Colonel Qadhafi and Prime Minister Jallud whether an improvement in US-Libyan relations is possible, notwithstanding our policy differences over the Middle East. The objective in sending an envoy would be to find, if possible, a way of preserving the remaining US interests in Libya, which already are sharply reduced. As those interests continue to erode, the desirability or practical usefulness of invoking this option correspondingly declines.

Libya may refuse to receive a special US emissary or use his visit as an occasion on which to castigate the US Government for its support of Israel. Nevertheless, by offering to send one, the United States would have demonstrated for the record, both at home and to other Arab countries, that it had tried to reach an accommodation before taking the negative decisions affecting Libya that now seem inevitable if the present deterioration in Libyan-US relations continue. If Libya refused [Page 83]to receive the emissary or declined to engage in serious discussion with him, the United States would proceed to other options. If Libya did agree to receive him, he would state that:

—The US Government is now considering a number of matters of interest to Libya, including 1) approval for a US company to install a modern air defense radar system for Libya (sell only air defense equipment that would not compromise equipment used by the United States and its allies), 2) sale of an additional eight C–130’s, 3) renewal of the C–130 maintenance and training agreement, and 4) continuation of the sale of spare parts and ammunition for military quipment previously sold to Libya.

—At the same time, we are faced with Libyan actions in a number of fields that make it difficult for us to respond positively to these requests. These actions include 1) the nationalization of American oil interests in Libya in violation of the Concession Agreements and generally recognized principles of inernational law, 2) a Libyan visa policy that makes normal Embassy operations impossible and imposes hardships on American citizens working in Libya, 3) the recent attempt to shoot down an unarmed US aircraft over international waters off the Libyan coast, and 4) repeated high-level Libyan attacks on the US Government.

—The purpose of his visit is to see if the Libyan Government is interested in reaching an accomodation on these points.

If the Libyan response were negative, the special emissary would express the disappointment of the United States and indicate that he would convey the Libyan decision to his own Government.

If the Libyan leadership stated that relations could be improved only if the United States were to withdraw its support of Israel, the current US policy on that subject would be restated.

If the Libyan response were postitive, the special emissary would propose that the Libyan Government take the following steps:

—Open discussions, before the end of 1973, for the settlement of outstanding US private claims against Libya;

—Assure the US Goverment that:

—the remaining American oil assets in Libya would not be further nationalized for at least five years.

—compensation agreeable to the Libyan Government and to the affected companies would be paid promptly to the latter if further nationalized after five years.

—accept American passports as valid travel documents qualifying otherwise eligible American nationals for Libyan visas (we would do the same with respect to Libyan Arabic-language passports).

To the extent that Libya indicated its willingness to take these actions, the special emissary would indicate his willingness to recom[Page 84]mend favorable consideration by his Government, subject to the usual restrictions, on the matters of interest to Libya listed above. He would not attempt to negotiate specific agreements on these questions since the purpose of his visit would be to ascertain whether a meaningful dialogue were possible, not to engage in detailed discussions.

C. Option 3: React

Under this option the United States would begin a process of measured overt retaliation against Libya for actions inimical to US interests. The decision to invoke this option could result from either of two situations: a) continued Libyan actions adversely affecting US interests in Libya or elsewhere, or b) a subtantial reduction in US interests in Libya which would minimize the Libyan Government’s opportunity to retaliate against the United States directly. Retaliatory bilateral actions are limited, but could include the following:

—cancel outstanding munitions control licenses and halt the flow of spare parts for American military equipment previously sold to Libya;

—inform Lockheed that the US Givernment will not authorize the export of the eight C–130’s which Libya hopes to begin receiving in November 1973, and tell the company that the planes should be sold to another buyer since the US decision against Libya was final;

—refuse, as a matter of general policy, authorization for third-country sales of military equipment or technology to Libya;

—refuse to authorize the sale of an air defense-radar system which Libya is interested in purchasing from an American supplier; instruct the interested companies to cease all discussions with the Libyans on this subject;

—terminate Lockheed contract for C–130 maintenance and training;

—delay indefinitely the issuance of visas to Libyan students and to other Libyan travelers to the United States, unless Libya issues visas to Americans who wish to travel to Libya notwithstanding the absence of Arabic from their passports;

—take steps to discourage the travel of US citizens to Libya, thereby restricting Libyan access to American petroleum expertise;

—vigorously support US companies in their legal pursuit of “hot” oil in the United States and abroad;

—continue U.S. reconnaissance or operational flights through Libya’s proclaimed “Restricted” area, HLR 22.

Under this option the United States would also begin a process through a variety of channels to try to limit Libyan influence. In doing so, it would seek the cooperation of friendly governments, including [Page 85]Arab governments, in intelligence exchanges regarding Libyan activities and possibly in supporting political, media and other elements opposed to Libyan extremism. Such approaches would be based on the proposition that Qadhafi’s Libya is a greater threat to other regimes, particularly in the Arab world, than it is to the United States.

Exercise of the foregoing option could result in the Libyan closure of the American Embassy in Tripoli; withdrawal of the Libyan Embassy in Washington; and possible nationalization of the remaining US oil company assets in Libya.

  1. Summary: Newsom, the Chairman of the NSC Interdepartmental Group, forwarded a follow-on options paper to NSSM 185 requested by the Senior Review Group on August 14.

    Source: National Archives, Nixon Presidential Materials, NSC Institutional Files (H-Files), Box H–200, NSSM 185. Secret.