BIG OIL REASON FOR RELEASE OF LIBYAN TERRORIST

I admit it. I subscribe to Stratfor. I know. I know. You thought I made all this stuff up, didn''"t you? If you were as incensed as I was about Scottish Justice Minister'' Kenny MacAskill'"s release of the man convicted in the Lockerbie bombing on compassionate grounds, then you will happy to know that wasn"'''t the real reason.

STRATFOR

Tuesday August 24, 2009

In a special session of the Scottish Parliament on Monday, Scottish Justice Secretary Kenny MacAskill repeated his explanation for why his government decided to release Abdel Basset Ali al-Megrahi, the Libyan convicted of terrorism charges in connection with the bombing of Pan Am Flight 103. The bombing over Lockerbie, Scotland, in December 1988 caused the deaths of 270 people. Al-Megrahi, whose release from prison on Aug. 20 for “humanitarian reasons” (doctors give him only three months to live due to prostate cancer) has sparked outrage in both the United Kingdom and the United States, where some have even called for a boycott of Scottish products. U.S. President Barack Obama and FBI Director Robert Mueller also spoke out against the release.

The public outrage and consternation in the United States and United Kingdom mirror the uproar in Switzerland, where President Hans-Rudolf Merz’s apology to Libya — offered on the same day as al-Megrahi’s release — continues to be the top story in the usually placid and uncontroversial Alpine state. Merz traveled to Tripoli last week to apologize in person for the arrest in July 2008 of Hannibal Gadhafi — the son of Libyan President Moammar Gadhafi — and his pregnant wife by Geneva police, who claimed that the two were abusing their servants in a Geneva luxury hotel (and even threatening to throw one of the maids out of a window). The incident last year led the Libyan leader to cut off oil exports to Switzerland (shipments that account for 20 percent of total Swiss oil use), and to keep two Swiss engineers essentially “hostage” in Libya, refusing to allow them to leave the country.

“The people in both the United Kingdom and Switzerland are outraged that their governments appear to be kowtowing to the Libyan dictator.”

In the United Kingdom, rumors are rampant that Business Secretary Peter Mandelson negotiated al-Megrahi’s release in return for lucrative energy deals for BP in Libya. The Swiss, meanwhile, are accusing Merz of bowing under pressure relate to Libyan energy exports and Gadhafi’s decision to pull $5 billion out of Swiss bank accounts. The people in both the United Kingdom and Switzerland are outraged that their governments appear to be kowtowing to the Libyan dictator. However, the public might be missing the deeper, geostrategic reasons behind the U.K. and Swiss governments’ growing tolerance for Libya.

At the heart of this week’s collective outrage is the simple fact that Europe’s efforts to diversification away from Russian energy are leading the continent right into the outstretched arms of leaders like Gadhafi. Since the Ukrainian gas crises in the winters of 2005-2006 and 2009, Europe’s main goal has been to find energy sources other than Moscow, which uses its natural gas exports to achieve geopolitical goals.

However, the energy alternatives to Russia are to be found in the Middle East and North Africa — namely, countries such as Iran, Iraq, Algeria, Egypt and Libya. Iran has huge potential for energy exports, particularly natural gas, but developing the massive infrastructure that would be needed to ship the gas through pipelines via Turkey would first require a substantive political evolution in Tehran. Even at that point, it is not clear whether Iran would refrain from attempts to parlay its position as a major energy supplier to Europe for geopolitical concessions in the region. Internally, Iraq is a mess in terms of both politics and security. Algeria, while politically coherent, has been dealing with a low-level insurgency for decades. Egypt is among the more stable Middle Eastern countries, but its energy reserves are so limited that there is not much time before it becomes an energy importer.

Then there’s Libya. The political enigma that is the Gadhafi regime frequently links political relations directly to investment relations. The government, obsessed with security, runs a tight ship, but the unpredictability built into the system is more than enough to induce caution among energy firms. As the Hannibal drama with the Swiss and the Lockerbie bomber’s release demonstrate, the Europeans will have to tolerate Gadhafi’s mood swings if they expect the energy to keep flowing.

Europe’s conscious decision to reduce its energy dependence on Russia will improve its ability to stand up to geopolitical challenges from Moscow — particularly in Ukraine, the Baltics and the Caucasus. But this additional room to maneuver comes at a price. The Europeans will have to swallow their pride in dealing with an unpredictable regime like Libya. Indeed, much of the public outrage in the United Kingdom and Switzerland can be viewed as the collective angst of two powerful European countries that find themselves having to stroke the ego of a North African country more often associated with impoverished illegal immigrants heading for Europe’s shores than with holding Europe’s political elite hostage. Still, if Europe wants to loosen Russia’s energy grip, it will have to get used to indignation.