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Gaddafi on a shopping spree in Italy

June 11, 2009

By Guy Dinmore in Rome

published on FT on June 11 2009

Muammar Gaddafi on Thursday launched a shopping spree in Rome on his fence-mending visit to Libya’s former colonial ruler, using his $70bn sovereign wealth fund to scope out further stakes in Italian industry and infrastructure.

Despite a few political protests by opposition parliamentarians, students and members of the Jewish community driven out of Libya in the 1970s, Italy’s centre-right government celebrated the Libyan leader’s red carpet visit – his first since taking power in 1969 – as a welcome boost for a struggling Italian economy.

How the world is changing was not lost on Franco Frattini, Italy’s foreign minister, who at the same time was hosting a meeting of G8 development ministers focused on improving aid to Africa and examining the impact of the global financial crisis.

Libya has emerged as a major donor in sub-Saharan Africa, Mr Frattini said, even as Italy’s “financial constraints” have forced it to curtail – but, it insists, not abandon – the ambitious aid goals it set out at the Group of Eight summit at Gleneagles in 2005.

“Libya at an international level is taking on a more cooperative role,” Mr Frattini told the Financial Times. He disclosed that Mr Gaddafi had agreed to work with Italy in trying to stabilise and rebuild Somalia where the embattled government is fighting off militant Islamists.

Mr Gaddafi, who renounced weapons of mass destruction in 2003, will mark another milestone in his international rehabilitation by attending the G8 summit in Italy next month as president of the African Union.

Among Mr Gaddafi’s 200-strong entourage in Rome was Abdulhafid Zlitni, chairman of the Libyan Investment Authority, who said Libya was looking at investing in Italian industry. He named Enel – Europe’s second largest power utility – and Impregilo, a  construction company. Libya was also “following the value of Telecom Italia stock”.

Claudio Scajola, Italy’s minister of economic development, said that “in this new climate of friendship” Libya might also increase its stake in Eni, Italy’s energy major which sources the largest share of its global crude oil production from Libya. The construction of four free-trade zones for Italian companies in Libya was also on the agenda, plus agreements on solar energy and infrastructure.

Italy is Libya’s largest trade partner. Libya has held long-term stakes in Fiat carmaker and Juventus football club. It recently helped Unicredit in the bank’s capital raising by building a 4.6 per cent stake, and announced its intention to buy up to 10 per cent of Eni.

Silvio Berlusconi, prime minister, clinched drawn-out efforts to take relations with Tripoli to a new level last August when he visited Libya, apologised for Italy’s 1911-43 period of  colonial occupation and pledged $5bn in compensation over 25 years.

In return, Italy got priority in Libyan infrastructure projects and – of significant political value to Mr Berlusconi – an immigration deal where Libya would take back African refugees intercepted at sea by Italian forces on their way to Italy. That agreement was condemned by the Italian Catholic church and the United Nations refugee agency.

Mr Gaddafi praised his hosts for righting the wrongs of colonial rule and lectured them on the ills of the past.  He riled some Italians on his arrival by pinning a photograph to his chest of Omar al-Mukhtar, a resistance hero executed by Italian Fascists in 1931.

Resistance by some Italian lawmakers obliged Mr Gaddafi to address the Senate not in the main chamber but in a less prestigious hall. Mr Gaddafi spoke of terrorism, saying people should understand the reasons behind it. He did not directly mention the 1988 bombing of the Pan Am flight over Scotland in 1988 for which Libya accepted responsibility.

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