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Oil and trade lure Berlusconi to Lybian talks

August 28, 2009

By Guy Dinmore in Rome and Heba Saleh in Cairo

published on the Financial Times on August 28 2009

Libya is the biggest provider of crude oil to Italy by far and its sovereign wealth fund may yet prop up some major Italian companies, but Silvio Berlusconi is discovering – like Gordon Brown of the UK – that dealing with Colonel Muammer Gaddafi can prove to be a double-edged sword.

Flying to Tripoli on Sunday the Italian prime minister will be the first western head of government to greet the Libyan leader since the controversial homecoming of the convicted Lockerbie bomber.

But first, this evening (Friday), Mr Berlusconi has a related but potentially more important meeting closer to home, with Cardinal Tarcisio Bertone, the Vatican’s secretary of state.

At dinner, following a medieval Catholic festival bestowing absolution of sins, the meeting was originally intended as a kind of reconciliation with the Church in the wake of harsh attacks by senior clerics on the 72-year-old tycoon’s personal life involving relationships with prostitutes and a teenager.

But a political row that has erupted over the Vatican’s bitter condemnation of a deal with Libya involving Italy’s forced return of African refugees has also thrust immigration and human rights to the fore.

That Mr Berlusconi has met Colonel Gaddafi more often than the number two in the Vatican over the past year is a measure of the importance of Libya’s oil and its estimated $100bn sovereign wealth fund.

Analysts also suggest that the right-wing and resurgent Northern League in Mr Berlusconi’s diverse coalition is exploiting the prime minister’s weakness over his personal scandals to push for a tough line on immigration. The hardline party’s newspaper responded to the Vatican’s criticism over refugees by suggesting to the alarm of the Church that the 1929 concordat with the Italian state be reviewed.

The harsh exchanges were provoked by the arrival on Italian shores of five Eritreans on the brink of death in an inflatable dinghy who recounted how 73 others had perished at sea and were thrown overboard, including women who had delivered still-born children. They also said some 10 vessels ignored their plight.

The UN estimates that, under the deal finalised with Libya in May, Italy has forcibly returned 900 to 1,000 Africans intercepted in international waters and not screened for refugee status as the UN says they should be. Many have fled conflicts in the Horn of Africa.

The Italian government says the policy saves lives. Aid agencies dispute this, arguing that desperate people will take greater risks to reach Italian waters where they are safe from immediate expulsion.

Aid workers also believe that a new Italian law criminalising illegal immigration and those who help such migrants is deterring skippers of Italian fishing boats and other vessels from rescuing those in distress.
Oil and business ties are expected to top the agenda when Mr Berlusconi joins Mr Gaddafi to celebrate the accord they forged a year ago in which Italy said it would pay $5bn over 25 years as reparations for its colonial rule from 1911 to 1943.

In return, Libya made the deal on boatpeople leaving its shores, and is giving Italian companies priority in big infrastructure projects, such as Finmeccanica’s joint aerospace venture with a Libyan fund and its award last month of a 541m euro railway signalling contract.

Libya’s sovereign wealth funds are seeking stakes in Italian companies, including a possible 10 per cent holding in Eni, the energy major controlled by the Italian government.

On Tuesday Mr Gaddafi will celebrate the 40th anniversary of the coup that ousted the monarchy and brought him to power. He will be joined by the Frecce Tricolori (Tricolour Arrows) of Italy’s air force acrobatic team and, according to sources in Tripoli, some 40 to 50 African leaders, including Omar Hassan al-Bashir, Sudan’s president indicted by the International Criminal Court over the Darfur conflict.

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