The diplomacy associated with Libya’s 2003 decision to abandon its weapons of mass destruction (WMD) programs and support for terrorism has been rightly held up as a model. After years of isolation and international sanctions, Libyan dictator Muammar Gaddafi decided to change course. He agreed to dismantle and repatriate most of his nuclear infrastructure, to eliminate his chemical weapon stocks and ballistic missiles, and to abandon the use of terrorism as a foreign policy instrument. Libya wanted to be largely normalized and was prepared to pay a price to achieve this end but also wanted to receive the benefits of this normalization.
In this, Libya represents a useful test case for not only how sanctions can be imposed but also for how they can be relieved. Though often ignored as a component of the sanctions story, relief from sanctions once imposed is as important as the manner of their imposition. This is because sanctions are not just about denial of resources or access to an adversary; they are also intended to serve as an object lesson for other potential sanctions targets. For this reason, it is important that sanctions imposition is seen as aggressive and thorough but also that sanctions relief is seen as tangible and useful to those that may—one day—find themselves on the receiving end of a future sanctions effort. If sanctions are to serve their purpose for diplomatic leverage by inflicting consequences for misbehavior, then those who are made subject to them must also be able to articulate to audiences both at home and abroad that relief has its benefits.
Based on a review of the data and anecdotal history, there appears to be sufficient grounds to support the contention that sanctions had an effect on Libya’s economy (and eventually on its decision-makers), as well as did their removal. There are inconsistencies in the data and historical record with respect to this conclusion. After all, though Libyan economic growth petered out, it did not bottom out as wide-ranging economic sanctions would normally intend. Likewise, though the Libyan economy did grow and investment increased after 2004, the fact that Libyan oil exports also increased at the same time dampens the enthusiastic case for the effects of sanctions relief. Moreover, considering the arc of time under consideration, it is possible that other issues—such as Gaddafi’s fear after 9/11 that Libya might be next after Afghanistan for harboring terrorists or that possession of a nascent WMD program would be similar cause for invasion after Iraq—weighed heavily in Libyan strategic thinking. But sanctions did play a role in constraining the decision-making of Libya and its ability to improve its economy. Moreover, in the end, a desire to rid Libya of sanctions—which Libyan officials have themselves affirmed was part of the Libyan strategic calculus at the time—led Libyan officials and Gaddafi personally to make changes to Libyan policy in a manner that was conducive to international interests with respect to WMD proliferation and terrorism.
For future relief scenarios, there are two recommendations for how best to evaluate sanctions relief performance.
Both recommendations could complicate negotiations of agreements and selling them afterward, but they would also help to ground subsequent debates both at home and abroad.
National oil companies (NOCs) produce about half of the world’s oil and own the bulk of oil and gas reserves. They are also large issuers of bonds held by international financial institutions. Their ESG risks should be a matter of great concern.