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C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000073 
 
SIPDIS 
 
DEPT FOR NEA/MAG 
 
E.O. 12958: DECL:  2/1/2019 
TAGS: PREL EINV EPET LY SP
SUBJECT: A KING IN AL-QADHAFI'S COURT: SPAIN'S JUAN CARLOS VISITS 
LIBYA 
 
REF: TRIPOLI 72  TRIPOLI 00000073  001.2 OF 002   CLASSIFIED BY: Gene A. Cretz, Ambassador, Embassy Tripoli, Department of State. REASON: 1.4 (b), (d) 

¶1. (C) Summary: King Juan Carlos of Spain's visit to Libya served as a platform for the GOL to walk back Muammar al-Qadhafi's announcement that oil production might be nationalized.  In the first visit of a Spanish head of state since Libya's independence in 1951, Juan Carlos' delegation managed to secure symbolic compensation for unpaid, decades-old debts to Spanish companies.  Al-Qadhafi, however, remained fixated on Gaza (duly instructing the king on his one-state solution) and bilateral visa deals.  The two leaders reportedly got on well and, in an unusual move, al-Qadhafi invited 16 Spanish businessmen to join the king in one of their meetings. The king's business-minded entourage was reportedly heartened by al-Qadhafi's promises to protect their investments in Libya and assurances by senior GOL officials that oil nationalization was not immediately in the offing.  End Summary.  

AL-QADHAFI ONLY "THINKING OUT LOUD" ON NATIONALIZATION  

¶2. (C) In a short but symbolically important visit January 22-23, characterized by all the pomp and goodwill the Libyans are capable of mustering, Spanish King Juan Carlos served as a convenient interlocutor for the GOL to walk back Muammar al-Qadhafi's suggestion in a January 21 video conference with Georgetown University students that Libya might nationalize oil production (reftel).  The king - focusing on economic and commercial links between Spain and Libya - brought with him the Foreign Minister, the Minister of State for Trade, and 16 senior business executives, including REPSOL-YPF president Antoni Brufau.  The two leaders met three times over the course of the 24-hour visit, once with Brufau and his 15 business companions who heard the leader repeat his statement on nationalization "because [Libya] has no other choice." Saying Libyans enjoyed a close relationship with Spain, he added reassuringly that "Spanish companies have nothing to fear."  Senior MFA adviser Mohammed Siala separately told the businessmen that nationalization was "unlikely."  After the visit, REPSOL head Brufau told Spanish press that al-Qadhafi's comments on nationalization had been nothing more than "thinking out loud" and that he had no fears that nationalization was imminent.  

¶3. (C) Spanish Foreign Minister Miguel Angel Moratinos met separately with his Libyan counterpart, Abdulrahman Shalgam, to sign a memorandum of understanding securing compensation for unpaid private debt to Spanish companies dating back to the early 1980s.  Under its terms, Libya agreed to pay USD 18 million to settle USD 60-80 million in total claims.  Spanish DCM Rafael Reig conceded that the payment was largely symbolic, noting that all of the firms involved had long ago written off the debt, but that payments as large as USD 5 million were akin to "winning the lottery" for the companies involved.  In a further gesture to Spanish business, al-Qadhafi highlighted the historic reliability of Spanish dealings with Libya and opened the door for further investment in infrastructure projects and renewable and solar energy.  Al-Qadhafi made special mention of REPSOL, which stayed on through most of the sanctions period. REPSOL now produces 300,000 of Libya's estimated 1.8 million barrels per day and renewed its production contract in July 2008 through 2032.  

AL-QADHAFI: MY KINGDOM FOR A VISA  

¶4. (C) In a post-visit readout to EU chiefs of mission attended by the DCM, the Spanish Ambassador said some progress had been made on two bilateral agreements.  Spain expects Libya to ratify a Protection of Investments agreement during the spring session of the General People's Congress (Spain ratified in November) and negotiations toward a double taxation agreement continue. He added that Spain had also signed a memorandum of understanding covering visas.  In the course of negotiating an EU Framework Agreement, Libya has been vocal in decrying the 10-day wait time Libyans face in applying for a Schengen visa and is looking to secure bilateral agreements with member countries to drop their security consultation requirements and commit to a 48-hour turnaround time for visas.  According to a Spanish Interior Ministry official seconded to the embassy here, Spain agreed to remove itself from the group of 10 countries requiring additional security checks for Libyans and would start talks to exempt diplomats from needing "national" visas.  

KING HEARS AL-QADHAFI'S ONE-STATE SOLUTION PLAN  

¶5. (C) According to the Spanish Ambassador, al-Qadhafi also briefed Juan Carlos on his one-state "Isratine" solution to the Israeli-Palestinian conflict.  Saying it was "wrong that  TRIPOLI 00000073  002.2 OF 002   Palestinians don't have weapons and Israel does", al-Qadhafi cited favorably the example of Charles de Gaulle as a leader who had banned arms to both sides of the conflict.  

¶6. (C) Comment: Spanish diplomats here are rightly pleased with the outcome of the visit, despite the fact that the deliverables were largely symbolic.  Understanding that business is politics in Libya and that al-Qadhafi controls both, Spain will likely benefit commercially from the warm interactions between the king and al-Qadhafi.  Other gains will be more difficult, with the Libyan diplomatic apparatus growing increasingly frustrated with the Europeans' collective visa policy.  Afterglow from the visit may prove to be brief, though, as the Bulgarian Ambassador, Cassandra-like, reminded his Spanish and EU colleagues that Bulgaria had once enjoyed "the best relations" with Libya, but suddenly became "the most hated country in Libya" after Bulgarian nurses in Benghazi were falsely accused by the GOL of infecting Libyan children with the AIDS virus.  End Comment. 
CRETZ