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S E C R E T SECTION 01 OF 02 TRIPOLI 000770

NOFORN SIPDIS STATE FOR NEA/MAG; STATE PLEASE PASS USTR; ENERGY FOR GINA ERICKSON; COMMERCE FOR NATE MASON.

E.O. 12958: DECL: 9/28/2019

TAGS: PREL ECON EPET EMIN ENRG LY

SUBJECT: LIBYA'S LATEST CONTRETEMPS - WITH CANADA TRIPOLI 00000770 001.2 OF 002

CLASSIFIED BY: Gene A. Cretz, Ambassador, U.S. Embassy Tripoli, Department of State. REASON: 1.4 (b), (d)

1.(S/NF) Summary: The Canadian Ambassador to Libya confirmed September 28 that the Libyan Government had canceled Libyan Leader Muammar al-Qadhafi's planned stop in Newfoundland in protest of the Canadian Foreign Minister's statement that he would give Qadhafi a "public tongue-lashing" regarding the hero's welcome given Pan Am 103 bomber Abdel Bassett al-Megrahi. The contretemps is escalating into a commercial dispute, as the National Oil Company called in the Chairman of PetroCanada September 27 with a threat to nationalize the company's operations in Libya if the Canadian Government did not offer a formal apology. Post recommends supporting the Canadian Embassy if a request is made to intervene with the Libyans on Petrocanada's behalf. End Summary.

2.(S/NF) Canadian Ambassador to Libya Sandra McArdle called the Ambassador September 28 to inform him of the escalating contretemps between the Canadian and Libyan governments engendered by Muammar al-Qadhafi's proposed September 29-30 stopover in Newfoundland en route to Seville, Spain. McArdle told us that Canada's minority government, facing tough elections, had initially planned to cancel Qadhafi's one-day stopover in Newfoundland. On instructions from Ottawa, McArdle said that she informed the Libyan Government in mid-September that Qadhafi was not welcome to visit Canada at this time. McArdle, who had just arrived in Libya in late August, had not yet presented her credentials at that time and said that she seriously believed for a few days that she could be PNG'ed or have her agrement revoked.

3.(S/NF) Fearful of delivering bad news to Qadhafi, McArdle explained that the notoriously slow Libyan bureaucracy, delayed passing Ottawa's message to the Leader for several days. In the meantime, Canadian companies with business interests in Libya launched a furious lobbying effort and convinced Ottawa to allow the trip to go forward. However, McArdle said that the Canadian Government's precarious domestic situation and upcoming elections pressed the Foreign Minister to go public with his very stern message. As of September 26, McArdle said that she had not yet received any reaction from the Libyan Government regarding her Foreign Minister's statement, although she expected it would not be well-received.

LOGISTICAL DETAILS COMPLICATE LIBYAN STOPOVER REQUEST

4.(C/NF) McArdle added that the last-minute nature of the trip had posed serious logistical challenges. The Canadian Government was forced to issue last-minute visas for Qadhafi's 130 delegation members at its consulate in New York. She hinted that the Canadian Government had waived many of its visa requirements and security checks, relying instead on the fact that Qadhafi and his party had undergone extensive U.S. vetting in order to receive their UNGA visas, but later told the Ambassador that the Libyans appeared to have been offended by Canada's visa requirements and procedures.

GOL DEMANDS APOLOGY, THREATENS TO NATIONALIZE PETROCANADA

5.(S/NF) On September 27, the Libyans responded strongly to the perceived Canadian snub of Qadhafi. The National Oil Corporation called in the head of PetroCanada abruptly September 27, threatening to nationalize the company if the Government of Canada did not offer a formal apology to Qadhafi for the Canadian FM's statement. The Libyans set a deadline of September 28, which McArdle told the Ambassador would be difficult to meet given that offices in Ottawa would open near close of business Tripoli time and after the Canadian weekend.

6.(S/NF) McArdle said she has advocated some kind of public and private statements from the Canadian PM and FM, which would indicate a Canadian welcome for the Libyans and hopefully turn the situation around. Libyans here are frantically calling the Canadian Embassy, concerned that if the issue is not resolved, Qadhafi's trip home will be complicated by lack of a place to stop for necessary refueling.

UK EMBASSY REQUESTS GUIDANCE ON INTERVENTION IN SUPPORT OF PETROCANADA

7.(S/NF) British Ambassador Sir Vincent Fein requested to meet the Ambassador on short notice September 28 to say he had queried London to see if the FCO wanted any intervention on the TRIPOLI 00000770 002.2 OF 002 basis of concern over commercial interests (i.e., that the Libyans should not be doing this type of retaliation as it will spook all investors. The action will heighten concern given that the oil and gas sector has been traditionally protected from whim, except of course when it came to seeking contributions for the compensation fund and the difficult contract negotiations that the Libyans are engaging in with the oil companies). The Ambassador told Fein that he would see if there was any similar interest in Washington to intervene on Petrocanada's behalf.

8.(S/NF) Comment: Post believes it would be in the USG's interest to weigh in on the same basis as the British may decide to do: namely, to emphasize that it is not good for Libya to threaten existing and potential investors and violate the sanctity of contracts with such abandon. The situation between the Libyans and Canadians reflects vintage Libyan policy to strike hard at any quarter that insults the Leader publicly. The issue may be a bit more complicated by the fact that Petrocanada's new owner, Suncorps, was reportedly trying to divest itself of Libyan assets anyway (septel). End Comment. CRETZ