News Analysis: Ghaddafi's visit to Rome fosters business ties with Italy

by Silvia Marchetti

ROME, June 13 -- Libyan leader Muammar Ghaddafi's just-concluded visit to Italy will boost Italy-Libya business ties and pave the way for greater investment opportunities in energy and infrastructure, observers say.

During his first-ever visit to Italy, Ghaddafi met in Rome with Premier Silvio Berlusconi, President Giorgio Napolitano, ministers, politicians and businessmen.

Libya is interested in increasing its stakes in Italian industry through its 50 billion euros (70 billion U.S. dollars) sovereign wealth fund.

Abdulhafid Zlitni, chairman of the Libyan Investment Authority, on Thursday confirmed reports that Libya was planning to invest in Italy's biggest utility company ENEL and could soon acquire stakes in telephone operator Telecom Italia.

The Libyan Central Bank and the Libyan Investment Authority might even increase their participation in Unicredit Bank, Italy's second largest bank.

After a formal dinner with Ghaddafi, Economic Development Minister Claudio Scajola confirmed Libya's economic ambitions in Italy. Scajola told local media that Libya might also increase its stake in energy giant ENI, which buys most of its crude oil from Libya.

Scajola added that new agreements on solar energy and infrastructure have been discussed, along with the creation of four free-trade zones for Italian companies investing in the North African country.

"Libya has great amounts of liquidity and is very interested in making diversified industrial investments in Italy, thanks to the new friendship between our two countries," Scajola said.

Ghaddafi's visit to Italy was a result of 40 years of hard-spun diplomatic negotiations. It followed the August 2008 signing of a 5-billion-U.S.-dollar compensation agreement to make amends for Rome's 1911-1941 colonial rule.

The agreement launched a strategic partnership between Libya and Italy in a variety of fields and in the fight against terrorism and illegal immigration. It entered into force on March 2 with Berlusconi's visit to Sirte and his formal apologies for colonialism.

According to the treaty, Italy is to build infrastructure for a total of 5 billion U.S. dollars. The work will be carried out by major Italian companies operating in the fields of hydrocarbon research, development and constructions.

On Wednesday, Berlusconi and Ghaddafi signed bilateral agreements to boost cooperation in sea resources, develop student exchange programs and implement special fiscal measures for companies' investments.

On Friday, Ghaddafi met with the Italian association of entrepreneurs and officially opened Libyan doors to all Italian companies wanting to do business in his country.

"Italian firms will have the priority in the energy sector and we will not favor any other country," Ghaddafi said.

The Italian exclusivity in Libya deeply pleased Italy's industrial leader Emma Marcegaglia, who hailed "the historical turning point in Italy-Libya relations."

Arturo Varvelli, a researcher at the Milan-based ISPI institute of international politics and author of Italy and the Rise of Ghaddafi, said "it's typical of Ghaddafi to show an instrumental use of history."

"It benefits his position in Libya, consolidating his power," Varvelli said. "He says and does what the Libyan people want him to do.