2011-01-31 Cables: Libya threatened to seize assets of Petro-Canada

US State Department cables released on Monday by the Telegraph (London) and WikiLeaks reveal that, in September 2009, in response to a perceived insult to President Muammar al-Qadhafi from the Canadian government, the Libyan National Oil Company threatened to nationalize the local assets of Petro-Canada, then a Canadian Crown corporation. The cables tie the diplomatic row to Foreign Affairs Minister Lawrence Cannon's threat to give al-Qadhafi a "public tongue-lashing" over his reception of Abdel Bassett al-Megrahi, whose conviction in the case of the Pan Am 103/Lockerbie bombing and recent release from prison had both been controversial.

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The US ambassador notes the general concerns that Libya's successive threats to Petro-Can had raised in the international community:

From 09TRIPOLI867:

10.(C) Comment: Libya's moves against PetroCanada, set against the backdrop of an escalating conflict with Switzerland, have left the expatriate business community on edge. Libya's willingness to explicitly link commercial contracts to political disputes has only added to the international energy companies' growing frustration with the Libyan business climate. Although most oil industry insiders do not believe the Canadian saga will escalate to the extent of the Swiss-Libya standoff, it is unclear how this dispute ultimately will be resolved. End comment. CRETZ

In the first of the cables the ambassador recounts a visit from the UK ambassador to Tripoli relaying such concerns and advises:

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

Of interest in Canada is the particularly aggressive stance FM Cannon and the government of Stephen Harper took towards Libya on the Megrahi file and the impact their actions and rhetoric had on foreign relations more broadly. See also the Globe and Mail, "Diplomatic spat with Libya led to threat to seize Petro-Canada assets."