Every major Western government now makes up histories of long-held opposition to Muammar Gaddafi’s dictatorship. Then there’s the truth: As The Financial Times reminded its readers in January this year (H/T: Peter Dwyer) the West’s 2003 decision to change Gaddafi’s regime status from dictatorship to reformer, was really about business.

Tony Blair flew down to Tripoli in 2004 to personally embrace Gaddafi; Silvio Berlusconi backed Gaddafi “to such a degree that trade between Italy and Libya is today eight times that between Tripoli and the UK;” on a visit to Paris, Gaddafi’s “Bedouin tent was set up within sight of the Elysée palace;” and the “US, Brazil, Germany have all rushed to do business with his regime.”

So why is Libya so important to the West?

There were two prizes. First, oil and gas. With 44.3bn barrels of proven reserves, Libya has more oil than any other African country, four times as much as Britain and Norway combined. A confidential document recently released by the UK government declares that Libya is one of the few countries “with medium-term capacity to bring significantly more energy to world markets”. For BP, a company with close relations to the UK government, this was immensely attractive. In 2007, it agreed to invest $900m in a deal to explore Libyan fields. As Tony Hayward, then chief executive, said at the time, this was BP’s “single biggest exploration commitment anywhere in the world”.

The second attraction was the operation of Libyan Investment Authority, a sovereign wealth fund worth $60bn-$80bn, according to analysts. The fund, which opened a London office in 2009, has invested in Britain to a lesser degree than rivals in Qatar and Dubai. But it has recently disclosed a 3.01 per cent stake in Pearson, the educational publisher and owner of the Financial Times. It also owns considerable London commercial property assets. Mohamed Layas, LIA’s head, told US diplomats last year that he preferred operating in the British capital to the US because of the “ease of doing business” and the “relatively uncomplicated tax system”.

Yes, the FT wrote that.

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