January 19, 1989
The President has authorized the Department of the Treasury to modify the special licenses of American oil companies operating in Libya.
In 1986, when the United States imposed broad trade sanctions against Libya, the Department of the Treasury authorized American oil companies operating in Libya to negotiate standstill agreements with the Libyan Government. Those agreements provided for a suspension of company operations in Libya to protect the companies from charges of default on their contractual obligations to work their concessions in Libya. The 1986 standstill agreements expire June 30, 1989.
The President's decision has been taken to protect U.S. interests. It will eliminate the significant financial windfall which Libya has been receiving under the 1986 standstill agreements by marketing the U.S. oil companies' equity shares of oil liftings. It also protects the U.S. oil companies from a potential breach-of-contract claim, under which the Libyan Government might otherwise attempt to seize the oil companies' assets in Libya and withdraw the companies' concession rights there. The effect of the decision will be to permit the U.S. oil companies, subject to the restrictions on trade and travel which remain in effect, to resume their operations in Libya, transfer operations to foreign subsidiaries, or sell their assets.
The United States trade embargo against Libya and the freeze of Libyan assets in the United States, which were renewed January 7, 1989, for 1 year, remain in effect, as do the bans on travel-related transactions and the use of U.S. passports for travel to Libya.
This decision does not represent a change in the attitude of the U.S. Government toward Libya. We remain deeply concerned about Qadhafi's continued support for terrorism and subversion as well as Libyan efforts to develop a chemical weapons capability.