We have stopped everything in Libya. It is impossible to work,” the deputy CEO of an Italian company told Xinhua in an interview on Wednesday. Ferretti International, an engineering and construction company, brought over around $11-13 million in machinery and equipment to Libya in 2008, where it had 30 Italians and almost 1,000 other workers prior to the late dictator Muammar Qaddafi’s downfall in 2011. In the ensuing chaos, Ferretti has had to evacuate its workers, and given the shifting security situation it may not be able to bring back its equipment.
In the wake of worsening chaos from Libya’s civil war, which has allowed ISIS a regional foothold for terrorism, Italy closed its embassy in Tripoli on Sunday, and repatriated its staff, the death knell of a bilateral relationship that had flourished while Prime Minister Silvio Berlusconi and Qaddafi were in power. In 2008, while Libya provided 25% of Italy’s oil and gas imports, the two countries signed an “eternal friendship” pact, which included an Italian pledge to invest $5 billion in Libyan infrastructure. Prior to 2011, their bilateral trade was roughly $5 billion per year.
Yet now the Chamber of Commerce Italafrica has estimated that Italian companies operating in Libya will face an immediate aggregate loss of 1 billion euros ($1.14 billion). Italian energy giant Eni, whose 2014 net profit was down 13% due to lower oil prices and disrupted supplies, is particularly vulnerable. It has billions of dollars’ worth of investment in Libya, but fears of terrorist attacks on wells and pipelines have all but shut down oil and gas production within the country. The company withdrew its Italian workers earlier in February, leaving Italian staff only at Eni’s offshore oil platforms, which are still producing.
Italian defense firm Finmeccanica has seen a lucrative $285 million joint venture with the Libya Africa Investment Portfolio from 2009 fall through. Its other costly investments in the country, including a satellite factory built in 2013, have not met their goals and are at further risk, according to the Daily Beast.
“Yet it is difficult to assess the true damage as in Libya there are hundreds of Italian small and micro businesses besides big companies,” Alfredo Carmine Cestari, President of the Chamber of Commerce Italafrica, explained to Xinhua. He noted that Italy traditionally is one of the main agro-food and technology suppliers of Libya, while infrastructure, health, textiles, raw materials, building materials, and telecommunications are other important business sectors.
Most ominously, Cestari warned that “many Italian firms will go bankrupt as the Libyan market was indispensable for them.”