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BEIRUT, Lebanon, March 1 (UPI) -- The arms embargoes slapped on Libya by the United Nations and the European Union could cost international defense companies, particularly those in Europe and Russia, billions of dollars.
Much will depend on how long the sanctions last and whether Libyan leader Moammar Gadhafi, who has ruled Libya with an iron grip since 1969, wins his fight for survival against his many enemies.
Those sales must be coming back to haunt Europe's arms manufacturers now as Gadhafi uses the weapons and equipment they supplied to fight off an insurgency to topple his 41-year-old regime.
Russia has also been one of Libya's main arms suppliers, as Moscow was during the Cold War.
Since 2004, the Tripoli regime has been spending big on modernizing its military forces.
According to defense industry sources, Russia stands to lose $10 billion in arms sales to Libya and other North African states hit by the wave of political unrest.
Italy, the former colonial power in Libya and now one of its closest economic partners, could lose as much as $1 billion, the sources estimated.
The Interfax news agency quoted a Russian military source as saying that Moscow has orders for equipment worth $2 billion, with deals worth another $1.8 billion under negotiation before the uprising against Gadhafi began in February.
Libyan Defense Minister Younes Jaber went on a spending spree in Moscow in January 2010 and signed arms deals worth $1.79 billion.
These included six Yakovlev Yak-130 fighter-trainer aircraft. Libya had also been expected to buy 12-15 Sukhoi Su-35 Flanker strike aircraft under an $800 million contract that was never reported signed.
"We're really alarmed by this," Russian Defense Minister Anatoly Serdyukov told Interfax Sunday. "We'd like contracts that were signed to be implemented."
That's not going to happen any time soon under the U.N. embargo announced at the weekend.
The EU embargo was imposed Monday and is likely to be more effective than the U.N. effort since Gadhafi and his inner circle are believed to have stashed their financial assets in Britain, Switzerland and Italy.
Gadhafi visited Moscow in November 2008, his first since 1985, after Russian President Vladimir Putin agreed to write off $4.5 billion in Soviet-era debt in exchange for lucrative arms and energy deals.
Among the prospective deals discussed were the Libyan purchase of the S-300PMU long-range air-defense missile system, the Tor-M2E and Buk-M1 short-range air defense systems, two squadrons of Su-30MK2 and MiG-29SMT fighters jets, several dozen combat helicopters, a diesel-powered submarine as well as T-90 tanks and rocket launchers.
None of these deals were finalized, as far as is known, and Moscow voiced irritation as the slow pace of negotiations that ensued.
Gadhafi later visited the former Soviet republic of Belarus, a major arms manufacturer and dealer that Western officials suspect has been airlifting arms to Gadhafi's forces around Tripoli in recent days.
Libya signed military contracts worth $402 million with France in August 2007, the first with the West since the 2000 embargo lifting, for Milan anti-tank missiles made by MBDA, an affiliate of EADS, and communications equipment.
Germany's defense deliveries to Libya in 2009 totaled $73 million, the third highest in Europe.
Eighty percent fell under the EU's ML11 category that mainly covers military electronic equipment, including electronic jammers. The regime has been blocking mobile phone and Global Positioning Systems to prevent rebel groups communicating.
The EU had also agreed to provide Gadhafi with border security radars worth $68.9 million.
"The situation in Libya illustrates the fundamental problem that the long-term effects of arms transfers are not taken into account," observed Bernhard Moltmann of the Peace Research Institute of Frankfurt.
Italy supplied systems that Gadhafi has supposedly also been using against his own people, although it's not clear if these included AgustaWestland helicopters under 2010 contracts worth $96.5 million.
Italy's Selex Sistemi Integrati signed a $17.9 million deal for gun targeting equipment in 2010 and shipbuilder Intermarine SpA opened negotiations for warship contracts worth $827 million.
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