Interdependency and Economic (Ir)rationality: West German-Libyan Petro-relations in ‘Crisis’

Abstract

Dependent on Libya for over 40 percent of its crude oil imports, West Germany was already vulnerable when Muammar Gaddafi inaugurated his resource sovereigntist campaign at the end of 1970. This reliance on Libyan crude, however, was more than a liability for the Federal Republic of Germany (FRG). Instead, this article argues that, as a genuine interdependency between the West German downstream and the Libyan upstream, the asymmetrical German-Libyan trade relationship not only restricted the FRG’s maneuverability but also enabled it to navigate the changing Libyan petroleum landscape during the domestic inversion of company-government relations and Gaddafi's foreign-political radicalization of the early 1970s. Despite the purported illogic of Libyan political and economic policy, the FRG achieved critical goals –neutrality in the Arab-Israeli conflict, energy security, and rebalanced German-Libyan trade relations – precisely because of the mutually binding economic rationality on which the interdependency was founded.