Britain was right to do business with Libya

The stigmatising of every business leader, academic, politician and public servant who has had anything to do with Libya in the last seven years has been taken to ridiculous lengths in some quarters. Spurred by universal disgust with the Gaddafi dictatorship’s recent outrages, sense and judgment have flown out of the window as normally intelligent commentators vie in their denunciation of anyone who acted in the public interest in deepening ties with Libyan people, institutions or that country’s economy.

If, as a result of this pressure, British businesses in future shy away from international investment for fear of risking similar opprobrium, Britain’s relative decline in the global economy can only worsen. It is difficult enough already for us to compete against the world’s rising economic powerhouses. If on top of our present disadvantages – high relative costs of production, considerable regulatory constraint, weak entrepreneurial drive and barriers to entry to many fast-growing markets – we introduce a further hurdle of rejection of any country less savoury and democratic than our own, our employment levels and standard of living are going to fare very badly in this century.

Before my words cause every decent-thinking person and human rights campaigning group to open their Twitter feeds to denounce me, let me make one thing clear. I agree with internationally-agreed boycotts such as those against Iran, North Korea and Burma, and now Libya. There is certainly an indisputable place for moral and political disavowal of individuals and regimes whose behaviour towards their people is undemocratic and unacceptable. There are also advisable rules for the conduct of inter-state relations where conditions are less clear cut, as Sir Jeremy Greenstock was arguing on this page last week.

I also happen to believe that in our welcome of Muammer Gaddafi’s rejection of his terror-supporting past, the Labour government sometimes gave the appearance of going further and embracing him or at least tolerating his excesses and shortcomings. Incidentally, before this month’s uprising in Libya, I saw absolutely no sign of the coalition government following any different policy, for all their wise-after-the-event high-minded statements since.

It is also arguable that those senior members of the Libyan regime who burnished their pro-democratic credentials should have been treated even more cautiously than they were. There are lessons to be learnt and we need to reflect, not on the principle of bringing people like Colonel Gaddafi in from the cold but the degree of warmth we appear to show them afterwards, before they start to reform their domestic ways and methods.

This lesson is not an easy one to apply. For example, when you reach out to repenters, you do not then turn on your heels and start treating them like pariahs. Such reaction is hardly going to entrench their changed behaviour or encourage others to follow suit. There are also realities of international trade and investment to understand. When every other country is busy trading and investing, including the US and in Europe, it is odd to practise a unilateral boycott of your own. Would it have made sense to outlaw British Airways, HSBC, Marks & Spencer, BP and other British brands from entering Libya? Or British universities from making similar contacts? I don’t see that it would have. I am not suggesting that we operate with the standards of our lowest denominator partners. We have values as well as interests to bind us. But nor can we operate exceptional and unrealisable rules just for ourselves.

Being the odd ones out not only does ourselves economic harm but does nothing to assist the process of change in countries such as Libya. Our policy goal should be to do all we can, with others, to put such a country on to the path of transition. Opening up its economy, helping it to tap its natural resource wealth, deepening its integration to the rest of the world and stimulating domestic enterprise and business will spur the growth of aspiration, demands for freedom and the spread of pluralistic values in that society.

Contact with the outside world makes a population want more of what that world – its material goods and liberal values – has to offer. The next step is for them to organise in order to resist and weaken the tyrant’s power and, eventually, overthrow him and his regime as, hopefully, will happen in Libya and, in due course, Iran.

Of course, when such public groundswell starts to spread, countries such as Britain should be among the first to offer encouragement and practical support. We should always use our diplomatic channels to exert pressure in favour of reform and democracy.

The last western leader to argue this approach was, of course, George W. Bush – not everyone’s model of political correctness. With hindsight, he seems to have had a point that signally failed to catch on in those liberal circles now coming out in support of the courageous demonstrators in Tahrir Square or on the streets of Benghazi.

This weekend, I was “exposed” by a British newspaper because, when a cabinet minister, I “struck a deal with the Gaddafi dictatorship” to encourage contact with Libyan universities and for their students to come to Britain. The fact that this could only have done good for the students involved was apparently immaterial. Under media pressure, the reaction of my successor has been to suspend all co-operation. Perhaps this is excusable, as a further demonstration of Britain’s disapproval of Gaddafi’s killing of his own people.

But, as a general policy, we were right to foment such contacts. We were also right to do business in the country. Our timing was right and the current attempt to whip up a phobic reaction to those who led this commercial activity as Libya was putting its terrorist past behind it, is wrong and misplaced.

Lord Mandelson is former UK business secretary and was EU trade commissioner 2004-2008