The West forged close ties with Libya after Gaddafi agreed to end production of weapons of mass destruction [EPA]

The European Union has condemned Libya for its crackdown on opposition protesters, but for many nations in the bloc, straining ties with Tripoli presents an awkward situation.

Western nations forged close trade ties with the north African nation after Muammar Gaddafi agreed in 2003 to end the production of weapons of mass destruction, ending nearly two decades of sanctions.

European energy firms were quick to invest in the holder of Africa's largest proven oil reserves, the eighth-largest in the world, while many others signed lucrative arms and construction deals.

Tony Blair, Britain's former prime minister, signed a so-called "Deal in the Desert" in March 2004, which paved the way for oil contracts worth billions, leading to a close relationship that has come under increasing criticism.

Oil deals

It included Anglo-Dutch company Shell signing an agreement worth up to $1bn and three years later BP agreeing its largest exploration commitment to date, in a deal worth at least $900m in Libya.

It sparked significant controversy around the world and led to US claims that BP lobbied Britain for the release of Abdelbaset Ali al-Megrahi, the man convicted of the 1988 Lockerbie bombing.

The Italian government of Silvio Berlusconi has also strengthened its ties with Tripoli in recent years, taking the largest proportion of oil from Libya for its national needs.

At the end of 2008, Italy's energy company Eni was operating 13 oil and gas permits and its production was 306,000 barrels per day of oil equivalent, about one-fifth of Britain's total daily oil production.

Spain's Repsol also has rights to 15 hydrocarbon blocks.

Defence

Arms deals with Libya have also proved contentious, particularly in light of the recent crackdown.

In August 2007 France signed contracts with Libya to sell anti-tank missiles and radio communications equipment worth a reported $405m. The European aerospace and defence giant EADS now has an office in Tripoli, and has sold civilian aircraft to the country.

According to the Campaign Against Arms trade, the UK licensed over $6m worth of ammunition to Libya, including sniper rifles.

Russia also announced a small-arms and weapons deal to the value of $1.8bn in January 2010, worth nearly a quarter of its state arms exports.

A building boom in Libya has also seen strong investment from Turkey, which has around 200 construction companies in the country working on projects worth an estimated $15.3bn.

Sovereign wealth has also attracted business ties from Europe.

Many of the investments made by the $65bn sovereign wealth fund have been in Italian stocks. It holds a 4.6 per cent stake in Italy's second-biggest bank, Unicredit and has a small stake in car maker Fiat, the Reuters news agency reported.

European nations are also interested in preserving relations with Libya for the sake of national security.

Italy, the closest entry gate for illegal migrants attempting to enter the EU, is especially concerned about an influx of refugees, following the crisis in Tunisia.

Tripoli has already warned it could suspend co-operation in the fight against illegal immigration if European countries continue to criticise its action against protesters.

Source: Al Jazeera and agencies