U.S. to Ask Allies to Curb Economic Ties With Libya

In light of “hard evidence” that Libyan leader Moammar Kadafi is plotting a new wave of terrorist attacks, the United States will seek commitments from its allies to freeze Libyan assets in Europe, ban the sale of high-technology oil equipment to Tripoli and reduce Western imports of Libyan oil, Administration officials said Wednesday.

These officials are concerned that the recent lull in Libyan-sponsored terrorist activity may tempt European oil companies to fill the gap created by the pullout of U.S. companies last June. U.N. Ambassador Vernon A. Walters will present the Administration’s proposals for joint allied action during his mission to Western European capitals beginning this weekend, they said.

At the same time, White House officials denied that recent speculation over another U.S. military attack on Libya is designed to goad Kadafi into an irrational response, paving the way for American retaliation.

“Our goal is to prevent Kadafi from doing things, not trying to provoke him,” White House spokesman Larry Speakes said in Los Angeles, where President Reagan is on vacation.

Western intelligence sources indicate that Kadafi is in “an extremely vulnerable position,” said one Administration official, who warned that the Libyan leader nonetheless is “like a boxer on the ropes--he can still pack a lot of punch.”

In the last month or so, said an Administration official who spoke on the condition of anonymity, “there is hard evidence that the Libyan government has been involved in planning and attempting to execute terrorist acts, that they have not been deterred in their goal of committing terrorist acts on a worldwide basis.” However, this official and others refused to disclose any details on this evidence.

“Until we’ve got the goods, we’re not going to go public,” one top official said. This official insisted that the United States has “a lot of surveillance information” indicating that Libya is preparing to get back into the terrorist business “in a big way”--in the number of plots and their “lethal intent.”

Preventive Action

“We’re seeing lots of plans in the embryonic stage,” the official said. “We don’t know whether they will materialize, but we’re trying to act now instead of 60 days from now, when a lot of bombs could be going off.”

Administration officials contend that the recent lull in terrorist activity was a direct result of the U.S. bombing raid on the Libyan cities of Tripoli and Benghazi on April 15. They hope to dissuade Kadafi from carrying out further attacks by intensifying the economic pressure on him, focusing on oil.

The Administration has been heartened by reports that Italy, which has been closely allied with Tripoli, is preparing to take court action to freeze the assets of Libyans who are in arrears to Italian companies. One top official said Walters would try to persuade other European countries to follow suit and perhaps expand on the measure.

One key Administration official said no American company is in outright violation of President Reagan’s ban on conducting business in Libya. However, U.S. firms can--and some apparently do--continue to maintain interests in Libya through international corporations, this source said.

Business Reports Required

To combat such moves, the Treasury Department last month issued a regulation requiring American companies to report on any foreign affiliates that conduct business of more than $50,000 a year in Libya. Data on the reports, which were due last week, is still being analyzed, the Administration official said.

American and allied diplomats in Washington agreed that serious concern about the continuing Libyan terrorist threat has resulted in a new unity among the Western nations as they contemplate further action against Kadafi.

“The fact that the colonel (Kadafi) has been reasonably quiet since April may have made people think that the U.S. bombing was perhaps not all wrong,” said one British diplomat, who spoke on the condition that he not be identified.

At the same time, one U.S. official said the West German government has the most impressive record in cutting trade with Libya and trimming Libyan diplomatic missions, which U.S. officials claim operate as bases for European terrorist campaigns mounted by Kadafi.

Big Fiat Stockholder

Even Italy, which has the closest historical relationship with Libya because of its colonial rule there, has “come a long way” since earlier this year, the U.S. official said. But many Italian citizens remain in Libya, he added, and Kadafi’s government holds 12% of the stock of Fiat, the largest Italian automobile builder.

Meanwhile, G. Henry Schuler, an expert on Libya, said exiles who have government contacts in Tripoli have told him that Kadafi was asked in recent weeks to step aside and let the military and the Revolutionary Council take over the country.

“They (the military and Revolutionary Council) sought his concurrence, and he didn’t concur,” says Schuler, of Georgetown University’s Center for Strategic and International Studies. “And the upshot of it is that the other guys are figureheads--and he’s still in control.”

But when Libya celebrates the anniversary of its revolution next Monday, Schuler predicts, “we’ll see the old Kadafi back on the stand, speaking for hours, just as he always has. There’ll probably be a turnout of crowds like before--they’ll be trucked in, and maybe that doesn’t indicate any degree of popular support.”

He added, “It does indicate that he’s still capable of handling the sorts of functions that he has always handled when he was in trouble like this.”

Rare Public Appearance

On Wednesday, it was reported that Kadafi made a rare public appearance in Brega, a town 160 miles south of Benghazi, to open a pipeline factory and then sped off into the desert without making any statements. Cheered by Bedouin horsemen and several hundred spectators chanting “Victory of Islam” and “May a storm destroy America,” Kadafi cut a ribbon at dusk Tuesday at the entrance to the plant deep in the desert. The 44-year-old colonel looked fit and showed no outward signs of stress, the Associated Press reported.

In London, meanwhile, Reuters news service reported that the United States had brought into Britain 18 jets of the type used in its long-range air strike against Libya, but British officials said they were here for a routine North Atlantic Treaty Organization exercise planned six months ago.

Eleanor Clift reported from Los Angeles and Don Shannon from Washington. Times staff writers Michael Wines and Rudy Abramson, in Washington, contributed to this story.