Word: fiat
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Because of Libya's investment in Fiat, the Pentagon has decided not to award a proposed $7.9 million contract to the company under which it would have built 178 earthmovers for the U.S. Marine Corps. Reason: the Reagan Administration does not want any American money to flow--even indirectly--into the coffers of a government that sponsors international terrorism...
...Fiat became entangled with Libya in 1976. The company was short of cash, and Gaddafi, who was piling up petrodollars, was not then generally viewed as a bankroller of terrorists. Fiat welcomed Libya's investment of some $400 million. Recalls Agnelli: "We liked petrodollars. Everybody needed petrodollars...
...Fiat has prospered, the value of Libya's stock in the company has multiplied to an estimated $2.5 billion. Not surprisingly, Libya has no interest in ridding itself of what has proved to be a very good investment. Says Agnelli: "We have offered to buy, but they won't sell." Adds Roberto Nicolello, Fiat's chief of public affairs: "We're handcuffed. The Libyans are not interested in selling for one simple reason: Where can they put this money? No one will accept $1 from Gaddafi these days...
Since Libya currently owes Italian businesses and institutions more than $800 million, it is conceivable that Rome could seize the Libyans' Fiat stock as a partial repayment of the debt. But not likely. Government officials say that such a move is out of the question as long as Italy maintains diplomatic relations with Tripoli...
While missing out on the Marine Corps contract will not put much of a dent ) in Fiat's sales or profits, the prospect of being excluded from bidding on substantially larger Pentagon contracts worries Agnelli. He is a staunch supporter of President Reagan's Strategic Defense Initiative, the antimissile research program known as Star Wars. Says Agnelli: "Sure, I'm concerned. We're trying to participate in SDI. If Fiat is blacklisted, that could be a big problem...