JEDDAH: Recep Tayyip Erdogan has struck a deal with the UN-backed Libyan government for Tripoli to pay $2.7bn in compensation for debts owed to Turkey before Libya’s nine-year civil war began.

Turkish companies were heavily involved in lucrative infrastructure and construction projects in Libya from the 1970s, but they collapsed when dictator Muammar Qaddafi was removed in 2011 and the country descended into chaos.

Now, as peace talks in Moscow edge toward an agreement between warring factions in Libya, the Turkish president is maneuvering to restore business links between the two countries. In addition to compensation for Turkey’s losses, the new deal paves the way for new contracts in the energy, housing and construction sectors.

The agreement is expected to be signed in February. The exact amounts have still to be negotiated, but they are thought to include a $1bn letter of guarantee, $500m in compensation for looted or damaged machinery and other equipment, and unpaid debts of $1.2bn.

Karol Wasilewski, a Turkey analyst at the Polish Institute of International Affairs, in Warsaw, said Turkey would welcome the cash, but the restoration of business ties was of more long-term benefit to Ankara.

BACKGROUND The new deal paves the way for new contracts in the energy, housing and construction sectors.

“That compensation money for the construction sector is just a side effect, even if a very beneficial and a needful one for the Justice and Development Party and the businessmen connected to the party,” he told Arab News.

Turkish companies Ustay Yapi, Tekfen, Enka, Renaissance and Guris Insaat have mostly dominated the Libyan construction and infrastructure sectors.

Meanwhile, Libyan peace talks in Moscow hit an obstacle when Khalifa Haftar, whose eastern Libyan National Army forces are besieging Fayez Al-Sarraj’s Government of National Accord (GNA) in Tripoli, asked for more time to study a cease-fire document.

Haftar and his ally Aguila Saleh “view the document positively,” Russian Foreign Minister Sergei Lavrov said, but they “have asked for a bit more time until morning to make a decision on its signing.”

The document spells out the terms of a truce that took effect at the weekend. GNA leader Al-Sarraj and Khaled Al-Mechri, head of the High Council of State in Tripoli, signed the deal on Sunday.