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Fleet naval forces--notably Italy and Greece. While a
 substantial portion of Libyan oil exports are purchased by
 the United States (40 percent of Tripoli's 1.7-million-b/d
 exports in 1980), US dependence on Libyan oil is much less
 significant--about 10 percent of imports and 5 percent of
 consumption in 1980. Italy imports about 200,000 b/d of
 Libyan oil (12 percent of Italian imports) and Greece only
 about 10,000 b/d. Because of the current soft oil market,
 the United States, Italy, and Greece could readily obtain
 alternate sources of high-quality crude. Some US and
 Italian companies operating in Libya, however, might
 experience short-term supply problems if denied Libyan oil.
 For its part, Tripoli's substantial cushion of $16 billion
 in foreign assets alone could finance more than one year of
 imports. (S)

Nationalization. Quadhafi could also carry out his
 oft-repeated threat to nationalize the remaining equity
 interests of US companies operating in Libya. We do not
 believe, however, that such an extreme response is likely.
 Although prone to precipitous actions, since the excesses
 of the early 1970s Quadhafi has largely kept his hands off
 the petroleum industry, regarding it both as his guarantee
 of international influence and as his source of funds for
 the welfare society that has kept his people largely quiescent.
 Despite the closing of the People's Bureau in Washington.
 Libya has continued to treat the oil companies more
 as potential allies than as tools of US policy. If, however,
 Quadhafi's response was to intern or expel US oil company
 personnel from the country, within a few months Libya's oil
 production capability would decline sharply, to a level on
 the order of 700,000 to 1.2 million b/d. (S)

Harassment of US Citizens. The most likely Libyan reaction
 to a US exercise that resulted in a military incident would be
 some degree of harassment of the 2,500 or so US personnel working
 in Libya (approximately 2,000 if the exercise is postponed
 until dependents return to school). The regime could be selective,
 arresting and imprisoning a token number of Americans who
 could be charged with complicity in a US (or US-Israeli-Egyptian)
 invasion plan. US personnel inside Libya could also be the
 target of government-incited mobs. (S)

Terrorist Options. The exercise may result in a Libyan
 desire to punish the United States through the use of anti-American
 terrorism, particularly if Tripoli believed the Libyan

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