Russia scraps Libya debt in exchange for contracts

You have to hand it to Vladimir Putin. Even though his term as President of Russia ends in a few weeks, he is still meeting with foreign leaders and making huge deals. The latest is a $4.5 billion dollar exchange with Libya's Moamer Kadhafi.

Russia has agreed to forgive over four billion dollars worth of debt going back to the time of the Soviet Union in exchange for Libyan contracts with Russian companies. The deals include a plan to build hundreds of miles of railway in Libya, defense contracts, and most importantly, a deal to develop Libya's vast natural gas reserves.

Russia's gas monopoly Gazprom signed an agreement with Libya's national energy company to develop natural gas production and distribution facilities. The plan may eventually include a pipeline under the Mediterranean Sea to link the Libyan gas fields with Southern Europe. Right now Russia supplies about a quarter of the natural gas Europe uses, mostly through pipelines running into Eastern Europe. A significant amount of that gas comes not from Russia, but from former Soviet countries in Central Asia.

The Gazprom deal in Libya not only secures another source of natural gas for Russia, but also, if the pipeline is completed, will make Europe even more dependent on Russia for its energy needs, continuing Russia's growth as an energy superpower.