The deal is part of a wider agreement between the Italian companies and Tripoli to upgrade the country's aerospace industry. The agreement centres on the establishment of a new joint venture company, Libyan Italian Advanced Technology Company (Liatec), formed between Finmeccanica, AgustaWestland and the Libyan Company for Aviation Industry (LCAI). LCAI will have a 50 per cent shareholding in the new company, while Finmeccanica and AgustaWestland will hold 25 per cent each.

The company's focus will be to supply helicopters and light fixed-wing aircraft, electronic security systems and land-based security infrastructure in a move to modernise Tripoli's defence sector, which has been starved of investment. The Italian companies will provide know-how, training, technology and equipment, while LCAI will invest mainly in infrastructure, plants and local marketing projects.

Liatec aims to establish a new helicopter production plant in Tripoli, from which it will target helicopter sales across Africa. It will also establish a training centre.

Despite efforts by Europe's largest defence groups, including the UK's BAE Systems and France's Thales, the deal is Tripoli's first with a western defence contractor since the lifting of international sanctions in mid-2004. Rome pushed for the lifting of the EU arms embargo in order to enlist Tripoli in its efforts to control illegal immigration of North Africans into Italy. BAE Systems, which had hoped to work on Libya's decaying civilian airport infrastructure, has yet to sign such a deal. Several other defence companies, including Europe's EADS and France's Dassault Aviation, are also reported to have bid for Libyan work.

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