Leaders of the Libyan Islamic Fighting Group (LIFG) are close to reaching an agreement on abandoning their armed resistance against Moammar Gadhafi’s government, Saudi-owned Asharq Al-Awsat newspaper reported July 7. The reports indicate that Libya is putting its oil money to good use. Numan Bin Uthman, the LIFG’s former leader, held an interview with the Saudi newspaper in which he revealed that negotiations between the group’s leaders and the Gadhafi government in the BuSalim Prison in Tripoli (where most of the group’s members are detained) are yielding substantial results. The LIFG sprouted in Libya in the early 1990s after a large number of Libyan jihadists returned home from Afghanistan, where they had teamed up with Afghan mujahideen to fight the Soviet Union. The group quickly became a thorn in Gadhafi’s side by starting a low-level insurgency that included attacks against security forces and even assassination attempts against Gadhafi himself. A massive crackdown swiftly followed, forcing most LIFG leaders to go underground and pursue a new arena in which to wage violent jihad, which they found in Afghanistan and Iraq. LIFG eventually folded itself formally into the al Qaeda network in late 2006, when it joined Islamist militant groups from Morocco, Algeria and Tunisia to declare the formation of al Qaeda in the Islamic Maghreb, informally known as al Qaeda’s North African node. While other North African nations — particularly Algeria, Egypt and Morocco — are dealing with an ongoing struggle to stamp out Islamist militancy, Libya largely has contained the jihadist threat that exists within its borders, mainly through the use of force. But with al Qaeda taking a beating in Iraq, Libya is preparing for the inevitable jihadist exodus, especially as Libyans increasingly are being found among al Qaeda's senior ranks. Libya has recognized that it needs more than force to deal with this impending problem. Saif al-Islam, the aging Gadhafi's son and heir, has led the effort to bring the government’s jihadist opponents back into the political fold through his organization, the Al-Qadhafi Foundation for Development. When Libya released at least 90 members of the LIFG on April 9, it was clear the negotiations between al-Islam and the LIFG were getting somewhere. Libya certainly has the cash to persuade these jihadists to reach a political deal. Libya’s first priority is regime preservation, and its second is development of the country’s energy industry — especially now that Tripoli has shed its pariah status and become the West’s best example of a rogue gone right. Both of these items on the Libyan agenda are directly tied to buying political support from its jihadist opponents and creating a hostile environment for jihadist activity. Since 2003, when Libya abandoned its unconventional weapons program, net oil export revenues have more than doubled thanks to the steady price climb in crude oil. And this is just the beginning. Once Libya’s cash economy gets developed through a flood of foreign investment, it will have plenty more petrodollars to spare to keep the domestic front quiet, particularly as the elder Gadhafi prepares to officially hand the political reins to his son. Libya’s oil money is already being put to use, with Uthman claiming in his interview that the released LIFG members "have been given 10,000 dinars ($8,467) each to start a new decent life and 300 dinars ($254) each in immediate assistance from the Prison Administration on the day they were released". If the Saudi report is accurate and the LIFG is indeed close to laying down its arms, Libya will have scored a major victory at home. But the benefits spread beyond Libya’s borders. Uthman disclosed in his interview that LIFG leaders have requested that he carry the message to LIFG-linked militants abroad that the negotiations with the Libyan government are moving ahead. By reaching out to their comrades, the LIFG’s deal-making with the Gadhafis could very well impact the broader jihadist movement. Of course there will be resistance to such a deal, from elements within both the LIFG and al Qaeda’s North African node, which opposes striking a deal with a longtime enemy. But this, too, could work to Tripoli’s advantage. Much like the way Egypt’s security regime handles its Islamist militant opponents, Libya can pursue a divide-and-conquer strategy by exploiting the intra-Islamist rivalries that are bound to flare from these negotiations. As long as the bulk of the movement moves toward political accommodation, Libya will be taking a major, oil-funded step toward domestic stability. This will be key to establishing the security environment needed for Western investors champing at the bit to get into the Libyan energy market.