";We are interested. We are paying attention to it,"; said Paul Mikolashek, president of Raytheon International, in an interview at the Dubai Air Show today. The company would actively pursue contracts ";if the opportunity develops and the political situation is right.";

The Waltham, Massachusetts-based company could sell Libya surveillance gear for its airports and borders, Mikolashek said. Raytheon';s international division would do business in the country in accordance with U.S. government guidelines, he added.

Libyan relations with the U.S. and European countries improved from 2002 to 2005 when Libyan leader Muammar Qaddafi abandoned a nuclear-arms development effort, pledged to destroy a chemical weapons stockpile and renounced terrorism. European and U.S. companies are looking to do more business with the country.

";The size of the potential Libyan defense market is similar to Egypt and Saudi Arabia. It has the ability to fund defense acquisitions and the need, but very little indigenous capability so it will have to import it,"; said Nick Cunningham, an analyst at Evolution Securities in London. ";Given how attractive those other markets have been, to have a new one open up like that is extremely attractive.";

Finmeccanica Venture

Finmeccanica SpA, Italy';s biggest defense contractor, signed an agreement with the Libyan Investment Authority in July to form a joint venture to pursue investment opportunities in aerospace, electronics, transport and energy for civil applications.

Libya came under U.S. and United Nations sanctions in the 1980s and 1990s after being accused of sponsoring terrorism, including the bombing of a PanAm Boeing 747 over Lockerbie. The release of convicted bomber Abdel Basset Ali al-Megrahi from a Scottish prison in August led to an increase in tensions after cheering crowds met him at the airport when he returned to Libya.