LONDON NATO is considering creating a sea corridor backed by naval vessels to enable merchant ships to boost trade with Libyan rebels and speed up humanitarian aid.
Fighting between Libyan armed forces and rebels who are trying to overthrow Muammar Gaddafi, as well as sanctions against the Libyan leader's government, have brought seaborne trade to a virtual standstill in recent weeks.
NATO has been enforcing a U.N. arms embargo on Gaddafi in international waters only. Merchant ships face a risk of attack inside Libyan waters due to the violence.
Two shipping sources said on Friday they were aware of proposals to create a secure shipping lane to Libya, though security sources said NATO would not be able to protect ships in port.
"Contingency planning has been done on this at NATO and in the European Union," British Foreign Secretary William Hague told Reuters on Thursday when asked about the proposal.
Hague said a lot of aid had been delivered to the besieged Western city of Misrata without a military presence, which was "always the first option."
"It's only if that failed and the United Nations ... recommended that military assistance was required that then that would come into play," he said at a NATO conference in Berlin.
Aid groups have urged shipping companies to resume services to rebel-held eastern ports including Benghazi to bring in aid, and the anti-Gaddafi Libyan National Council (LNC) has said it must keep exporting oil to boost minimal cash reserves.
"The possibility of protecting merchant shipping traveling to and from ports under the control of the (LNC) is part of the broader strategy which the coalition has adopted to facilitate the 'normalization' of the status of rebels' interim authority on the world stage," said J. Peter Pham, Africa director with U.S. think tank the Atlantic Council.
"In theory, escorts or the designation of protected transit corridors ... should lower, if not eliminate altogether the need for war risk price differentials. This, in turn, should make it easier for the rebel authorities to transact business."
Jakob Larsen, maritime security officer with BIMCO, the world's largest private shipowners' association, said a merchant ship had been attacked by Libyan coast guard vessels last month.
"As a precautionary measure, close protection of shipping would be desirable," he said. "We are still waiting clearer directions as to which cargoes can legitimately be offloaded in Libya."
A NATO official said the organization had drafted notices to mariners giving clear indications on "how to behave in the maritime joint operations area."
"Our task is to enforce the arms embargo, not to protect commercial ships," the official said.
Earlier this week, the first signs of seaborne trade emerged with Qatar marketing 1 million barrels of Libyan crude oil on behalf of rebels, and delivering four shipments of petroleum products. Shipping sources said there was speculation over whether the shipments had received naval escorts.
Last month, London's marine insurance market added Libya to its list of high risk areas.
"The biggest concerns for underwriters are whether the ports are open or not, who is there to receive the ship and how secure it is when in port," said Neil Roberts of the Lloyd's Market Association, which represents the interests of all underwriting businesses in the Lloyd's market.
Maritime security sources said a NATO corridor could not provide cover at ports as the mission would not risk putting troops on land inside Libya.
"They may have had some kind of nominal escort but only up to port limits," said John Dalby, chief executive with maritime risk management specialists MRM.
"The vulnerable point is actually... in the port and NATO cannot provide any protection there. Air cover will not prevent ground attacks by either side on a ship in the port."
(Additional reporting by Adrian Croft and David Brunnstrom in Berlin, Editing by Lin Noueihed)