Pier Paolo Cito/AP

Libyan leader Moammar Gadhafi (right) and Italian Prime Minister Silvio Berlusconi in Rome on Aug. 30. Gadhafi and Berlusconi marked a friendship treaty between their two countries amid increasing criticism over Gadhafi's exhortation to Italians to convert to Islam and Libya's prominent role in the Italian economy.

Libyan leader Moammar Gadhafi's behavior during a trip last week to Italy has stirred controversy. His remarks on Islam angered church officials, and many politicians worried about the Libyan leader's growing clout in the Italian economy.

Italian Prime Minister Silvio Berlusconi laid out the red carpet for Gadhafi on the Libyan ruler's fourth visit to Italy in just over a year. It marked the second anniversary of a friendship treaty between the African country and its former colonial master.

Gadhafi brought a surprise with him: Bedouin riders mounted on 30 thoroughbred horses, flown in from Libya, performed for the Italian hosts. Nearly the entire government, as well as leaders of the business establishment, were present at what one newspaper quipped was a "circus spectacle," with Gadhafi acting as ringmaster.

Berlusconi had only words of praise for Gadhafi and even kissed his hand.

"It is an advantage for everyone that relations between Italy and Libya have changed and are definitely positive," Berlusconi said. "Those who do not understand this and criticize Libya belong to the past and are prisoners of outdated ideas," he added.

A day earlier, Gadhafi addressed 500 young women - hired by a modeling agency and paid $100 each to listen to a lecture on Islam. Gadhafi urged them to convert and said Islam should be the religion of all of Europe.

The remarks caused anger. A Vatican official called them a provocation. Some Italian government officials also were disturbed, accusing Gadhafi of having transformed Rome into his own private Disneyland for his senile vanity.

Growing Economic Clout

Critics of Gadhafi - the onetime sponsor of terrorist groups - say the 2008 Italy-Libya friendship treaty has given the Libyan leader a big role in the Italian economy.

In the past two years, Libya has invested nearly $40 billion in Italy, according to economic journalist Stefano Feltri.

"It is the most important foreign investor in terms of strategic investments, so they are the only foreign country who can buy shares in companies like our biggest banks and biggest energy firm," Feltri says.

Gadhafi's Libya is now the largest shareholder in Unicredit, Italy's biggest bank. It is planning to raise its stake in ENI, the state-owned energy company, to 15 percent, and it has interests in construction, helicopters, telecommunications and insurance as well as in the Juventus soccer team.

Libya is currently the fifth-largest investor on the Italian stock market. And the friendship treaty stipulates that Italy will provide $20 billion worth of infrastructure to Libya.

Human-Rights Concerns

One key aspect of the treaty has prompted strong criticism from the United Nations and the European Union - the agreement under which Tripoli intercepts and takes back immigrants who try to enter Italy by sea.

Rome has been widely accused of turning a blind eye to human-rights violations in Libyan camps where would-be immigrants are detained.

Opposition Parliament member Furio Colombo says 50 percent of those seeking to enter Italy are asylum seekers, and Italy cannot turn them back under international law.

"They wanted someone to perform the dirty work for Italy, paid by Italy but without the Italians being involved and without public opinion knowing anything, to make sure no boats of refugees could pass through," Colombo says.

Now, Gadhafi is saying he should be paid millions by the EU to keep African migrants out of Europe.

Many Italians are wondering what will be the ultimate cost of an agreement with the dictator of a country that has never ratified an international treaty on human rights and who now plays such a key role in Italian business.