Gaddafi sought to develop closer links in the Maghreb; in January 1974 Libya and Tunisia announced a political union, the Arab Islamic Republic. Although advocated by Gaddafi and Tunisian President Habib Bourguiba, the move was deeply unpopular in Tunisia and soon abandoned. Retaliating, Gaddafi sponsored anti-government militants in Tunisia into the 1980s. Turning his attention to Algeria, in 1975 Libya signed the Hassi Messaoud defence agreement allegedly to counter "Moroccan expansionism", also funding the Polisario Front of Western Sahara in their independence struggle against Morocco. Seeking to diversify Libya's economy, Gaddafi's government began purchasing shares in major European corporations like Fiat as well as buying real estate in Malta and Italy, which would become a valuable source of income during the 1980s oil slump.

What country formed a political union with Libya in 1974?