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LIBYA

 
  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 34.137     57
  n/a     n/a
GNI per capita
 US $
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km)
1,759,540

Population
5,499,074

Capital
Tripoli

Currency
Libyan dinar 

Leader 
Col Mu'amar al-Qadhafi

  

Background:
The Great People's Socialist Libyan Arab Jamahiriya 
Modern Libya, the Jamahiriya, has grown as the political experiment of an idiosyncratic vision that has been more concerned with the implementation of its ideology than the construction of appropriate institutions to manage the state. So long as an adequate inflow of oil revenues could be sustained, the 'experiment' has been able to gain a degree of public tolerance, if not support, thanks largely to the dispersal of public welfare. Ultimately, the Jamahiriya's political institutions have fostered the perpetuation of a kinship based society. As tribal loyalty has supplanted civil society, the grass roots political activity that would typically be organized around business, social, or religious concerns has been suffocated. An effective repressive apparatus has ensured the eradication of civil society and effectively precluded the rise of a sustained opposition movement of any kind. 

Pariah State? 
Although Libya has earned international condemnation, President George W. Bush stopped short of including Libya in his 'Axis of Evil' paradigm pronounced during his 2002 State of The Union Address. Indeed, Libya's idiosyncratic and flamboyant leader Col. Mu'amar Qadhafi was among the first leaders to condemn the September 11th 2001 attack on the World Trade Center and the Pentagon. Yet Libya remains one of America's favorite 'Pariah States'--along with Cuba, Syria and Iran--and its leader is an icon of comedians and variety show hosts' personifications of 'nut-case' evil, bordering on the grotesque. Libyans, and those who are familiar with their country, however, might be puzzled by America's concerns over Libya. Not only is the current Libyan military capacity limited in terms of equipment, and even more so in management, but Qadhafi has been waging a campaign against political Islam since the time G. W. Bush was still prancing around as a fraternity huckster at Yale. Indeed, it might be correct to suggest that Bush and Qadhafi have been consumed by similar passions in recent years. The Libyan leader has long considered Islamists to be the greatest threat to the regime and publicly denounced them as being a disease to be eliminated, "worse than cancer or AIDS". 

Political Opposition and Economic Reform
Moreover, Qadhafi's peculiar political structure and ideology have, in fact, made it difficult for any opposition movement to sustain a successful campaign against the regime. The violent opposition that has sporadically taken place, has largely been a reaction to the ill-conceived economic reforms that have been implemented since 1986 - as oil prices fell to record lows. The reforms have failed to fulfill the intended liberalization of the economy and critically curtailed the State's distributive largesse. This has alienated the poorest elements of society that had typically been Qadhafi's most vociferous supporters. Yusuf al-Muqariyif of the National Front for the Salvation of Libya (an Opposition Group based outside Libya) has even suggested that Qadhafi has created the Islamist threat himself to gain support from Tunisia and Egypt toward the easing of international sanctions, the idea being "either me or fundamentalism". Anti-government protests, by Islamists or others, have not been ideologically motivated. Rather, these have been symptomatic of the fact that Libya's income and distributive network have relied on a single resource. The abrupt shrinking of the public sector showed the vulnerability of this policy and proved unsustainable to most Libyans, who had become accustomed to a high standard of living. Oil revenues have made it possible for Libya to experience a significant political, social and economic transformation since independence and especially since 1969.
The regime that was established as a result of the 1969 revolution has made great efforts to distribute the wealth accumulated from oil production among the population through public services and subsidies for a variety of consumer products. It has promoted large scale, if somewhat misguided, development projects in infrastructure, education and ISI industry. The Great Man Made River (GMMR) designed to facilitate irrigation for agricultural production along the Libyan coastline via an artificial 4000 km river based on Sahara groundwater is a multi-billion dollar monument to Libya's material infrastructure since independence, the result of an extensive program of welfare spending. Radical egalitarian principles based on Qadhafi's Green Book since 1978 improved the material living conditions of the vast majority of Libyans as enterprises were nationalized and housing rental payments were outlawed.
However, the combination of a 50 % drop in oil revenues in the mid-1980's that created a current account deficit have hurt the State's distributive capacity. While the economy's nationalization process continued, the State responded by applying austerity measures and limiting imports of consumer goods. Libyan consumers, who had become accustomed to the availability of a wide range of consumer goods, reacted badly to the austerity measures, sometimes venting their anger through popular protest and by damaging and burning government supermarkets. The depth of the economic crisis was such that the foreign labor force had to be reduced. Typically, the expulsion of Egyptians and, in particular, Palestinians that was masked in political rhetoric over the Arab-Israeli peace process, has more often than not resulted from economic difficulty. This made it necessary to curtail spending and adopt a measure of economic reforms to stimulate greater private sector involvement in the economy. The reforms effectively served to retract the distributive network of subsidies and state employment that had provided the Government's principal source of support from the population. 
Therefore, for a majority of Libyans, the 'reforms' have only contributed to deteriorating standards of living. The failure of these reforms has highlighted the institutional shortcomings of the regime that enacted them and promoted increasing opposition to it that the Libyan government has often blamed on what it has called Islamic 'radicals'.

Political Structure and Risk
The General People's Congress (GPC), a body similar to a parliament in the Jamahiriya, also served as a forum of public discontent over the austerity programs. In an unprecedented move, the regime responded to the criticism with a series of policies designed to address the grievances which was adopted in 1988 at the yearly session of the GPC. It provided the framework of a more liberalized economy, curbed the authoritative excesses of the Revolutionary Committees (RC) and assumed the title of Great Green Charter of Human Rights in the Age of the Jamahiriya. Despite this lofty title, the institutional infrastructure of the Jamahiriya failed to implement the Charter in a manner worthy of its name. The Libyan economy has lacked the necessary institutional infrastructure and administration in order to function properly. The mere elimination of state dirigisme, as occurred in Libya, has not sufficed to generate alternative sources of economic growth. 
Free trade and the removal of price subsidies, coupled with international sanctions from 1992 to 2000 caused price inflation for most consumer goods while average wages remained stagnant. The only beneficiaries of the economic reforms were the private merchants who controlled the import and the sale of various types of merchandise. Meanwhile, worker cooperatives known as tasharrukiyyat entailed a form of privatization that was adapted as best as possible to the Green Book's economic ideology. These allow for the sale of state production assets to one or more individuals, who agree to share equally in the management and profits of their enterprise. By and large this system has not enjoyed much success beyond the small service sector in such areas as appliance or automobile repair, hairdressing shops and photography laboratories where ownership is usually limited to single individuals. In these types of activities earnings are higher but thus far privatization has not resulted in a significant diversification of the economy. Property rights have not been guaranteed and neither has privatization been officially sanctioned in law. In the end it has been far harder to create the necessary regulatory framework to support national markets. This requires financial, legal, and civil institutions in order to provide a free exchange of information and enforce contracts. Another very significant problem is the abnormal lack of any reliable statistical information concerning economic indicators or demographics and it is often necessary to 'play by ear'' in order to 'read' the country's economic performance.
Nevertheless, the end of the UN embargo, which had been enforced since 1992, and increased oil demand have helped increase revenues. Reportedly, GDP has risen steadily since 1995 from 7.8 to 12.6 US$ billion in 1999 while consumer inflation has dropped from the estimated 30-35 % that persisted throughout most of the past decade to 12 %, while in 2000 it is rumored that there was a current account surplus of US$ 1.3 billion. Not surprisingly, domestic opposition to the regime, even in the economically depressed Benghazi region, has been limited since 1998 because of the improved economy. Most Libyans have been able to continue enjoying relatively high material living standards. As promising as the situation appears, the Libyan economy under the Jamahiriya has not made significant progress and has grown ever more dependent on oil exports and strong external demand for its product. The fickleness of world oil markets mean that when they're low and there is a threat of an economic crisis, the regime is not institutionally prepared to manage it, raising the prospect of political instability. 
A more significant political risk than even the price of oil is posed by Libya's tribal structure. More than ceding to an Islamist or secular opposition, in the event of collapse of the current leadership, the country would fracture along tribal lines. There has already been direct evidence of opposition motivated by tribal interests and it partly explains the Libyan leadership's foot-dragging over the Lockerbie incident. Indeed, the Warfalla tribe organized one of the most significant coup attempts of the past decade in October 1993. The tribe is well represented in the regime as one of its members is Major Jalud, an original member of the Revolutionary command Council (RCC) that led the 1st September, 1969 coup, which brought Colonel Qadhafi to power. The coup was a response to the regime's considering handing over the suspects implicated in the bombing of the Pan Am B-747 over Lockerbie, Scotland in 1988 to normalize relations with the West. One of the suspects was a member of the Warfalla tribe and Jalud opposed any normalization plans on that basis. 
Islamist politics in Libya, contrary to Egypt or Tunisia, have not developed successfully. Qadhafi has never provided the opportunity for Islamists to carry out any measure of political discourse as its neighbors have by way of elections and official representation. However, Qadhafi's speeches in the period between 1989 and 1993 when economic hardships were hardest, and violent confrontations between citizens and security forces more frequent, indicated his fear of Islamists operating in Libya. In addition; in April 1993, Qadhafi reversed his unorthodox position and presented himself as a defender of Islamic law. He encouraged the adoption of traditional Islamic punishments for murder, theft and fornication. Alcohol consumption, which had been tolerated in the 1980's, was again condemned. In many ways he adopted the defining elements of what he thought was the Islamists' agenda. Qadhafi's Islamic revival, nonetheless, precluded removing the Green Book as the de-facto constitution of the Jamahiriya. 
Libya's unique political system has been envisaged to function according to the precepts of the Green Book. The system has ideally been intended to function as a direct democracy and to guarantee economic and social equality. However, while a measure of economic equality has existed in Qadhafi's Libya, its political system has perpetuated a kinship based social organization and impeded the political development of the population. These combined characteristics have served to hamper the rise of an effective and united opposition. Essentially, direct "democracy" in Libya works through a peculiar infrastructure that involves grass roots discussion and approval of the general ideas pertaining to policy, defined and made plain by Qadhafi, in a manner that resembles more a consultative than a legislative body. Ultimately, the informational and organizational vacuum that exists in Libya has precluded the necessary degree of coordinated action capable of sustaining a real threat to the regime. 
Libyan citizens are fearful and apprehensive and the Revolutionary Committees have had a de-facto mandate to keep them this way! Libyan society has remained fragmented since the Revolution as exclusion from political activity and the official repression of civil society has promoted kinship as the primary mechanism of social organization. There has been little political evolution among the population and therefore little popularity for more radical alternatives to Qadhafi himself.
Officially, Qadhafi himself does not hold any political office and he is simply referred to as the Brother Leader of the Revolution Akh al-Qa'id al-Thawra and, most recently, as the Philosopher of the Revolution. However, his role is in fact one of supreme authority which he exercises through the Revolutionary Committees. These in fact 'bring' Qadhafi's ideas to the Basic Congresses and Committees for approval, while taking back valuable information on the people's perceptions of certain policies, that are sometimes reversed if these are perceived to threaten wide scale, politically dangerous opposition. While there is no formal Constitution as such, the dictates of the Green Book serve a similar purpose. The Green Book promotes many of the themes common to Arab Nationalism and contemporary Islamic thought such as anti--imperialism, and dependence on the West, social injustice and exploitation and advocates a return to Islam to restore Arab/Muslim power.
Kinship based social organization principles have persisted in Libya as a result of the official encouragement of tribe and family and the prohibition of alternative organizational principles. Economically, the Green Book's "Partners not Wage-Workers" (la-hujara', sharika !) slogan is one of the ideological pillars of the Jamahiriya. The egalitarian ideal of this principle is to prevent labor exploitation but has served to forbid capitalist development in real estate, commercial enterprise or industry. Consequently, enterprises have been limited to small size and family ownership where self -sufficiency has been the guiding principle. No one may obtain more than the property to satisfy basic needs. Really, only the Revolutionary Committees, staffed by officers from Qadhafi's six main sub-tribes retain any real authority and they are the only group that resembles a political party. This is what some observers have referred to as the basis of the Jamahiriya's present 'stateless' society. In fact, however, 'stateless society' meant that those who argued for long term social investment, prudent administration, reduced military spending and greater efficiency were kept at bay.
This tendency is fully confirmed by the fact that a constitutional reform in March 2000 has abolished twelve General People's Secretariats (GPS), the equivalent of ministries in more conventional governmental structures, including the very important GPS for Oil. Analysts have interpreted this move as an attempt by Qadhafi to further de-centralize power to the provinces where the Colonel's extended family members wield important posts in the army and provincial government. The concept of a formal head of state has also been revised in favor of designating an official leader. Initial analysis of the significance of this latest political transformation suggests that there has been a concerted effort to diminish the influence of the technocrats, who were instrumental in negotiating the termination of the UN embargo in 1999, in favor of the ideologues of the revolutionary cadres. Certainly this is in accordance with the pattern of power distribution that has prevailed in Libya since the al-Fatah revolution.
Similarly, educational institutions have also suffered from ideological infiltration; in fact the universities became the largest recruiting ground for the Revolutionary Committees as these stressed the teaching of Arabism at the expense of more pragmatic issues such as the management of an oil economy. The weakness of the educational system has not simply been a matter of odd curricula that, until recently, allowed for such ideological intrusion as the imposition of such courses such as 'Econometrics according to the Green Book' at Tripoli's al-Fatah University. There is also the matter of the difficulty that Libyan students have faced in studying abroad because of their country's international perception as a Pariah state making it difficult for them to keep up to date with global technical and scientific developments.

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Update No: 1 - (01/12/03)

Pan-Am 103 and UTA 772 resolutions
2003 in Libya has been highlighted by vigorous and significant efforts to improve its international standing. While, this process officially began with the Lockerbie trial in 1999-2000, it has culminated in the fall of this year with agreements being reached over compensation procedures and important bilateral talks at the international level.
Libya has reached an agreement with France this past September over a compensation package for the victims of the UTA DC-10 that was shot down shortly after the Lockerbie incident. This raised the chances of a full normalization of Libya's international relations. The situation has therefore become more favorable for some much needed foreign direct investment; though bilateral US sanctions on Libya remain. As outlined in the BACKGROUND, Libya shares some interest in the US pursuit of militant Islamic groups and Colonel Qadhafi himself, expressed his condolences after the attack on the World Trade Centre. The unexpected convergence of security interests between Libya and the USA suggest that there may be a quiet resolution of their differences in the shorter term. 

New Prime Minister - Economic Liberalization?
On the economic front Libya has since the early part of the summer of 2003 adopted measures to favor foreign investment in an attempt to accommodate the needs of foreign investors. Dr. Shukri Ghanem a former minister of the economy and a technocrat has been appointed prime minister in a major cabinet shuffle. News sources from the region expect that key sectors of the economy are slated to be privatized including the crucial oil industry. The renewed call for free market reforms has been prompted by what the Libyan leader outlined as the need to achieve "People's Capitalism." He also blamed the public sector as hampered in their administration of the economy as a result of "unqualified employees who doe not care about the interests of their country." Doubtless, after years of neglect due to sanctions from 1992 to 2000 the whole of the country's infrastructure and most certainly in the crucial petroleum sector, needs work and investment. Accordingly, Qadhafi has openly exhorted his officials to take advantage of globalization and nominally accepted to abide by the International Monetary Fund (IMF) Article VIII (Section 2, 3 and 4) obligations. This would allow investors to make payments and transfers of current international transactions without restrictions. 
Nevertheless, the last major shuffle in 2000 saw the very same technocrats being removed after they had engineered the way out of the Lockerbie problem. Privatization and economic liberalization measures have been implemented only to be removed for the last two decades. This raises serious questions as to how much room the new liberal prime minister will actually have to implement the proposed reforms. He faces the not insignificant obstacle of the unreformed political system, which despite the expressed desires of its nominal leader, or 'guide' rather, is often blocked by the vested interests of more radical elements such as the Revolutionary Committees. There is also the specter of the violent street protests, which took place shortly after the last major wave of economic liberalization in the late 80's and early 90's. Certainly, on paper, the reforms are very interesting but the changes will not come overnight, while those who have a stake in maintaining the status-quo will place an additional obstacle to the normally slow pace of change in Libya.

Improvement of International Image
There is no question that the Libyan leader has been actively trying to restore relations with the rest of the world. Apart from the final agreements over the compensation of the families of the Lockerbie and UTA victims early in the fall of this year, there are strong rumors that the Libyan embassy will re-open for business in London. It is rumored that the Libyan mission will be located in London's elegant Kensington and Chelsea area - in a building valued an estimated 10 million pounds. Since 1994 Libya has maintained only a diplomatic representation mission after its embassy was closed after the killing of a British police woman by a Libyan 'diplomat' who was firing from a window at a group of protestors of the Libyan regime. Diplomatic relations between Libya and the UK were restored in 1999. Libya is placing great importance on improving bilateral relations with Britain. Early in 2003, the two governments represented by the assistant secretary for production affairs at the Libyan people's general committee, Al-Baghdadi Ali al-Mahmoudi held talks aiming to develop and support economic ties in all fields. The move is all the more surprising as it came at the eve of the Iraq war crisis, when it was evident to all observers that the Anglo-American coalition was determined to wage war on Iraq. 
In that respect the Libyan leader has also adopted surprisingly moderate tones. This suggests that formal diplomatic channels will be Libya's instrument of choice in pursuing its interests - ideological as well as economic - abroad, in place of the more covert methods it was famous for in earlier decades. Qadhafi's recent foreign policy speeches have been targeted at the Arab League. Having for the last five years focused on developing closer ties within Africa going as far as to propose the formation of an African Federation, with Libya at its head, the Libyan leader has recently signaled his intention to renew his commitment to Arab causes. This past October he held talks with President Mubarak of Egypt, in which he described the need to revamp the Arab League. Such a move was needed, he said, in order to face the challenges of Iraq and Palestine. Qadhafi suggested that Libya would be forced to withdraw from the League if measures to reform it were not taken soon. Other important signals of Libya's willingness and determination to improve relations with the outside world were provided by the landmark official state visit to Libya by Prime Minister Jose-Maria Aznar of Spain this past September 17th. . 

Visit of Spanish Prime Minster Aznar in September
Spain has held important economic relations with Libya throughout the 1992-1999 'sanctions' era and its oil company Repsol has been at the forefront of oil exploration efforts, in cooperation with OMV of Austria, Total-Fina of France, Agip of Italy and Lasmo Oil of Great Britain. Repsol however has secured the rights to the crucial NC 115 and NC 186 fields in Murzuq, south of Sebha (about 1000km south of the capital Tripoli). Apart from the obvious oil interests, Spain would also like to further discussions with Libya about extending cooperation between the European Union and the 12 countries that share the Mediterranean Sea with it. Libya had declined to participate fully in this process during the mid-nineties when Israel's Prime Minister Rabin's efforts to improve relations with the Arab world fueled the hopes of greater international cooperation and better relations within the Mediterranean region. In recent speeches Qadhafi has indicated more interest in inter-Mediterranean partnerships and even in the proposed Mediterranean free-trade zone, which is slated to be launched in 2010. In addition, Aznar's visit carries important political significance as far as the United States are concerned. A key ally of President Bush, Aznar's visit is a further signal that the US may consider removing its sanctions sooner, rather than later. Aznar declined comments about whether or not he had a special message from Washington, or whether he would relay any message from Tripoli, but hinted as much when he declared that "Spain shares information with its allies". 


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