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LIBYA


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 34,137    34,136 57
  n/a     n/a
GNI per capita
 US $
Ranking is given out of 208 nations - (data from the World Bank)

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Area (sq.km)
1,759,540

Population
5,499,074

Capital
Tripoli

Currency
Libyan dinar 

Leader 
Col Mu'amar al-Qadhafi


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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: 003 - (01/02/04)

Ever closer to full relations with the West
There is no doubt that Libya and the United States are witnessing a thaw in their relations, as Col. Ghadafi has announced measures that amount to nothing short of a Libyan equivalent of Glasnost and Perestroika. Much of the Arab press - particularly in the Gulf states - has interpreted Qadhafi's overture as a perestroika. The Libyan press was also enthusiastic adding that the real deadly weapons in the world are poverty and ignorance. The principle obstacle to the establishment of full diplomatic links as well as the more important resumption of trade and investment between the two countries, which have a twenty year history of cold war' and diplomatic hostility, remains the objection of the American families of the Lockerbie crash victims. As of early January, hopes of a quick normalization with the US will have to wait, as Pres. Bush has renewed unilateral sanctions against Libya. Nevertheless, current developments suggest that those sanctions will soon end. As a further signal of Libya's desire, and need, for better relations with the West, just before Christmas, it announced that it would allow International Weapons inspectors to put an end to suspicions and allegations that it possesses any chemical weapons and a nuclear weapons program. It will be interesting to see what the inspections reveal, though most experts agree that Libya may have had a small stockpile of chemical and biological arms. A number of interesting diplomatic overtures by Washington and Tripoli have followed the Qadhafi's December WMD announcement - which was formalized by the signing of the Nuclear Test ban treaty on January 15th. Among those measures to have greater effect in the short term is that Washington plans to establish a diplomatic mission in Libya to help oversee the dismantling of the country's weapons of mass destruction programs. This would be very significant, as the US embassy was closed in May of 1980, even if as the Administration representatives have stressed, the office in Tripoli will not be an embassy; rather, it will be an office to assist international officials to carry out the 'disarmament process'. 
In December, President Bush praised Libya's surprise announcement that it would dismantle its weapons of mass destruction programs and allow international inspections of its nuclear facilities but renewed sanctions adding:
"Libya's agreement marks the beginning of a process of rejoining the community of nations, but its declaration of December 19, 2003, must be followed by verification of concrete steps..As Libya takes tangible steps to address those concerns, the United States will in turn take reciprocal tangible steps to recognise Libya's progress." 
In late January US senators visited Tripoli and Qadhafi's son, who is ever more involved in acting as the Libyan middleman in this recent wave of diplomatic activity came especially from London to greet them. Republican Senator Curt Weldon and Democrat Solomon Ortiz headed the seven member bi-partisan delegation in a historic trip. The signals are clear, that the US will remove sanctions sooner rather than later and that US companies will soon be competing with the European majors Agip, Repsol, Lafico and Total-Fina, to mention some in Libya. As if the Dec. 19th, announcement was not enough, Libya also made diplomatic overtures to Israel and has offered to discuss some form of compensation for Jews that were expelled - along with Italians - after the 1969 revolution that brought Qadhafi to power. The measures would initially provide for the permission for these citizens to visit Libya. Libya also attended the recent Davos meeting in Switzerland, the first time it had done so in twenty years. All in all, January has witnessed Libya's most intense efforts to re-establish credibility and contacts with the West since Qadhafi took power. After Pan-Arabism and the brief flirtation with Pan-Africanism, Col. Qadhafi has decided that perhaps the best course for his political survival is to participate in the Western dominated 'globalization' process. The interesting question remains, why has Qadhafi changed tone now? 

Why Now?
Many observers have suggested, in some cases triumphantly, that Libya's reforms and its opening to the West have come as a direct consequence of US pressure and Col. Qadhafi's fear that he might face the same fate as former President Saddam Hussein of Iraq. Doubtless, the timing of the announcement from Libya was remarkably close to the capture of the once powerful Iraqi leader. While Col. Qadhafi has opened his country to inspections, on his part President Bush is rumoured to be planning a short visit to Tripoli and that Libya and Israel have discussed the possibility of allowing former Jewish Libyans to visit Libya - as well as restitution of property confiscated after the 1969 Revolution. However, little has been reported about how the announced economic reforms and diplomatic measures taken to improve relations with the West and the United States in particular will affect Libyan internal affairs. Nor has the question of 'why' this is occurring now been fully explored. This article will challenge the view proffered by the Washington and London, or the reasoning they have been hoping most pundits would adopt, that the war in Iraq and Saddam Hussein's capture have scared Col. Qadhafi into a sudden mood to cooperate with the West.
Indeed, the very reasons for Col. Qadhafi's overtures to the West by announcing that Libya would give up Weapons of Mass Destruction (WMD) - if it really ever had any significant ones to begin with - are unclear. The triumphal tone, coherent with the US administration's current foreign policy, essentially and predictably suggested that the capture of former President Saddam Hussein in Iraq has essentially scared Col. Qadhafi into changing his ways. This is a rather simplistic view of course. Rarely, have scare tactics worked with the Colonel. He remained defiant of the US even after Tripoli was bombed in 1986 and endured sanctions for seven years before finally agreeing to submit witnesses to the investigation over the Pan Am 103 crash in Lockerbie. The desire for international cooperation has become crucial to the Qadhafi regime. The efforts to appease the United States are a crucial ingredient to favour this Libyan version of Egypt's 'infitah' of the Sadat era when, the Egyptian President shifted economic policy away from State led growth to favour the private sector while establishing closer ties to the United States. Qadhafi needs the US to remove its unilateral sanctions in order to allow US firms to invest in Libya's oil sector. This would encourage investors from all over the world who may be hesitating doing business with Libya fearing US reprisal as provided by the Iran -Libya Sanctions Act (ILSA). The US warning to the German utility giant RWE that it may face US sanctions for a deal to explore for oil and natural gas in Libya is an example of the challenges faced by companies wishing to conduct business with Libya so long as ILSA remains in place. 
There could also be a more political explanation for the recent push for economic and diplomatic reforms in Libya. The process began in 1999 with the Lockerbie trial and culminated with the appointment of the technocratic Prime Minister Dr. Shukry Ghanem in the summer of 2003. We should not neglect the possibility that Col. Qadhafi is actually laying the framework of a smooth succession of power, or leadership, for his son Saif Al-Islam by strengthening his authority and acquiring new powerful friends in the form of the United States. After years of Pan-Arab adventurism combined with ever evolving socio-political experiments and a brief flirtation with Pan-African idealism in the late 90's, Col. Qadhafi may have decided to opt for ordinary, but more reliable, stability in order to guarantee his political survival and that of his potential successors. There are no constitutional mechanisms that might be employed to justify any successor to Col. Qadhafi. He holds no official post and his title is Guide of the Revolution (Al-Akh Al-Qa'id Al-Thawra). Tripoli abounds with rumours of the Colonel's rapidly deteriorating health, while his son Saif Al-Islam has held ever-growing public responsibilities having made formal announcements about economic reforms and, more importantly, about the plan to allow IAEA inspectors in Libya to assess the extent of Libya's supposed WMD program. As part of the reforms the very role of the General People's Congress (in essence Parliament) and its General Secretary (read Prime Minister) could well be strengthened and give way to far more technocratic policies in Libya. More cynically, there have been accusations that The British Foreign Secretary Jack Straw covered up the story of the seizure of uranium enriching equipment found on board a Libya bound German owned vessel last October. The suggestion is that Britain and the US offered Col. Qadhafi the now famous diplomatic overture that announced a new era in Libyan relations with the West.

Energy
Perth, Australia-based Woodside Energy Ltd., signed a 30 year contract with the Libyan Oil Corporation NOC, in partnership with Repsol Exploración Murzuq, S.A., a wholly owned subsidiary of Repsol YPF of Spain, and Hellenic Petroleum S.A., of Greece. This will provide for the exploration of five blocks in the onshore Sirte basin. The operator is Woodside and maintains the largest stake (45%), while Repsol and Hellenic Petroleum have 35 and 25 % respectively. Meanwhile, The Chinese petroleum company CNPC announced in mid January that it had completed a 527-kilometer pipeline in Libya, its first project in North Africa. The project has been jointly financed by Libya's Oil company NOC and Italy's Agip gas division. The pipeline will transfer natural gas from Wafa in western Libya to Mellitah on the coast. The project began in early 2002.

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