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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 19,131     71
     
GNI per capita
 US $ n/a n/a
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 045 - (28/08/07)

The Libyan Reform Paradox
One month ago, in a French accented diplomatic maneuver - though some would say grandstanding - the complicated negotiations involving Bulgaria, the EU and Libya over the release of the six Bulgarian medics (the Palestinian doctor was naturalized a Bulgarian during the ordeal) culminated in a 'Hollywoodesque' ending. The medics were freed and France's president Sarkozy and his wife Cecilia stole the show. However, while the French leadership basks in the limelight, Libya itself has managed to turn what was increasingly becoming the embarrassing problem of the death sentences faced by the medics and the related internal political pitfalls, into a strategic exploit no less important than the formal renunciation of 'weapons of mass destruction' in December 2003. Col. Al-Qadhafi made that move, launching the rehabilitation process, having realized that his own political survival depended on establishing better relations with the West. Sarkozy's exploit aside, the medics' release is more of a Libyan strategic victory than it is French or 'western'. Regardless of whether the entire affair of the Bulgarian nurses is interpreted as blackmail or internal political scheming, its resolution suggest that Qadhafi is now prepared to take greater risks in order to turn his country around, or at least to achieve some change. 

The release of the nurses no doubt comported some risks in the Benghazi region, which has typically been the epicenter of opposition to the Qadhafi regime, as noted by the riots there in 2006 - which were masked by the 'Jyllands-Posten' cartoons of Muhammad controversy. Ironically, the eight year period of the Bulgarian nurses ordeal also marked Qadhafi's slow, but steady effort to relinquish a socialistic approach to the economy, advocating reforms in the banking industry and promoting more investment-friendly policies (even if these still largely concern the oil sector). Even here, Col. Qadhafi has taken risks, rattling embedded interests among a small circle of tribal and business elites, while raising the ire of the remaining loyal 'revolutionary' institutions such as the Revolutionary Committees. Having opposed representative central government in what has served as Libya's unofficial constitution since 1977, The Green Book, Qadhafi has also promoted more authoritative and competent public officials, such as Shukry Ghanem - now prime minister after an important stint as oil minister - and to manage Libya's growing ties to the 'global system'. 

Qadhafi the Risk Taker
In doing this, Qadhafi has taken the risks that have been, by all accounts, flexible and pragmatic. In this sense, in the past eight years, or since Libya started cooperating with international judicial authorities in the Pan Am 103 crash over Lockerbie case, Qadhafi has embarked on the most sustained reform process ever undertaken in modern Libya. On the more strictly political front, his son, Saif ul-Islam al-Qadhafi, consistently seen as a modernizer, called for Libya to adopt a proper constitution, to guarantee a free press and an independent central bank in a televised speech. While, Col. Qadhafi would remain as the unchallenged leader of the 'Revolution', Saif ul-Islam insisted that Libya "would not turn into a dynasty or monarchy" in which he would succeed to power. While, the details are still very sketchy, it is unlikely such a move would come swiftly and without challenge from embedded interests. Such talk of a constitution is the first of its kind in Libya and suggests that it future laws would gradually aim to create a constitution or something like it, which will be veiled in Green Book rhetoric. It could be the biggest political development in Libya since the launch of Qadhafi's 'Third Universal Theory' in 1977. Often described as a 'glasnost perestroika', in the Arab world such reforms are usually described as 'infitah' (opening) and they are risky. Sadat in neighboring Egypt was murdered largely because of some religious group's negative perceptions of his infitah, which was seen to have been exceedingly western-influenced in character, culminating in the Camp David peace accords with Israel in 1979. In contrast, Libya's reform process under Qadhafi is being attempted with less overt Western intervention.

International and Domestic Pragmatism
Paradoxically, even while Colonel Qadhafi has kept some distance from the West, maintaining a critical and aloof stance on many issues, Libya also poses one of the smallest fundamentalist or militant risks to the West - Libya is neither Wahhabist, salafist nor Shiite - and has no western military presence whatsoever to keep it that way. While the United States, and a few other powers, have engaged in military actions in the Middle East, fueled by neo-conservative ideology in pursuit of regional interests, it is the recent Libyan experience that has pointed out the better and more realistic approach to achieve this. 

For its part, the US administration is now in a position to send its highest ranking official yet to Libya, as could be expected after the obstacle of the jailed Bulgarian nurses was removed. Condoleezza Rice will make the first visit to Libya by a U.S. secretary of state in half a century, next October. John Foster Dulles, who served President Dwight Eisenhower, was the last secretary of state to visit Libya, in 1953. The visit is clearly being interpreted, and wanted as a way to further improve bilateral relations. US envoy David Welch visited Tripoli in August, most probably to set the stage for Rice's visit. Last April, it should be noted, John Negroponte, the deputy secretary of foreign affairs, visited Tripoli but Qadhafi refused to meet him. The United States has much to gain in better ties with Libya as it tries to reduce dependence on Persian Gulf hydrocarbon resources in favor of African ones. US oil majors Irving, Exxon Mobil Corp. and Chevron Corp. returned to Libya in 2005 after the U.S. lifted economic sanctions.

In August, Libya showed further signs of 'realpolitik' coming to terms with a longstanding source of internal risks. Having always denied the existence of a Berber minority, the Libyan allowed Berber activists to hold a congress in a Tripoli hotel for the first time. More importantly, Seif ul-Islam al-Qadhafi (ever more prominent in delicate international and domestic matters) and Prime Minister Baghdadi Mahmoudi visited the Berber heartland in the Jebel Nefusa Mountains about 50 km from Tripoli, to launch major projects to boost the local economy. The World Amazigh (name for the Berbers of North Africa) Congress president Belkacem Lounes praised the move. Just six months ago, Lounes wrote to Qadhafi to complain about a speech in which the Libyan leader once again denied that a Berber minority does exist. The turnaround may well be a tactic to further ingratiate Libya within the African Union, but it is no doubt encouraged in the context of the continuing reform system. Berber activists want government recognition for the Berber language, which they already have in Morocco and even Algeria. The 'recognition' was accompanied by the inauguration, by Seif ul-Islam, of a new power station and a large reservoir fed by Great Man-made River. 

More Confidence in Banking Sector
Surely, France has already secured some interesting deals out of their involvement including the sale of military and civilian aircraft, and even a rumored civilian nuclear reactor deal, which was considered the actual clincher for the release 'deal'. However, overshadowed by the media attention on Madame Sarkozy's blitz in Tripoli and the understandable joy at the medics' homecoming, was the fact that at the end of last July the French bank BNP Paribas was chosen by the Central Bank of Libya to act as the strategic partner of Sahara Bank. BNP is the first foreign bank to develop full service banking activities in Libya. BNP acquired 19% of the Sahara Bank's capital, immediately taking over operational control in a EUR 145 million deal. The BNP partnership is the first of its kind in Libya and falls within the Central Bank of Libya's restructuring program for the banking industry. BNP is expected to play an important technology and knowledge transfer role not just to Sahara Bank but ultimately to the whole Libyan banking sector, which emerges from decades of political and economic isolation. The program involves the liberalization of regulations on banking activities, the modernization of payment systems, and the creation of a credit bureau.
 
These reforms should facilitate the development of the Libyan financial sector, bringing it up to the level of banking systems in neighboring countries such as Tunisia, where banking services are among the most advanced in Africa. The BNP investment could herald a renewed interest in non-oil sector related investment from the West, suggesting that there is some substance behind the often discussed plans to stimulate other sectors of the economy, such as tourism and small industry. Direct investment efforts would be supported by a likely free trade arrangement with the EU already enjoyed by other countries in the Euro-Mediterranean sphere such as Tunisia or Morocco, through the so-called association agreements that it has with other North African countries. Moreover, the BNP deal could spur more interest in the Libyan financial services sector. Other western banks will also be looking to secure deals filling the role of facilitating foreign investment in non-oil related business, and spur the development of more practical financial products. Libya's non-oil economy has notoriously been held back by a level of bureaucracy, and unreliability, that can drive even the most stubborn investors away. 

Meanwhile, in August, several new projects were announced. Hill International said it won a 28-month, $56 million contract to be a project manager for the expansion of Tripoli's al-Fatah university. SNC Lavalin Nexacor of Canada won a 400-million euro (541-million dollar) bid to build an airport in Libya's Mediterranean city of Benghazi (another likely 'payback' for the resolution of the Bulgarian nurses' affair). The new airport will be able to handle five million passengers a year and 45 aircraft an hour, said Libya's official news agency JANA. Tripoli's airport will also be revamped, which should make it better able to sustain the projected growth of air traffic to the country and the deployment of a fleet of new Airbus airliners. TAV Construction, a subsidiary of TAV Airports Holdings won a tender as part of an international consortium for Tripoli International Airport, in which the Libyan government plans to invest $3 billion. The consortium includes the Turkish TAV Construction, Brazilian Odebrecht and Lebanese Consolidated Contractors Company (CCC). The French company Aeroports de Paris (ADP) designed the project to serve 100 aircraft simultaneously.   

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