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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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)

Books on Libya

Update No: 085 - (24/12/10)

Lessons Learned from Libya in 2010
The end of the Swiss-Libyan dispute, which was achieved through the mediation of Germany and Spain and the very serious action taken to discourage migration to Europe suggest that Libya’s next diplomatic target and main opening may well be Europe. While there is nothing to suggest that the Libyan leadership will stop ‘picking fights’ with other countries or leaders- leaving foreign investors in a constant state of vigilance, there can be no denying that Libya’s relations with the EU have become stronger over the past few months. Libya is running a hedge fund from London, with a wider aim to facilitate Libyans’ access to western finance. Libya has fallen short of its oil production targets, partly because of the various political risks associated with the country, discouraging more investment- especially the episode involving the Canadian firm Verenex, which hinted at a resurging ‘nationalization’ trend. Now, Qadhafi is intent on reaching a goal of producing three million barrels a day, which will require offshore drilling to achieve.

The events of 2010 suggest that Libya’s main risks in the short and medium terms remain the unpredictability of the succession, the ever present potential for an international diplomatic crisis (in the Swiss or Bulgarian nurses style) and possible social unrest as Libya remains under increasing EU pressure to curb the migration phenomenon. Oil prices are rising, potentially reaching USD 100/barrel due to the low value of the US Dollar and speculation. The bustling state coffers suggest that foreign firms, especially from the West (struggling with the lingering economic crisis) will continue to actively pursue Libyan contracts. The earnings are potentially high, but so are the risks. Transparency International actually lowered Libya 16 points from 130 to 146 out of 178 countries in its ‘Corruption Perception Index’. Libya’s much touted reform plans have never actually materialized and the labyrinthine bureaucratic and the de-facto non-independent judiciary can play havoc on business regulations. The government’s commercial aviation ambitions reflect the idiosyncrasy of some of Libya’s economic growth plans. The government wants to make Tripoli into a major hub linking Europe to Africa; however, it has not yet resolved the messy and uncertain procedures involved in securing travelers’ tourism visas for entry into its own state.

The Libyan-Swiss saga served to highlight the fact that much of the EU continues to consider good relations with Tripoli to be a priority. When Libya imposed a visa moratorium against all EU citizens, the EU put pressure on Switzerland to resolve the matter, suggesting that the EU would not risk its member states’ relations with Libya for Switzerland’s sake. Even if various European leaders did visit Qadhafi to resolve the matter, it was always in the most polite of terms and always with a view to uphold favorable business ties, despite the fact that the charges against the two Swiss nationals were preposterous. The episode demonstrated that as long as Western governments and companies want a piece of the Libyan oil and infrastructure pie, the Libyan leadership has no incentive to change; especially as in realpolitik terms he continues to ‘win’ in these international disputes. If Western governments conduct delicate negotiations, always careful not to offend, many developing countries appear to revel in the way the Libyan leader can make western governments grovel. The Muslim world would have been especially pleased, seeing as in 2010 the debate over the banning of the burqa reached a peak in many European countries. In this climate, there is little to prompt real change in Libya and in 2010, it was quite evident that the ‘progressive’ or common sense governance approach embodied by Saif-ul-Islam al-Qadhafi, the leader’s son and, by most accounts, the architect of Libya’s initial rapprochement strategy in 2004, is waning in favor of a more ‘conservative’ one.

The reformers are losing, in other words. Saif ul-Islam vs. Mu’tasim 0-1
Twenty journalists associated with a media group, Libya Press, controlled by Saif ul-Islam al-Qadhafi’s al-Ghad Media Group were arrested in late November while websites managed by exile groups outside of Libya have been targeted by hackers. The Oea newspaper also part of al-Ghad, was shut down because it published an article critical of the prime minister al-Mahmoudi. The al-Ghad Group is also associated with Saif’s ‘Qadhafi Foundation for Economic and Social Development’. The arrests took place in Tripoli and Benghazi and they were made by security officials. While Libya Press asked for a direct intervention from the Libyan leader to secure the reporters’ release, the arrests testify to the fact that a power struggle is brewing in Libya between a progressive group, typified by Saif ul-Islam and the old guard, typified by the ‘revolutionary committees’ and those close to them, such as Saif’s brother Mutasim al-Qadhafi. The arrested journalists, some Tunisian and Egyptian, are believed to be members of the Muslim Brotherhood, which could indicate that the ‘conservatives’ do not trust Saif on matters of national security, tipping the balance of ‘favor’ for the leadership succession more toward Mu’tasim who acts as national security advisor. The arrests, therefore, would appear to be part of an internal power struggle.

The journalists were released, but Libya Press has moved from Tripoli to London. While Mu’tasim has refrained from voicing any suggestions regarding Libya’s current power structure, Saif ul-Islam has often criticized Libyan idiosyncrasies, noting that the country needs a real Constitution. In November, the print version of Oea newspaper – also part of the al-Ghad group – was suspended after it published an article that criticized the government of the prime minister, Al-Baghdadi Ali al-Mahmoudi. Saif ul-Islam’s Foundation, meanwhile, announced, almost at the same time of the arrests, that it would no longer participate in overtly ‘political’ affairs, preferring to focus on sub-Saharan Africa and poverty alleviation. This same Foundation recently sponsored the delivery of aid for Gaza by ship in an effort to break the Israeli embargo on Gaza. More significantly, the Foundation’s shift from ‘political affairs’ means that it will no longer deal with issues surrounding the reform of Libyan institutions and of the Jamahiriya itself. The Wikileaks website noted that US officials who tried to boost bilateral relations, including security matters, with Libya through Saif ul-Islam, were told to refer only to Mu’tasim.

The Qadhafi Foundation’s shift away from internal political matters could almost be interpreted as a partial resignation by Saif ul-Islam, whose star appears to be waning. The repercussions of this internecine struggle between Saif and al-Mu’tasim in 2011 will serve as a barometer for the kind of direction Libya will take in the near future. The Qadhafi brothers’ power struggle also has the potential of raising political instability, as the various associated camps will challenge each other for influence. In 2010, the old guard has held sway. For western governments and companies this means that Libya will continue to use such threats as the immediate cancellation of commercial contracts, worker expulsions, reduction of political contact, demonstrations against specific foreign interests and repercussions on foreign nationals.

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