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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)

Books on Libya

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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: 005 - (31/03/04)

Mr. Blair Goes to Tripoli
March 26th, 2004 will be remembered as a historic date in Arab relations with the West as Prime Minister, Tony Blair, met Libyan leader, Muammar Al-Qadhafi, in Tripoli. Tony Blair is the third leader of a European country to have visited the Libyan leader only a few months after Jose Maria Aznar (September 2003) of Spain and Silvio Berlusconi of Italy (February 2004). Although not the first, Blair's visit is the most diplomatically significant. 
The meeting was highlighted by a symbolic handshake between Mr. Blair and Colonel Qadhafi, which was all the more remarkable given the difficult relations of the last twenty years between Britain and Libya. Indeed, the meeting and the now famous handshake have also marked what is perhaps the most favourable period of relations that Libya has enjoyed with the West since Qadhafi's Revolution in 1969. It was the first visit to the country by a British leader and follows decades of animosity, which soured after Britain cut diplomatic ties with Tripoli in protest over the shooting of police-woman Yvonne Fletcher outside Libya's London embassy in 1984 and culminated in the sanctions imposed following the accusations over the bombing of Pan-Am flight 103 over Lockerbie. There is little doubt that Blair's visit to Tripoli marks the official thaw in Anglo-Libyan relations. 
The meeting between the two leaders lasted no more than 90 minutes and took place inside an especially fitted tent in typical Qadhafi fashion. Blair acknowledged what many Arab and Western observers were thinking when he said that he felt "strange" being in Tripoli given the sordid history of the recent past; nonetheless, he also remarked that "remarkable" progress had been made. He was not exaggerating. Libya had been progressively isolated from the international 'mainstream' since 1973 during the Arab oil embargo and Qadhafi's increasingly radical political experiments from Socialist Republic to his idiosyncratic political experiment based on his "Green Book", which was fully institutionalized in 1977.
Ostensibly, this thaw was made possible, as Blair stated, due to Col. Qadhafi's decision to abandon Libya's weapons of mass destruction program announced last December. The meeting of the two leaders culminated a period, described by Blair, as being one of "full and transparent cooperation". 
Despite complaints from Conservative MP's, many relatives of the Pan Am 103 flight over Lockerbie victims supported it, as they expect that the normalization of relations between Britain and Libya sends a welcome signal of cooperation. Libya's common cause in fighting terrorism and official renunciation of weapons of mass destruction will help provide an example to other states currently pursuing this goal. Indeed, Qadhafi's regime has faced tough opposition from Islamic militants throughout his 35-year rule and particularly in recent years, he has officially denounced al-Qaida as an enemy and was one of the first leaders to condemn the 9/11 attacks on the United States. Blair stressed this aspect of Qadhafi's rule during his press conference as if to justify his meeting with the Libyan leader, a meeting few would have predicted not a few months ago.
Prime Minister Blair's visit was preceded by another groundbreaking diplomatic event that saw the highest level US visit since 1980, when American oil companies were still operating in Libya, as US envoy Assistant Secretary of State William Burns arrived in Tripoli on March 24. This all but confirms the fact that Mu'ammar al-Qadhafi has become the man to court in the Arab world. He has taken the role, ironically, of the very man he felt had betrayed the Arab world, President Anwar Sadat of Egypt. As the latter, over two decades ago diverted from the policies of Gamal Nasser - Qadhafi's model and hero - pursuing a policy of openness to the West and market economics 'infitah' culminating in the Israeli-Egyptian peace treaty. In 1986, President Reagan called Qadhafi "The mad Dog of the Middle East". 

Diplomatic and Military Developments
Mr. Burns delivered a letter to Qadhafi form President Bush praising Libya's progress in eliminating weapons of mass destruction. Just a few days earlier, there was some concern that the meeting might not take place as Libyans were angered by the overly 'triumphal' news footage of some of the alleged WMD equipment being dismantled by international officials. The Bush administration has been presenting Libya's 'turnaround' as evidence of the positive ripple effects following the overthrow of Saddam Hussein's regime and the Iraq war. The United States and Libya have also been taking increasing steps toward re-establishing official diplomatic and Burns and Qadhafi discussed plans to establish a U.S. liaison office in Tripoli and the normalization of trade and investment. This follows last month's announcement that the US would lift the travel ban to Libya imposed since 1986, widely expected to allow American oil companies to resume business in Libya. Occidental Petroleum became the first U.S. energy firm seeking to reactivate dormant operations when it reopened an office in Tripoli earlier this month. Libya needs foreign investment and upgraded oil drilling and refining technology after years of sanctions, oil accounts for over 90% of the country's foreign revenues. During his visit, Tony Blair also announced that Shell would be resuming its operations in Libya (see below). More interestingly, however, he also suggested that the Libyan armed forces would be welcome to train in Britain, "to show that Libya could defend itself without weapons of mass destruction". There are speculations that this offer also includes a potential deal for British Aerospace to undertake aviation projects - Libya needs upgrading of its air transport and air force infrastructure after the neglect caused by the sanctions - as well as to sell secure potential aircraft and military equipment sales. 
Certainly, the military aspects of Libya's new relationship with the West have thus far focused on Libya's renouncing of its WMD program; however, there are indications that there may be more strategic interest involved. In mid-March, a small group of U.S. troops quietly helped the military forces of Libya's southern neighbor Chad during battle against an Algerian Islamic group. The engagement reportedly provided for communications, intelligence and reconnaissance support but not combat. US navy aircraft have also been operating out of Algeria, confirmed a US military source. 
The effort is supposed to provide broad, but low-key, assistance to assist Algeria, Mali and Niger against Algerian Salafist Groups, namely one, GSPC believed to be an Al-Qaida affiliate by the United States, from spreading their influence into North Africa. Moreover, the US military has also acknowledged that it is providing training for African military forces in the region with a view to preventing hostile groups from expanding their activities in the large sparsely populated regions of North Africa. The US believes that radical Islamist groups such as the GSPC have been spreading recruiting efforts into nearby Mauritania and Niger. The battle resulted in 43 GSPC deaths, while the Pentagon is concerned that the remote areas of several North African countries are at risk of becoming an al-Qaida recruiting ground and a possible back door into Europe. US intelligence issued this warning three days before the March 11 Madrid bombings. The US has already been cooperating militarily with Algeria, Tunisia and Morocco while some 200 US troops were expected to arrive in Mauritania, Chad and Niger. 
As a side note, Exxon has been increasing its oil exploration activities in Chad and Mauritania.
As far as Libya is concerned, the United States' growing interest in securing the North Africa region against the proliferation of activity by alleged Al-Qaida affiliates might eventually include it as well. Libya intervened in a disastrous civil war in Chad in the early eighties, but is now ill equipped to handle military campaigns - the Weapons of mass destruction notwithstanding. Blair's offers and closer relations with the US along with frequent citations of Libya's commitment against militant Islamists suggest that military cooperation between the once bitter foes cannot be too far off. 
The fact that senior US generals, including the commander of the US European command, General James Jones, have been touring the region looking for temporary bases and airfields to use in possible future operations in Africa suggest this may be sooner rather than later. Interestingly, William Burns, the US envoy who visited Libya in late March landed in Matiga airport, which had been the largest US military airbase until Qadhafi asked the US to leave Libya shortly after the 1969 revolution. In fact, General Wald has already suggested that Libya might one day join the North African alliance "in a not too distant future". Britain is being brought into the North African alliance as part of a joint European operation called the African Clearing House, he said. 

Energy
As Blair officially signalled Libya's re-entry into the mainstream of international affairs, Shell announced that it has signed an accord to seek natural gas offshore Libya. The plan would give the Anglo-Dutch giant, Europe's second-largest oil company, access to new supplies close to European markets. Only a few weeks earlier, Shell announced that it would be significantly reducing its operations in Nigeria. Libya has the world's eighth largest oil reserves and has the fourth biggest holding of gas reserves in Africa with an estimated 46.4 trillion cubic feet of natural gas, (twice as much as the United Kingdom). 
Occidental Petroleum Corp, chief executive, Ray R. Irani, also met with Qaddafi earlier this month to discuss resuming oil production. Occidental had produced as much as 100,000 barrels a day in Libya before it was forced to leave in 1986. Clearly, reaction to last month's lifting of the Libya travel ban has been swift and Libyan Prime Minister Shokri Ghanem will host a conference in Tripoli next month entitled "Doing Business in Libya," to promote investment in energy, trade and tourism officials and executives from international oil companies. 
With the threat of US sanctions under ILSA (Iran-Libya Sanctions Act) removed, Statoil ASA, Norway's 82% government-controlled oil company, has also expressed interest in petroleum projects in Libya. Statoil's project manager announced that Statoil hopes "to be able to contribute technical expertise and experience in oil and gas production." Statoil is still studying this possibility and the company said it needs to clarify a variety of issues before deciding on pursuing opportunities in Libya, including Norway's policy vis--vis the North African country. Until recently, Norway did not have a diplomatic presence in Libya. 

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ENERGY

Shell signs libya deal 


Shell has signed an agreement with the National Oil Corporation of Libya for the establishment of a "long term strategic partnership" in the Libyan upstream oil and gas industry, Sky News reported.
The deal, a result of the thawing of relations, is worth a reported 110m now - and could total well over 500m in years to come.
A Shell spokesman said Libya "offers significant oil and gas prospects and we have been engaged in discussions with the National Oil Company regarding possible opportunities." 
Libya has proven oil reserves of some 30 billion barrels - about the same as the US has left in the ground.
Libyan oil is light and sweet - low in sulphur, easy to refine and very good for jet fuel, petrol and diesel.
Industry experts say it is exactly the sort of oil that is not being found much any more. It is also easy to get out of the ground, and close to the European market.
The country has gas reserves of 1.3 trillion cubic metres - by comparison there are 2.2 trillion in the Norwegian sector of the North Sea.
Libya does have a Liquified Natural Gas terminal, but dates from the 1960s and is small. 
Libya is therefore considered a highly attractive country for the world's oil giants because of its low recovery costs, the quality of its oil and its proximity to European markets.

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