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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)

REPUBLICAN REFERENCE

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: 004 - (01/03/04)

Continued Diplomatic Breakthroughs
While the United States continues to impose unilateral US sanctions against Libya, Washington offered a very important lifting of its restrictions on US citizens traveling to Libya. On February 26, the White House announced that U.S. passport holders are now allowed to travel to Libya. The announcement had been originally expected two days earlier; however, the Libyan Prime Minister Dr. Shukry Ghanem denied, earlier in the week, that Libya had any involvement in the bombing of a Pan Am jet over Lockerbie in December 1988 and that it had accepted responsibility in order to 'buy' the all-important re-integration into the international community. The U.S. administration had delayed the lifting of the ban, until Tripoli accepted full responsibility. On February 25 in a move reflecting the unprecedented pragmatism of Libya's current foreign policy, Libya officially retracted the Prime Minister's statements confirming its responsibility for the Lockerbie incident. 
Nevertheless, in February Libya's diplomatic efforts of recent months showed the extent to which the country has been able to emerge from its 'rogue state' status to being courted by the West. On February 10, the Italian Prime Minister Silvio Berlusconi visited Libya and met Col. Qadhafi in Sirte. The Sirte location itself is significant, as the new administrative capital - and mainstay of the Al-Qadhaffa tribe to which the Colonel belongs - caused some controversy in European diplomatic circles in the mid-90's when the 'new' capital was being built. Diplomatic missions have often been asked to move there, but none ever agreed, recognizing only Tripoli as the official capital. Interestingly, the warmer international relations between Libya and the rest of the world, now suggest that the Colonel will stop demanding the transfer of diplomatic missions from Tripoli, just as foreign leaders seem eager to please the Colonel. The diplomatic process also featured the highest-level Libyan visit to Britain in decades when Foreign Minister Abdul Rahman Shalgham visited London and met with his British counterpart and Prime Minister Tony Blair. The latter is said to be planning a visit to Tripoli. Finally, Romano Prodi, President of the European Commission visited Libya at the end of the month to hold talks with Col. Qadhafi and delegates from the African Union (AU) in Sirte, the host city for this year's event. 
The Removal of the US Travel Ban and Pressure from US Corporations to Renew Ties with Libya
The removal of the travel restrictions is an important event in the U.S.-Libya relations, paving the way for a lifting of the sanctions imposed by United States on the North African country. In addition, the U.S. government extended an invitation to Tripoli to open an interest section in Washington while as mentioned in earlier updates, the US have set up diplomatic relations in Tripoli, ostensibly tied to the overview of the ongoing weapons inspections. More importantly, the lifting of the travel ban effectively means that U.S. oil companies may begin to re-establish full business ties with Libya even as the United States and Libya continue to resolve their diplomatic differences, which should ultimately lead to the lifting of unilateral sanctions. Libya's estimated oil reserves are believed to range from 29.5 to 36 billion barrels. Moreover, Libya offers great potential for exploration. International sanctions imposed until 1999, the US travel ban and the Iran Libya Sanctions Act (ILSA) effectively reduced exploration activities both because of the departure of leading US oil firms, in 1986 when the US bombing of Libya soured bilateral relations, and the difficulties involved in supplying exploration and drilling equipment and spare parts for such leading firms as Halliburton. As the chart below (in billion barrels) shows, Libya owns the world's eighth largest oil reserves and the largest in North Africa:

Saudi Arabia 261,750 
Iraq: 112,500 
United Arab Emirates: 97,800 
Kuwait: 96,500 
Iran: 89,700 
Venezuela: 77,685 
Russia: 48,573 
Libya: 29,500 
Mexico: 26,941 
Nigeria: 24,000


Libyan oil is also easier to refine, as it is one of the purest and most sulphur free varieties of crude. This makes Libya a very important source of energy and future resources. While IAEA inspectors and other specialists continue to look for and analyse Libya's much touted weapons programme, Libya's resources make it a very attractive source of energy for the United States, especially as it seeks viable alternatives to reduce its reliance on Saudi Arabian supplies. Libya's location at the centre of the Mediterranean and its advanced offshore delivery systems also provide faster and more reliable transfer opportunities, especially as the stability of the Gulf has been compromised by the wars in Iraq and Afghanistan and concerns over possible Saudi funding of militant Islamic groups. In addition, Saudi Arabia's oil fields have been less productive recently and industry analysts are concerned about Saudi Arabia's ability to satisfy global oil needs and demands in the near future. In order to satisfy energy forecasts, industry analysts have estimated that Saudi Arabia should almost double its output in the next decade. The concern is that production will not increase beyond current levels generating a significant gap in supply. Experts have reported that Saudi Aramco plans to continue to pump oil at the current capacity levels of about 10.15 million barrels a day as far as 2011. The United States Energy Department, on the other hand, expects that Saudi Arabia will need to produce 13.6 million barrels a day by 2010 and 19.5 million barrels a day by 2020 in order to match expected world demand. 
These reasons add much credibility for a renewed and sustained thaw in US - Libyan bilateral relations, and more than a little suspicion that Col. Qadhafi's now famous announcement of December 19 about Weapons programs was a face-saving way for both Libya - maintaining a defiant image of military strength - and the United States to reach a solution to their diplomatic problems. Some well noted military analysts as the London based Gwynne Dwyer, for example, are highly dubious that what he describes as "the comic-opera dictator of Libya", Mua'mmar Al-Qadhafi, has decided to terminate his
nuclear weapons programme because he feared Libya would face the same fate as Iraq (and he that of Saddam Hussein). He is very skeptical and suggests that Col. Qadhafi's road toward gaining the good will of the international community effectively began when he decided to take responsibility for the 1988 bombing of Pan Am flight 103 back in 1999, long before 9/11, Iraq and the continued pressure on other Middle Eastern states such as Syria. He insists that Libya wholly lacked the capability - let alone the need - to produce nuclear weapons. Evidence has suggested that Libya purchased nuclear bomb plans from a few Pakistani nuclear scientists on a so-called black market route. However, considering the widely acknowledged fact that almost all skilled and highly technical jobs in Libya are performed by foreigners on contract, even a remote chance that Libya was developing nuclear weapons is very unlikely.
The nuclear weapons card was played in order to restore important relations with the United States. For the Libyan Government needs sustained oil production and exploration for its survival. The lifting of the travel ban effectively means that U.S. oil companies with holdings and interests in Libya before the sanctions were imposed in 1981 may begin to plan and negotiate their return to the North African country. Some of the petroleum companies that will have no doubt a strong interest in renewing their activities include the world's biggest such as Occidental Petroleum, ConocoPhillips and Amerada Hess. The sanctions remain in place officially, and they probably will until the 2004 Presidential elections are decided. However, these have now assumed a secondary importance and pose no more than a formality in the face of a highly anticipated and effective return to business, which the lifting of the travel ban has made possible.
The current US administration has faced much pressure from oil companies and business interest groups to lift unilateral sanctions against Libya or take steps to facilitate a re-entry of such companies into what are potentially very profitable markets. In December 2003, a few days before Co. Qadhafi announced that he would be foregoing all weapons of mass destruction and opening his country for inspections, Halliburton Energy Services Group President and CEO John Gibson advocated opening new markets and hoped that the United States lift sanctions against Libya, Iran and Cuba. William Reinsch, president of the National Foreign Trade Council, had expressed concerns on behalf of oil companies he represented that the US energy industry risks might be left too long out of Libya's lucrative energy resources. Reinsch, represents a group of 300 multinationals including ExxonMobil, ChevronTexaco, Halliburton and Bechtel Group. US oil companies from ExxonMobil Corp to ChevronTexaco Inc are eager to start exploiting Libyan fields. US oil groups have had a presence in Libya since the 1960s. Exxon and Mobil, now ExxonMobil, were forced to leave the country in 1982 amid a US trade embargo. Five other US energy groups, Amerada Hess, Conoco, Grace Petroleum, Marathon Oil and Occidental Petroleum, were all active in Libya until 1986 when President Ronald Reagan ordered them to leave. 
The announced ease of sanctions represented by the lifting of the travel ban does not fully entitle US oil companies to start drilling. However, it is a significant first step that will allow companies such as Occidental, Marathon, ConocoPhillips and Amerada Hess to renegotiate contracts with Libya paving the way for re-establishing the desired participation of American oil concerns in the North African country. The lifting of the travel-ban was accompanied by other steps toward better relations. The Bush administration also intends to take steps this month to facilitate renewal of commercial contacts, and the enrollment of Libyan students in American universities and cooperation on health issues.

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