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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


Area (



Libyan dinar 

Col Mu'amar al-Qadhafi


Update No: 015 - (31/01/05)

Thinking beyond oil?
The year 2004 was very good for Libya both politically and economically signalling the return of Libya in the international system. The Libyan leader Mo'ammar Al-Qadhafi noted on 1st September 2004 address on the anniversary of the 'Revolution' that brought him to power in 1969 that "The world had changed". The Libyan media, which typically echoes and interprets the direction of the leadership's policies, have been stressing that economic interests are what matters most to Libya now regardless of previous diplomatic and ideological antagonisms. Indeed, Libya received the largest amount of foreign direct investment in Africa in 2004 thanks to its vast energy resources, attracting the right kind of attention from the United States and Europe, whose corporations are eager to develop. Europe is also hoping to use Libya as a base for curbing illegal immigration from Africa - the high prices of crude have also helped sustain the interest and have generated about $15 billion in revenue for 2004. The Prime Minister Choukry Ghanem has been one of the principal architects of the economic pragmatism that has characterized his administration since the summer of 2003. Ghanem has indicated that Libya intends to double its oil output from 1.5 to 3 million barrels by 2010. Ghanem has also implemented reforms to correct the corruption that prevailed in securing business contracts in Libya reducing barriers to foreign investment. Ghanem also started to de-centralize the oil industry adopting more transparent and free-market style processes. However, this is still a work in progress proposition part of a wider scheme to reform the primarily state run Libyan economy. 
The Libyan oil industry reform, outlining the government's plans how licensing arrangements with foreign energy companies will be concluded were the focus of a conference in Tripoli backed and supported by the national oil company NOC. Nevertheless, Libya as holder of Africa's largest oil reserves, as well as some of the highest quality crude reserves in the world, realizes it has negotiating strength. Libya could therefore, refuse to grant better terms demanded by three of the biggest U.S. oil companies, which want to restart production contracts that were frozen in 1986 when US sanctions were introduced. The three companies ConocoPhillips, Marathon Oil, of Houston, and Amerada Hess formed Oasis Oil Co. with the Libyan state oil company NOC. The US consortium owned 40% of the Oasis, while the remainder was owned by NOC. The Oasis group has demanded that Libya extend their agreement for use of the fields for 18 years originally signed before 1986, but The Oil minister Fathi bin Shatwan has refused citing the 10 year limit on such agreements imposed by Libyan law. Before 1986, the Oasis group produced 400,000 barrels a day, about one quarter of the country's current output. The original American Oasis partners were also demanding a higher rate of return at 8.5%, while the agreement allowed for a 6.5 percent return. Nevertheless, Shatwan, who discussed these issues during an interview, also said that he expected the US companies to sign the agreement in spite of the unfulfilled demands. Meanwhile, Libyan oil has also attracted Japan's Nippon Oil, which has announced that it will bid for oil and natural gas development projects in Libya at international auctions. 
Two other Japanese firms -- Teikoku Oil and Japan Petroleum Exploration Co. -- will be among 63 firms taking part in the auction. This is a significant auction, as it is the first to be held since the US lifted full economic sanctions in September 2004. 

This time the Reforms are serious
However, the conference was part of a program designed to generate awareness and interest in Libya's potential in other sectors of the economy such as Agriculture, transport, telecommunications, education, tourism and healthcare. Indeed, while 2004 was a pivotal year for the inflow of foreign investment in oil, in 2005 Libya hopes to attract investment in other sectors of the economy. Libya has realized that oil will not last forever, is searching for alternative sources and develop new industries as while also managing oil revenues more efficiently suggested Dr. Ghanem. Accordingly, the Libyan Prime Minister said that Libya has approved investments by some foreign banks in Libya as part of economic reforms implemented by the government. The economic reform plan revolves around reforming the banking sector. Ghanem stressed that no other sector of the economy would be open to foreign investors until the banking situation had been revamped. He reiterated this position while discussing rumours that the telecommunications sector, which badly needs updating, would remain closed to foreign investors for the time being. 

Pragmatic revelations at Davos
Nevertheless, reforms are on the way. Toward the end of January, Libya officially launched a program of economic reform unprecedented since the early years of Qhadafi's Revolution, when the economy was nationalized. The program is very ambitious and its implementation aims to make government more efficient and accountable, as it divests of assets favouring the emergence of a private sector. Libyan officials also announced that the media would be liberalized. The announcement was made at the World Economic Forum by Seif el-Islam Al Qadhafi - the son of the Colonel, who is widely seen as having influenced his father on taking a more pragmatic foreign policy and economic outlook - and Abdulhafid Mahmoud Zlitni, the chairman of Libya's National Planning Council. Seif el-Islam, in a clear bid to attract investment to Libya, stressed during an interview that "The old times are finished and Libya is ready to move onto the new stage of modernization…This will be conducted in a well organized manner that ensures new openness and ownership by the people of Libya, not a small class of oligarchs like Russia or Egypt." The latter remarks suggest that Libya's economic reforms might be more substantial than the mild and lopsided economic reforms usually called 'infitah' (opening) in Arab countries. Libya has hired famous economic consultants from the West to assist in the reform and advisers include Michael Porter of the Harvard Business School and Daniel Yergin, the Pulitzer Prize-winning economist famous for his book on the oil industry "The Prize." They will be helping Libya develop a two-year plan to implement the changes necessary to increase the private sector's role in the economy. 
Libya had embarked on two major attempts to reform the economy in the late 80's and the mid 90's. Both were seen as necessary responses to lower oil prices. However, the reforms of the late 80's merely reversed the social benefits that legitimised the Qadhafi regime in the first place and met with strong opposition. The reforms of the mid-90's permitted the formation of public-private cooperatives, which were limited to small scale production facilities; moreover, the sanctions boosted the black market and a related private retail sector, which supplied Western goods to Libyans, who could afford them. The latter accentuated differences between rich and poor and Col. Qadhafi faced some of his strongest opposition in 1996 when the black market reached its peak. Once critical observers of Libya now suggest that the current economic reform program is much more serious. Despite the challenges, Dirk Vandewalle, associate professor of government at Dartmouth College who specializes in North African politics and economics, says that external and internal pressures make the current climate much more favourable for cultivating reforms. "There is a strong internal feeling that change must happen...They realize international investment will be needed for development." One of the first projects will focus on reforming government and institutions, and will be guided by the British Adam Smith Institute - reducing civil sector employees will be one of the main aspects. Significantly, Libya has also announced it will close industries where it is not competitive. Two of those might well be the Libyan Cement Company and the Libyan Steel Company located in Misratah. They were built along with a number of other 'white elephants' in the 1970's and 1980's only to accrue millions in losses. Their closure would not have been politically feasible before the current reforms. Qadhafi added, pragmatically: "We now have a factory producing cars, which is crazy and will change," Qadhafi said. "We will not try to produce missiles or airplanes or anything that the Japanese can make better." 

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Poland to access Libya's oil fields

Polish Prime Minister, Marek Belka, recently headed a delegation that met with Libyan leader, Muammar Gaddafi in Tripoli. Bleka was accompanied by businessmen, which included the head of PKN Orlen, Igor Chalupec, Warsaw Business Journal reported.
Oil was the topic of discussion, with PKN Orlen and Lotos teaming up with other state-owned energy firms to negotiate over access to Libya's oil fields. Treasury Minister, Jacek Socha, said the project was worth considering both in terms of economic gains and national energy security, by diversifying oil supplies away from Russia. Nafta Polska chief, Krzysztof Zyndul, told Daily Gazeta Wyborcza: "We want to prepare a joint offer for the Libyans by the ed of April … but it is too early to talk about the creation of a formal consortium of Polish petrochemicals firms." Nafta Polska owns 17 per cent of PKN and a controlling stake in Lotos. Several Polish companies would also seek licences for oil exploration in Libya.

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