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LIBYA


  
  

 

In-depth Business Intelligence

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)

Books on Libya

REPUBLICAN REFERENCE

Area (sq.km)
1,759,540

Population
5,499,074

Capital
Tripoli

Currency
Libyan dinar 

Leader 
Col Mu'amar al-Qadhafi



Update No: 029 - (31/03/06)

Is the Cabinet Shuffle a Response to Difficulties with Reform? 
There was a significant government shuffle in Libya in early March. The general people's congress appointed Dr. al-Baghdadi al-Mahmoudi as prime minister, replacing Shoukri Ghanem who was given control of the National Oil Company NOC, succeeding Abdullah al-Badri, who is said to be very ill. The shuffle also included the appointment of a woman minister for the first time as minister of social affairs while the ministers of foreign affairs, tourism, planning, justice and the labor force kept their posts in the new government formation. Rajab al-Mismari was appointed as a new minister for general security to replace Naser al-Mabruk who was removed after Benghazi incidents on February 21 in which 11 persons were killed during their participation in the acts of protest over the prophet's cartoon. Six new ministries were formed: the ministry of general education, social affairs, the ministry of industry and electricity, the ministry of health, the ministry of agriculture, the ministry of transport and communications while the ministry of energy was abrogated. Ordinarily, a government shuffle in Libya would not cause excessive concern; however, the circumstances that preceded the March re-appointments are indicative of the potential problems in the reform process as highlighted by the February riots in Benghazi. The executive changes were made just days after the release of 84 members associated with the banned Muslim Brotherhood, who were detained since the end of the 1990s.

Indeed, the cabinet reshuffle that "ousted" the Shoukri Ghanem from his prime minister position has fueled uncertainty about the scope and outcome of the reforms that Ghanem had been appointed to effect, improving Libya's investment attractiveness, raising the concern of western governments and their oil companies - by far the main source of foreign investment. Aware of potential international repercussions, the new Prime Minister Al-Baghdadi, a medical doctor and former minister of health, assured that the reforms would continue. In the reforming Libya, the world has been led to believe that government ministers are backing away from state control of the economy and toward the free market as the solution to chronic unemployment and under-investment. Last month, Col. Qadhafi received a new plan for reform from Michael Porter, a Harvard Business School professor who advises countries about competing in the global economy. Porter has suggested that Libya should diversify its economy and overhaul its education system, but its recommendations may not become reality for a long time. The new Prime Minister, reassured oil companies and Western governments that his country will go on reforming its economy to attract investment and lower unemployment. The banking sector is also targeted for an overhaul. Al-Mahmoudi confirmed that the Ghanem economic plan would continue to be implemented. Meanwhile, a setback should be expected on the political reform front despite the recent release from jail of 180 political prisoners, including 84 key members of the banned Muslim Brotherhood organization. The release came because of a deal between Kaddafi and the Islamist organization.

Qadhafi trapped by the 'Jamahiriya'
There already are signs that reform will move more slowly than some thought - the country's reform-minded prime minister was demoted earlier this month and moved to oversee the National Oil Company. It has also become evident that the Benghazi events, as was suggested in the March update, helped to accelerate a change in leadership, while maintaining a certain degree of continuity. The debate has also highlighted one of the main failures of the Libyan system: it does not have a constitution. The 'Green Book' might be considered its constitution, but it makes no provision for political parties or succession, limiting the power of a reform minded official to garner organized support for an official 'reform' mandate. Libya's transformation as it joins the global economy - or as it breaks from isolation - and the "Ghanem Impact" have been felt by many powerful figures in Libya as risks to the stability of the country and a challenge to their political and economic position. The reforms were marked by intense debate in the People's General Congress betraying the internal tension that Libya's attempt at 'perestroika' has fueled. The intensity of the debates could not even be tempered by the intervention of Col. Qadhafi himself, as he attempted to quell fears suggesting that the changes would not be abrupt. However, as with most radical reforms processes, Ghanem may have had excessive room for manoeuvre, and Qadhafi has done little to control the more radical elements such as the Revolutionary Committees, as new commercial elites are starting to be rehabilitated. 

Such 'conservative' elements have been sending Ghanem warning signals for months, suggesting that his policies would create serious problems for them. The old guards are essentially composed of the influential members of the Revolutionary Committees, representing the most repressive symbol of the Libyan regime. Many ran side businesses of their own, before commercial activity was allowed to resume unhampered for decades.
Ultimately, Prime Minister Ghanem was not able to withstand the challenge posed by the chief representative of the old Guard Ahmed Ibrahim. Ghanem noted he has faced obstacles in carrying out reforms from the Secretariat of the Libyan National Conference, noting the existence of "invisible" forces that are violating the law and defying the government policies. He also pointed to rampant corruption and the desperate need for reform on a number of fronts. 

Politically, Ghanem asked that he be given the authority to choose his government and senior officials so they can function as a team. Ghanem criticized making the government simply under the authority of the Secretariat of the National Conference and said that if that is not possible then there is no need for a government or a prime minister - officially called the Secretary of the General People's Committee. In reprisal, the ideological guards Ahmed Ibrahim ( Gaddafi's Kin), the Assistant Secretary of the National Conference , and Abd-Alqadir Baghdadi, a Minister of an administrative portfolio, accused Ghanem's government of "violating the law and of not understanding 'the nature of the Jamahiriya System'." He added, "The General People's Committee - which Shukri Ghanem led - is simply a 'technical committee' that has no powers. According to Qadhafi's Green Book, the people rule in Libya through their local people's committees and the National Conference. Baghdadi went on to say, "under the Jamahiriya system, the government is not an executive body and that the only power is in the hands of the people, everybody else is only a servant". This void will always make reforms in Libya haphazard and unstable, as revolutionary elements will always be able to interrupt the process in the name of the Green Book, which is at the basis of the entire Jamahiriya system. Essentially, without first reforming the 'Jamahiriya' system, there cannot be a real reform. 

If Ghanem had managed to succeed in opening the economy to some foreign investment and commercial enterprise, it was largely because of enthusiastic support form Western authorities, who recognized in him the will to change. Ghanem also tried to apply reforms through a process of gradual transformation, a position not shared by the conservatives. Ghanem has been moved to lead the all-important National Oil Company also because as prime minister he succeeded in convincing four American oil companies (Oasis Group) to invest some $10 billion into Libya, receiving full support and backing from Col. Qadhafi. It would seem as if Qadhafi himself, however, has become a victim of his own Jamahiriya system and the revolution contained in the Green Book. The Revolutionary Committees have been the most effective institution in Libya (second only to oil). They have most to lose by reforms, and they will make it difficult for Qadhafi to bring about the changes.
 

  

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