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LIBYA

 
  
  

 

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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)

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Update No: 055 - (01/06/08)

African Migration and Diplomatic Leverage 
The return of the right wing coalition led by prime minister Silvio Berlusconi in Italy after two years of centre-left leadership has re-ignited a dispute between Italy and Libya over the ‘Mohammed caricatures’, first published by the Danish newspaper Jyllands-Posten, case that erupted in 2006. The new Berlusconi government, featuring a very influential Northern League minority, known for its sometimes xenophobic attitudes, had not even been sworn-in in before Libya warned of serious diplomatic consequences were Roberto Calderoli to become a minister. Aside from the warning, representing a possible case of interference into the affairs of another state, the warning was taken seriously. Calderoli, who had brandished a t-shirt just before the end of the Berlusconi government in 2006 featuring the Jyllands-Posten caricatures, created a serious row in Libya, notably in Benghazi, where opposition to Qadhafi has been strongest. Rioters attacked the Italian consulate and in the violence that ensued, the police shot and killed a dozen rioters. Perhaps fearing the repeat of a similar episode, Libya sent a clear warning to the new Berlusconi government, even suggesting that important ENI gas and oil contracts would be compromised by the appointment of Mr. Calderoli. ENI had signed a very important gas deal with Libya’s NOC and Russia’s Gazprom in April. The warning, delivered by Saif ul-Islam al-Qadhafi, heretofore the face of modern and western-friendly Libya, also included a threat implying that Libya would stop checking the flow of illegal migrants to Italy. But Libya also saw an opportunity to remind both Italy and Europe of its importance and value to their economies. Libya demanded respect. And, it is no surprise then that prime minister Berlusconi will soon visit Libya and hold talks with Muammar al-Qadhafi, in what will surely be a very important meeting. 

In fact, Roberto Calderoli publicly apologized for the t-shirt incident of two years ago, and after a series of “high level” contacts between Rome and Tripoli, Libya has closed the case, declaring it was satisfied with the public apology, ending a diplomatic crisis that emerged before the new Italian government was even formally installed. The crisis had a highly symbolic value; the Prodi government had held good relations with Tripoli, based not solely on oil and gas, but also on a willingness to explore Italian reparations for the colonial era. The centre-left coalition led by Romano Prodi had built a very productive relationship with Libya. Prodi and the foreign affairs minister Massimo D’Alema visited Tripoli on numerous occasions working to improve and strengthen diplomatic ties, which translated to facts. Libya and Italy agreed to cooperate – as part of the reparations - on the construction of an over 2,000 km long coastal highway from the Tunisian to the Egyptian borders. The Libyan leadership’s reaction was evidently also driven by displeasure at the results of the Italian elections and fears that such an important project would be compromised or shelved altogether. The issue of migration remains Libya’s most powerful card in dealing with Italy and the EU. Libya is the main springboard for African migrants attempting to cross the Mediterranean sea to Italy. Qadhafi has accused European states of killing hundreds of African migrants by deliberately sinking their boats to stop them reaching Europe, calling it a ‘war against Africans’, while addressing leaders of African trade unions. NGO’s dealing with migrant issues say that many migrants die from starvation or drown after overloaded boats sink. NGO’s would be the first to publicise it, were it true that European coastguard or naval vessels deliberately sank migrant boats. With such a serious and inflammatory charge, Qadhafi should produce the evidence. 

After some discussions as to whether or not to use a hard line or a conciliatory one, even the right wing Berlusconi government chose to appease Qadhafi using all the proper diplomatic jargon of ‘bilateral approaches’ and ‘reciprocal respect’. The apology, of course, was the bare minimum needed to restore dialogue between Rome and Tripoli; Libya now has the upper hand in the contentious talks to end the issue of colonial reparations. In openly challenging the new Italian government, Libya has sent a message to the West that such Calderoli-like outbursts are dangerous, because they foment hostility, political and economic risk for Italy (in this case) and perhaps, more significantly, they play into the hands of extremists of various stripes who use such situations as leverage to foment opposition. Libya has actively pursued a rapprochement with the West and anti-Islam outbursts end up playing into the hands of extremists, who want nothing other than to be able to portray the West as an enemy of Islam. In a sense Libya’s warning may also be interpreted as friendly advice, or even an exhortation to Western governments to exercise responsibility in its dealings with the Islamic world, in order not to compromise the delicate work that Arab governments themselves must do, in order to maintain close ties with the West in general. 

Enter Russia - and Ukraine
Nevertheless, Libya has also been building ties to Russia and Ukraine. Russian Prime Minister Vladimir Putin on Tuesday promised Libya increased economic and military cooperation. Putin urged the ratification of the accords cinched during the recent Russo-Libyan summit, which included the waiving of Libya’s debt to the Soviet Union in return for contracts to Russian companies. These include the Russian state railroad company's plans to construct a 600-kilometer rail link between the cities of Sirte and Benghazi. Perhaps, to Russia’s concern, ties between Libya and the Ukraine are also developing.

Viktor Yushchenko, Ukraine’s president has even suggested helping Libya develop peaceful nuclear energy – which is appetizing even to oil rich countries, as they see more profit in selling oil to foreign consumers than using it to power domestic needs. The desirability of nuclear energy is also prompted by the fact that neighboring Algeria and Morocco are also discussing serious plans to build nuclear reactors. Ukraine is also aiming to win an oil contract in return for the use of Ukrainian agricultural land by Libya – an imaginative deal indeed. Ukraine is also offering road and railway projects and has already given Libya an Antonov AN-124 cargo aircraft. Ukraine’s sudden drive for oil and gas contracts in Libya may also be driven by the fact that Moscow’s threat of shutting down the Russia-Ukraine gas pipelines is ever-present, while Libya, whose land is 90% desert, always has food supply concerns. 

Oil Sector
Libya aims to increase its crude oil production to 2 million bpd by the end of 2008 and to 3 million by 2012 said Shukri Ghanem, president of the National Oil Company (NOC). Ghanem also noted that gas production, now standing at an annual 3.5 billion cubic meters is also slated to double by 2013. Ghanem also expressed NOC’s willingness to increase transparency and non-discrimination (in nationality) in awarding oil and gas contracts. In 2007, oil represented 95% of Libyan exports and over 70% of Libya’s GDP. Thanks to the higher oil prices, Libya’s oil revenue in 2007 was a record USD 40 billion. Libya has also signed agreements granting exploration and production rights to Algeria's state oil company Sonatrach, Indian Oil Corp. and Oil India Ltd. The three companies will spend $152 million on exploration works that include drilling eight wells in the Block 95-96 area in Libya's Ghadames region. 

Some Infrastructure Progress: Aviation
Apart from the oil industry, Libya has also been working to improve the air transport sector. Indeed, Libya's air transport sector is one of the country’s best examples of economic reform, as government promotes investment, mergers and privatization to improve the system after two and half decades of sanctions and restrictions. The air transport sector was directly hit by the UN sanctions that were imposed in 1992. Libya now wants to invest USD 4.8 billion in airport and air communication equipment to bring aviation up to international standards, while liberalizing and merging its two state-owned airlines, Afriqiyah Airways and Libyan Arab Airlines. This merger is rumoured to take place in 2009 according to Sabri Shadi, chairman of Afriqiyah, which was formed in 2001 as an airline focusing on linking Libya to the rest of Africa. The airline serves 14 destinations in Africa, seven in Europe and one in the Middle East. It also provides an air link between Tripoli and Libya's second city of Benghazi. Libyan Arab Airlines, almost wiped out by the UN sanctions, flies to 10 destinations in Europe, five in North Africa and three in the Middle East. Both airlines fly to London, Rome and Cairo. Libyan Airlines also operates domestic routes, though it does so at a deliberate loss, because the government demands low fares to keep services affordable. 

The aviation sector has also benefited from Libya’s international diplomacy and in 2006, its airlines were able to revamp their fleets after having been prevented for 25 years from buying new aircraft. In 2006, Afriqiyah ordered 12 Airbus aircraft and a further five in 2007. It has also signed a MOU for six new generation Airbus 350 XWB, as has Libyan Arab Airlines. Libya also has a private airline, Buraq Air, which was founded in 2000 by a group of Libyan pilots. It flies to eight domestic destinations and some in Syria, Egypt and Turkey, using modern Boeing 737-800’s, the first new Boeing aircraft in Libya for 30 years when they were delivered to the airline in October and November 2006. Libya’s aviation infrastructure is still incapable of sustaining the kind of growth planned by authorities. Airports cannot meet the growing demand for flights, boosted by growing oil business concerns worldwide. The navigation and radar system are the first to need updating. Spain's Indra Sistemas is working on that, and expects to complete the multi-million dollar project by September 2009. A new passenger terminal is being built at Tripoli International Airport to handle six million passengers a year. The total cost of the project, awarded to Brazil's Odebrecht, TAF Construction of Turkey, Consolidated Contractors Company of Lebanon and Vinci Construction of France, is about USD 2.1 billion.      

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