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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: 090 - (31/05/11)

Some Scenarios for a post-Qadhafi Libya: the Jamahiriya has Exhausted all Political Capital
The members of the NATO coalition, which includes most of the G8 countries, have been very clear that Col. Qadhafi has to go. Russia, which had so far criticized the NATO military intervention to bring down the Libyan regime, has changed its position. President Medvedev stated directly that Qadhafi had lost the legitimacy to govern Libya. The Libyan leader himself has offered no indication that he would be willing to step aside. However, in May there were a number of developments indicating that even the inner circle of advisors and ministers in the Libyan government have, if not publicly expressed, developed many reservations over Qadhafi’s ability to snatch a victory out of the current situation. However, both Qadhafi and NATO do not have time on their side. Libya’s development, its wealth, has been entirely based on oil production. Forty years of Qadhafi leadership have done very little to alter this reality, despite the fact that the Libyan population has benefited from the widespread education possibilities that have increased literacy. Yet, most of the work, from the menial to the more sophisticated professions and the very management of technical aspects of the oil sector has been left to foreigners.

Structural Economic Weaknesses
One of Qadhafi’s ‘grandest’ schemes, the Great Man Made River project, which intended to draw and direct fresh water from a huge underground lake in the desert interior to irrigate towns along the coastline in order to promote agriculture has failed; the villages intended for agriculture have stayed empty. Libyans are not interested in being farmers. This has made Libya a net importer of food. It purchased this food with the oil money and then offered it to the population at politically convenient prices though heavy support. In other words, oil production means survival for Libya and Libyans. Qadhafi has been able to keep some form of support and tribal loyalty thanks to the large sums of cash at his disposal. However, oil production has all but ceased, and any revenues are now being collected by the Transitional Authority in Benghazi. There have been many rumors surrounding a possible defection by the head of the National Oil Company, Shokry Ghanem. His defection has not been confirmed by the Transitional Council, while others said that he has been holding talks with Western oil companies enticing them to come back, advising that their contracts are still valid. Ghanem’s American education and experience as the champion of the reform movement during his tenure as prime minister from 2004-2006 (namely the years of the restoration of Libya to the ‘international community’) cannot rule him out as someone who would play a key role in the post-Qadhafi. Reports claiming that Ghanem has not defected suggest that he has been urging foreign oil company representatives to meet him in Djerba, Tunisia in order to assure them that their contracts are intact.

There have also been rumors, of senior government members such as the minister of foreign affairs Abdelati al-Obeidi, heading to London to meet British government representatives for unspecified reasons. Regardless of their accuracy or veracity, the brewing rumors along with Qadhafi’s faint and less frequent appeals for unity, the psychological warfare carried out by NATO around his fortress of ‘Bab al-Aziziya’, clearly intended to highlight the leader’s weakness before his people, suggest that Qadhafi will have to go sooner or later. For both Libyans and NATO countries, the ‘sooner’ option is best. As noted, Libya’s economic foundation is oil; the NATO bombardments and war between regime loyalists and rebels have destroyed most of Libya’s industrial infrastructure. Moreover, the war has left the country void of its much-needed foreign labor force, from the hotel waiter, to the bread maker, to the construction workers and street cleaners. It will be costly and difficult to restore Libya’s economy to the pre-revolt levels. Even if Qadhafi manages to win the war, assuming he is still able to secure the loyalty of those around him, it would be impossible to maintain any stability with the economy in tatters and presumably post Gulf war Iraq-style sanctions, that would debilitate any oil-generated revenues to mere humanitarian subsistence.

The result of Libya’s limited diversification – there was an attempt to stimulate tourism before the insurgency – has been widespread unemployment and underemployment, which has left 20-30% of the population living below the poverty line. Essentially, the structure of Libya has not changed significantly since it became independent in the 1950’s, when it was one of the poorest countries in the world. The oil revenues have merely helped to mask rather than alter this reality, which is now revealing itself to the world. This stresses the fact that regardless of the outcome, economic recovery will be difficult. In this scenario, Cyrenaica, which has been growing accustomed to its independence from Tripoli, would surely refuse to compromise with Tripoli, effectively splitting Libya in two, though only after another internal war. President Jacob Zuma will be heading to Tripoli to discuss an exit strategy for the Libyan leader on behalf of the African Union (AU). It would be auspicious for the exit strategy to avoid any circumstances, which would enable Qadhafi to stay in power. To this effect, NATO has stepped up its strategy, announcing that attack helicopters would now be deployed, to ensure better striking capability in urban warfare settings, seeing, as there are few if any air defenses available to the loyalist forces.

Quick Resolution Necessary
The helicopters should help the rebels defeat the last remaining loyalist forces in Misrata’s suburbs, while the rebels have managed to maintain control of the port and the core of the city. The oil industry itself has been ‘artificially’ arranged such as to favor Tripolitania over Cyrenaica. Even while most of the oil deposits are in the East, most of the terminals are in the West, especially in areas dominated by Qadhafi’s tribe. New exploration focused on basins in Fezzan below Tripolitania. This makes the central area from Misrata to Sirte strategic, and the battle for Libya will be won or lost there. Politically, Qadhafi is now fully isolated, having lost Russian support as well, while the Transitional Authority in Benghazi has been partially, if not fully, recognized as the de-facto future government in London, Paris and Washington. The people of Tripoli and the loyalist areas appear to have already resigned themselves to the fact the Qadhafi era is all but over. Foreign journalists still embedded in Tripoli report that pro-Qadhafi demonstrations are very rare, amid the ruins of what used to be the ‘impenetrable’ fortress of Bab al-Aziziyah. While tribal leaders have pledged support for the regime, presumably to keep collecting the leader’s bribes, have not taken any military action on the ground to match their promises. The Qadhafi regime has been duly prepped to receive its final blow.
 
The sharp reduction of oil production and revenues has exposed Libya for what it truly was, a country with weak structural foundations, which will exacerbate the humanitarian crisis if the conflict is prolonged by either side for too much longer. NATO can only reduce the impact and effects of the humanitarian crisis by reaching a conclusion quickly. The longer the war lasts, the more infrastructure will need to be rebuilt, while western oil companies are eager to resume their extraction in Libya, having paid premium prices for the concessions in the peak period of foreign investment in Libya’s oil industry in 2004-2007. Europe, especially Mediterranean Europe, also fears that a prolonged war, which will cause even more destruction to infrastructure and manufacturing or processing plants; and related economic crisis, will push more Libyans to migrate. Post-war Libya will not manage to sustain itself, regardless of the winner, without significant aid. There is also the problem of the thousands of African migrants still trapped in Libya, some of whom have been recruited to fight against the rebels, having been armed by the regime. They will demand compensation and could easily become a destabilizing force if left unattended.
 

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