Republican Reference - Area (sq.km) 1,759,540 - Population 6,597,960 - Capital Tripoli - Currency Libyan dinar - President Col Mu'amar al-Qadhafi

LIBYA
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Key Economic Data 
 
  2012 2009 2008 Ranking(2012)
GDP
Millions of US $ 62,360 62,360 93,167 67
     
GNI per capita
 US $ 12,320 12,020 12,380 n/a
Ranking is given out of 213 nations - (data from the World Bank)

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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: APRIL 2015 - (30/03/15)

LIBYA: THE REALITY

Disunity and chaos is a far greater threat to Libya than ‘Islamic State’
The talks to resolve the Libyan political crisis in Skheirat, in Morocco, are not destined for success. The two opposing governments vying for control of the country (in Tobruk, led by the internationally recognized and secular Abdullah al-Thani and in Tripoli, led by Omar al-Hasi, alongside parties closer to the Muslim Brotherhood (backed by Islamist militias) have been negotiating a national unity agreement. It is fanciful to imagine that any progress can emerge from the talks considering that General Haftar, who heads the military forces loyal to al-Thani, has launched an air offensive against Tripoli, while the talks were underway. The implication is that even if al-Thani and al-Hasi sign a political agreement for national unity at the UN sponsored talks, the militias and factions on the ground will not recognize it. The militias will not be disabled and there are many questions as to just how much pressure al-Thani is able to exercise over General Haftar, who appears to have an agenda of his own. Indeed, the general, who took part in the coup against the monarchy alongside Col. Qadhafi in 1969-only to be disgraced after suffering a defeat in Chad in 1984-wants to sabotage the political negotiations, preferring the status-quo.

The need for Libya to achieve a political resolution makes foreign intervention of any kind problematic. Which faction would the West support? The West, Russia, Saudi Arabia and the Gulf have recognized the Tobruk government as the legitimate one, even if the Supreme Court of Libya has declared it illegal. Meanwhile, Turkey and Qatar have recognized the government in Tripoli.

The dichotomy between the political goals and the reality on the ground reflect the fact that Libya remains an intractable quagmire where the interests of local militias mix and clash with those of regional and international powers. General Haftar is an instrument of Egyptian President al-Sisi’s campaign against the Muslim Brotherhood. General Haftar is able to deploy the air force when needed. Sisi’s designs may be to keep Libya separated and perhaps to use Gen. Haftar to help secure the independence of the western province of Cyrenaica, which is especially rich in oil and gas resources. Cyrenaica could serve Egypt as a strategic outpost in the same way as the Sinai region does in the east. Saudi Arabia, which has backed al-Sisi, would likely back this plan, which would ease a stabilization process in at least parts of Libya, while opening the territory up to more business activity for the Egyptian armed forces, which already control billions of dollars’ worth of economic activity.

Most Libyans consider Haftar as an Egyptian puppet and unlike Sisi, who has managed to establish his legitimacy to rule in Egypt; the population largely shares his anti-Islamist agenda. The old Libyan general, puppet of the Egyptians, cannot command the same legitimacy. Only some Libyans share his vision, many of them are former members of the Qadhafi regime, now living in exile – many of them in Cairo. Without Egypt, Haftar would count for very little. He has tried to take over Benghazi, taking on the various local militias, Benghazi remains in turmoil. Therefore, Haftar remains a polarizing element and an obstacle to the translation of the political unity talks to the streets of Tripoli and Tobruk. Conversely, on the other side, the Islamist forces may coalesce to maintain Libya on the same destructive course. Tripolitania risks becoming a ‘Taliban’ like outpost, able to attract Islamist militias from all over the region and beyond, from where they could easily disrupt countries such as Tunisia where a fragile democracy is developing (the attack of March 19 in Tunis’s Bardo launched by Libyan trained militants on the museum was but a prelude). It is inconceivable; moreover, that General Haftar would be willing to limit his ambitions to Cyrenaica.

The ultimate goal, with Egypt’s blessing, would be for Haftar to pursue his project, perhaps re-establishing a Qadhafi-like dictatorship. The problem is that, as the world has learned all too well, military means are useless in eradicating Islamism; if anything, they exacerbate the phenomenon. Not even all the weapons that the Gulf monarchies (Egypt has ordered EUR 5 billion worth of Rafale aircraft from France) – except Qatar of course, which backed the Muslim Brotherhood – can buy for Egypt will help Sisi and Haftar achieve their goals. At some point General Haftar will have to be confronted, because he casts too large a shadow over the future of Libya’s political unity. The situation is eerily reminiscent of Lebanon in the 1980’s; however, Lebanon had enduring institutions and a basic democratic tradition (even if based on a flawed confessional basis) that allowed the differences between the factions and the larger than life personalities such as General Aoun and the Druze leader Walid Jumblatt to be managed. Libya is both blessed and cursed with oil and, unlike the dense Lebanon, has a small population with vast swathes of uninhabited desert territory. The concept of national unity is a difficult one to enforce and it is no surprise that modern Libya was a concept first enforced by fascist Italy, which faced many problems in centralizing control.

The West has grown ever more alarmed by the alleged presence of ‘Islamic State’ (IS) in Libya and the many rumors of their impending takeover. It is difficult to imagine this elusive force as establishing itself in a country, where hundreds of militias have been fighting each other for the past four years and where even a well-armed and financed general, backed by a regional power, is struggling to gain enough ground to deliver any political results. Therefore, the notion that IS has gone as far as conquering anything, fails the logic test. In Syria and Iraq, IS has advanced in a much smaller territory, financing itself with oil and confronting many weak militias. In Libya, IS would have had to deal with a far larger area, combating forces from the various militias in Misrata, to the Berbers, the Muslim Brotherhood and of course General Haftar. If anything, some of the tribal factions have learned some marketing lessons, borrowing the IS brand, easy enough to replicate, using similar propaganda, which helps to instill fear and recruit fighters. Of course, this does not mean that the Libyan IS franchise is any less dangerous than its Levantine inspiration. In Libya, the various factions have been abler to rely on the smuggling – already a problem in the Qadhafi years – of humans and drugs to gain the funds needed to keep their ‘activities’ going.

The West is also fueling the militias’ goals by insisting on the proposal of Manichean solutions that are inevitably more of the military than the political type. The actions of General Haftar and President al-Sisi are fueling this course and happy to promote IS propaganda. Rather, a strategic and perhaps counter-intuitive approach that recognizes the aspirations of the Islamists may be needed in order to make Libya more manageable, which is what the focus of the national unity should be. Offering recognition to some Islamist factions would help to isolate the more violent and radical ones, repeating the aforementioned Lebanese experiment that resulted in a less radical Hezbollah becoming a major political party, which has managed to extend its influence even beyond its original Shiite constituents. Libya, like Syria now and Lebanon before has become a battleground for third parties. Egypt, the United Arab Emirates, Saudi Arabia, Qatar and the West have their responsibilities in this regard. The collapse of border controls with Mali and Niger – while the Boko Haram insurgency starts to expand beyond Nigeria - and the international interference has then allowed as many as 5,000 foreign fighters to join Libyan militants from all sides.

Should IS establish itself with an especially powerful franchise in Libya it would not find ready political support. Haftar’s forces would target them (The Egyptian air force’s bombarded alleged IS positions after the murder of 21 Egyptian workers), as would those loyal to the Muslim Brotherhood government in Tripoli. This lapsed after the elections of 25 June 2014, only to be resurrected" thanks to the Supreme Court ruling of November 2014 that declared the government and parliament of Tobruk illegal. The Misrata militia run the city - famous for one of the most intense battles of the war against Qadhafi’s forces in 2011-like a city-state. They would not be so ready to give up any authority to IS. Then there are forces that have declared loyalty to Ansar al-Sharia, which claim loyalty to al-Qaeda, an IS enemy, just as the al-Qaida offshoot al-Nusra is an IS enemy in Syria.

The radical Islamist forces are present, especially in Cyrenaica, where Haftar and Egypt are also strongest. The leaders of Tripoli, Tobruk and Misrata therefore maintain an attitude that ranges from ambiguous at best to downright hostile toward IS. The tribal militias, in their midst, share neither the centralizing goals of the two governments now engaged in unity talks nor the Islamist pretensions of the Jihadist militias. Least of one such, which has as its stated goal the formation of an Islamic Caliphate. Nothing could be more centralizing than that. The local tribal militias that share control of the land and wealth of Tripolitania would make life very difficult for IS.

The danger of IS in Libya is more a construct of the media than one based on the reality on the ground. Factions are relying on the power of IS propaganda. They can lure fighters, from Tunisia in particular, more through the promise of money than ideology and train them to go fighting in Syria or Iraq rather than Libya, where there is simply too much competition. The big money in Libya comes from managing arms trades to groups in other parts of North Africa; and the Sahel and the illegal migrants, boarding boats to Europe. These ‘trades’ are already being controlled by the various tribes and local mafias; IS, is just another unwelcome nuisance that would have to fight to secure access to these prolific activities.

The reality on the international level is therefore that of conflicting interests, which was very happy to fuel the anti-Qadhafi war, only to find itself unable to guide its course, even as it now laments the growing dangers that the country poses for its neighbors and the world. Yet, the latest and much publicized threat coming from the Libyan franchise of IS, is being used by Egypt and the Tobruk government to persuade foreign powers to relinquish the arms embargo to allow General Haftar to challenge IS. In reality. Haftar would use those weapons to continue fighting the various militias in Tripoli, tribes and Islamists alike as well as the government in Tripoli.

There has been much international pressure for the West to intervene militarily, especially for Italy, the former colonial power, whose energy company Eni is still present in the country pumping oil and gas from offshore facilities in the Western region. However, until a political solution is found, there are already too many forces engaged and stability would be even more elusive. Any foreign, especially Western and UN, pressure should aim to bring about a political solution. Just as in Iraq and Syria, the vacuum resulting from the collapse of a decades long dictatorship, has allowed tribes, terrorist groups and petty thieves to divide Libya. Intervening on the side of the secularist Tobruk government, as instinctive as that might be, would simply generate resentment and maintain the current instability while also creating the conditions for the rise of yet another military dictatorship under General Haftar.
 

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