Aug 12 2012 |
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Qaddafi's weapons
Libya's transformation from being the personal fiefdom of Moammer Gaddafi to a fledgling democracy is an incredible achievement.This achievement is almost lost as analysts try to predict what's next or the challenges ahead and the fractures in the country's social fabrics. It is easy to point out the flaws and the work that needs to be done to turn Libya from a nascent democracy to a fully-functioning country with a strong powerful, regional influence.
The smoothness with which the National Transitional Council (NTC) handed over power to the new congress speaks volumes of the maturity. There were considerable doubts about Mohammad Jibril's ability to steer the ship immediately after the death of Gaddafi, but he has navigated well to steer the country into a fresh new path.
Libyans came in the millions on July 7 to select from more than 3,700 that stood for a chance to be part of the 200-member assembly. Libya's Alliance of National Forces Coalition of 60 parties, which could only compete for 80 seats, won 60% of the votes.
Not that the elections were without tensions. A number of local leaders were upset that the eastern region was allocated 60 seats in the constituent assembly while the more populous western region was awarded 100. Armed militants shut down three major export terminals with a combined capacity of 690,000 barrels per day for 48 hours to signal their displeasure with the regional composition of the constituent assembly.
But the country managed to move ahead and the assembly elected Mohamed Al-Megaryef, a founding member of the Libyan National Salvation Front and seen by many as a moderate Islamist.
Mr. Al-Megaryef was reportedly targeted by Libyan intelligence in Rome, Casablanca and Madrid over the years, but survived the previous regime's assassination attempts against him and his family.
The new assembly will choose a new interim government, draft a new constitution and prepare for fresh elections.
Clearly, though, there is much work that needs to be done.
The security situation remains one of the key issues that could undo some of the good legislative work that has been done.
"Concern persists that Libya's still embryonic security forces are ill equipped to tackle the variety of challenges they now face, making the security outlook for the country uncertain in the short to mid-term," wrote Anthony Skinner, Maplecroft's Head of MENA in a note to clients.
However, the National Forces Alliances, which is a group of sixty parties, has done much to repair some of the social and tribal rivalries and eliminate some of the tensions - at least now.
But historical rivals and land disputes could flare up, disrupting the peace.
"Efforts by the NTC to re-assert security and control in the south have been largely unsuccessful and arguably backfired somewhat," noted Mr. Skinner. "For instance, in a bid to resolve the security issue in the south, as well as reward the Tebou for their support in the revolution, the NTC appointed a Tebou leader to oversee border security with Chad and Sudan and implicitly the contraband networks. This has angered the Zaway tribe, and re-ignited latent rivalry."
QADDAFI'S WEAPONS
Qaddafi's regime may have been toppled but its legacy remains in the form of a cache of weapons that had been accumulated by the regime over decades and have now ended up in the hands of unsavoury elements.
Libya has close to USD22-billion worth of weapons accumulated over decades and much of them are now unaccounted for, according to a report by International Human Rights Clinic (IHRC), part of the Human Rights Program at Harvard Law School.
The clinic believes that these weapons pose grave danger to civilians.
"Arms are spilling out of hundreds of inadequately secured bunkers," said Nicolette Boehland, a fellow with CIVIC who previously researched the use of weapons in Libya with the Clinic. "Other weapons have spread across the country to militia stockpiles in urban centers, museums, fields, and even homes."
The report notes that since the beginning of the 2011 revolution, Libya has been flooded with weapons.
"Many experts told the IHRC team that they found in Libya a larger scale and variety of abandoned ordnance--unused weapons left behind after an armed conflict--than they had encountered elsewhere.15 Most of them had worked in other conflict or post-conflict zones, such as the Democratic Republic of the Congo, Iraq, Laos, Lebanon, Somalia, and Sudan, so they had points of comparison. A technical advisor from UNMAS said, "The scope of it all has blown me away.'"
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"The ordnance problem is not an easy one to fix, but with assistance from other countries, the new government can respond to the abandoned weapons situation and better protect its people," said Bonnie Docherty, senior clinical instructor at IHRC and leader of the research team.
IMF'S VIEW
Security is crucial if Libya is to attract foreign investment. Libya's infrastructure is a blank sheet that requires technical expertise from international companies in addition to capital.
Improving the business environment and creating jobs would require transparent and robust governance rules.
"This framework would foster private-sector development by attracting much needed foreign expertise and investment, as well as the country's skilled diaspora," the IMF noted in an April report. "Together with local entrepreneurs, the diaspora would help create new investments and job opportunities, and promote inclusive growth."
At the moment, Libya's rapid ramp up in oil production has made the macroeconomic picture very rosy. The IMF expects real GDP to rise 116.6% this year - a dazzling figure primarily because 2011 saw a 60% contraction in the economy. Oil output, which has returned to prewar levels, is primarily responsible for the stellar growth figure.
But non-hydrocarbon real GDP is estimated to reach 30%, although it fell off a cliff by 63% last year, suggesting the private sector is not firing on all cylinders.
"Libya has an opportunity to break with the past and promote inclusive growth by developing a vibrant, private-sector driven economy," the IMF recommends.
But the security situation could impede development and the inclusion of foreign and private investment.
International companies are biding their time, although the hydrocarbon opportunities has already seen a rapid return of Big Oil, such as France's Total, Italy's ENI, Spain's Repsol and Occidental of the United States.
"One of the important reforms that the NTC has taken includes the re-establishment of the oil ministry," according to an Africa Development Bank report.
"The Gaddafi government abolished the oil ministry in 2006 and left the management of the industry to the National Oil Corporation (NOC). The new ministry will be responsible for national oil policy, while the NOC will retain its role in the commercial side of the industry. These efforts should make important strides in reducing the kinds of arbitrary decisions, sudden reversals of policy and lack of transparency that troubled the industry under the former government."
The AfDP believes foreign direct investment is expected to decline for 2011-2012, but points to opportunities for the non-oil sector to grow during the reconstruction of the country.
"Infrastructure programmes will support the construction, utilities, communication, transport and financial sectors. Lucrative infrastructure projects will likely attract foreign companies," AfDP noted. "Contracts associated with the reconstruction effort over the next 10 years have been estimated to be worth USD 240 billion which will be financed by the country's oil revenues."
But it will be tough to attract non-oil companies without a robust legal and business governance framework and security issues hanging over investors' heads.
"Recent attacks against Western targets in the city of Benghazi are nevertheless a clear cause for concern, although it is too early to tell whether this marks the beginning of a sustained campaign of attacks against 'Western' targets," noted Maplecroft's Mr. Skinner.
Foreign and private sector investment will be crucial to reduce unemployment, which was the source of great resentment among ordinary Libyans during the Gaddafi regime. According to some estimates, one out of five Libyans eligible to work was unemployed before the civil war - that number is likely to have risen as the country's business environment was decimated during the bloody civil war.
"Rather than relying strictly on the public sector or the oil industry to provide the majority of employment opportunities, the NTC is looking to alternatives but such a course is difficult to achieve while the socio-political situation in Libya remains unstable," AfDP said.
CONCLUSION
A new political set up and the promise of opportunities that lay before Libyans should be seen as a positive for the economy. Unlike other North African countries that were affected by the Arab Spring, Libya's population is relatively small and its foreign reserves of more than USD200-billion means the newly elected assembly have considerable financial resources to tackle the security issues and jumpstart the process of rebuilding the country.
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