By Sami Zaptia.
Tripoli, 06 April 2013:
The Programme on Arab Reform and Democracy’s 4th Annual Conference was held in Tunis 28-29 March under the title ‘Building Bridges: Towards Viable Democracies in Tunisia, Egypt and Libya’
The programme is part of the Centre on Democracy, Development and the Rule of Law (CDDRL) at Stanford University, USA and was held in collaboration with (CEMAT) Centre for Maghrebi Studies, Tunis and University of Tunis, El Manar.
The conference included papers presented by participants from all three Arab Spring nations and included Rashid Ghannoushi, Islamic scholar and president of the Tunisian Islamist Ennahda party and Beji Essebssi, president of Nida Tunis the secular political coalition who served as interim prime minister in 2011.
The conference was an opportunity for participants from the three Arab Spring states to compare notes, analyses and experiences over the last three years. As a participant I presented a paper on the Libyan economy.
In opening, I noted that were it not for the Arab Spring and the ensuing, all be it nascent, democracy, I would not have been able to travel to Tunis and talk freely about the Libyan economy under the dictatorial regime. I thanked Tunisians for the priceless help they offered Libya and Libyans during the revolution – especially to the displaced.
I noted that all three Arab Spring countries were attempting to encourage roots of democracy and plurality and faced numerous challenges and choices – whilst trying to meet everyday social and economic demands.
After a thorough debate that had proceeded on the political issues of rights, representation, citizenship, inclusion, democracy, equality, and pluralism, I noted that all the above were also applicable with the addition of the prefix: economic.
The Arab Spring revolt was partly about economic rights and dignity. In Libya it is partly about economic distribution and entitlement: Specifically entitlement to Libya’s oil-generated wealth.
Whilst much time was spent at the conference looking for commonalities and similarities in the three Arab Spring nations, I felt that the economic fundamentals of Libya were different.
Libya has an estimated population of 6.4 million, an oil production output of 1.5 million barrels a day which at an average international crude oil price of US$ 100/barrel gave it a huge relative income. It is estimated to have oil reserves of over 40 billion barrels of oil. This equates to about 70 years of production.
Its population size and annual oil production gives it an average GDP/head of US$ 14,000. The IMF estimates Libya’s hydrocarbon exports for 2013 will be worth US$ 63.2 billion. With regards to gross official reserves, the IMF forecasts US$ 142.3 billion – equivalent to 39 months of exports.
The IMF also estimates Libya’s total foreign reserves at US$ 208.4 billion and economic growth of 20.2 percent for 2013. Inflation is expected to be 2.0 percent.
Libya also has no real long term debt. It does not need or depend on foreign donors or loans. Equally, prior to the 2011 Revolution, Libya enjoyed investment grade international credit ratings from S&P and Moodys.
These bare economic facts set it apart from Tunisia and Egypt. They make Libya with its huge young population ripe for investors and those with products and services to market.
Libya has suffered decades of under-investment, mismanagement, corruption, centralization and welfare-socialism. Its market is desperate for investment, competition and real consumer choice and sophistication.
Politically and socially, the state is under huge pressure to sate a hunger for investment by the huge young population. A population that has seen how Tunisia and Dubai can deliver efficient products and services and improved standards of living.
The Libyan authorities are under pressure to create at least 100,000 new jobs every year to soak up the newly graduated youth. These jobs need to be created by a vibrant private sector, rather than the huge inefficient public sector. The public sector needs to shrink to vacate the arena for the private sector to operate without its distorting effect.
This includes reining in the huge goods subsidies for foods, fuels and electricity and reinvesting the gains from a smaller civil service. Libya needs to encourage the SMEs and provide accessible loans. This includes Islamic banking to offer Sharia-compliant loans.
Libya also needs to seriously start on implementing its diversification away from hydrocarbons policy. It needs to start to plan for the post oil era. Dependency on one source of income is unhealthy. Hydrocarbons will most probably remain Libya’s biggest earner for decades. However, the paradox with Libya’s hydrocarbon industry is that it is a huge earner but a small employer.
Libya therefore needs to review its diversification options. It needs to assess what alternative goods or services it can offer and what share of the international market it can realistically capture. It needs to see what competitive advantages it has and if it can create a niche market or unique selling point (USP) on the world stage. Can it build for itself a brand image? Can it re-create part of the Dubai experiment? Can it create its own champions or brand icons such as Emirates airlines or Burj al-Arab or Burj Khalifa?
It needs to assess its geographical location, its climate, its desert, its beaches and long coastline and see how it can turn them into industries. Can it become a transit trade centre, can it become a financial centre, can it become a renewable energy centre or can its Misrata Free Zone become the new Jabal Ali?
Diversifying its petrochemical industry would be the logical step. Libya does not even produce enough refined products for its own consumption – let alone for export. It needs to look at retaining more added value from its hydrocarbon sector.
The other obvious area of diversification is construction: completing Libya’s stalled US$ 150 billion construction projects. It needs to upgrade its amenities and infrastructure so as to become more efficient, productive and competitive. It needs to complete its airports, roads, bridges, highways, ports, transport, electricity generation capacity and its ITC infrastructure.
Above all, and after forty-odd years of under investment and under development, it needs to invest in its people. It desperately needs to improve its human resource capabilities so as to find employment for the hundreds of thousands of under educated, under trained, and under skilled employees.
Libya, with its six million plus population and large youth unemployment, does not have the luxury of the Gulf States of importing labour in the millions. It needs to upgrade its workforce by offering education and training for a new private enterprise, free market, competitive Libya.
Above all, after 40 years of a socialist-welfare-entitlement-dependency mentality, Libya needs to set in motion a change of mind set. A mind set of what can I do for my state as opposed to what can my state do for me.
Hopefully in the new more representative and democratic Libya, the state will think and plan first and then act and implement national interest policies second.
In the short term the transitional authorities need success stories and champions. The highly demanding and expectant public need to feel tangible success on the ground. The new mandated government needs to accept that it has a legitimate mandate and needs to lead. The people need leadership.
All this must be achieved while battling with issues of sovereignty, national unity, security, terrorism, cross-border smuggling and attacks on legitimacy. The authorities need also to achieve consensus. A consensus on issues that did not exist under dictatorship and which takes time to build. Time that the ruling authorities are not afforded.
The armed youth have huge misconceptions about what democracy means. They erroneously think it equates to a magic wand that satisfies all their dreams. They want everything and they wanted now – or they might use their guns to get it.
Libya’s economic challenges are somewhat different to those of Egypt and Tunisia. The money is there. The problem is what best to do with it and how. The choices are too many for Libya, starting on a blank page. How to satisfy short term needs while creating and fulfilling a long term vision, strategy and plan. All this whilst learning about the process of democracy.
The challenges are there. They have to be met. Libya has the basic fundamentals to create a vibrant economy. There will be bumps on the road, but with the right vision and policies its newly liberated public’s hopes and dreams can be achieved.
This article is a modified version of the paper I presented at the conference.
Sami Zaptia
BA. Politics Economics and Law, University of Buckingham
MSc. International Relations, University of Southampton
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