Banishing Shadows
However, in their plans, the younger Qadhafi and the GPC seem to have overlooked the legacy of three decades of disastrous economic management and a lack of political accountability. Libya must directly address the shadow of its past to enlighten its economic future—beyond the oil industry and some carefully controlled private sector initiatives. While Ghanem’s speeches and interviews are laced with the buzzwords of economic transition—deregulation, transparency, rule of law, property rights, efficiency, markets—his rhetoric ignores the fact that Libya has no history of making the necessary institutional, legal and bureaucratic arrangements that allow such reforms to succeed. Not surprisingly, two previous efforts at liberalizing the economy—in 1987 and the early 1990s—foundered.

The current economic and political climate in Libya is substantially different from that in the 1980s and 1990s when, as a result of anemic oil prices, bad management and economic sanctions, those earlier reforms faltered. The current climate appears more auspicious for change. Qadhafi has cautiously expressed a commitment to reform, and, so far, has seemed willing to curtail serious opposition to it. The continued visibility of reformers such as Ghanem—and perhaps Saif al-Islam—also augurs well for the implementation of the reforms, even if their positions remain precarious.

In 2003, Libya reached a financial settlement with families of the victims of the 1988 commercial jet bombing over Lockerbie, Scotland, leading to improved relations with the international community. (A Libyan man was eventually convicted of the crime.) With economic sanctions lifted, high oil prices—and the promise of sustained income far into the future—Libya’s economic fortunes are substantially better than they were in the 1980s and 1990s. The latest round of oil exploration agreements, announced this past January, show the extent to which U.S. companies are privileged partners in Libya’s economy. Of the 15 exploration licenses awarded, 11 went to U.S. firms, including Occidental, Amerada Hess and ChevronTexaco. Clearly one of Libya’s priorities is to bring U.S. firms into its oil industry, even if doing so comes at the expense of the European companies—particularly France’s Total and Italy’s ENI—that supported the country during the sanctions period.

Vested Interests
Since 1969, the Libyan state has served as an intricate channel of economic largesse for the Qadhafi regime’s clients. The government shields its revenues from public scrutiny, obscuring much of this maneuvering. Small coalitions of supporters and elites make decisions about economic policies and investments, and the country’s national budget is largely opaque. The enormous bifurcation between formal and informal politics remains a pronounced feature of Libya’s political life.

The country’s Law Number 1—the basis for “revolutionary authority”—and Colonel Qadhafi are the only political references allowed in Libya.

These enduring legacies of the revolutionary period continue to cast a pall over the current economic policies. Any serious reform will have serious repercussions for the political elite. The fact that the country’s political structures remain unchanged, and do not support the transparency and accountability that economic reforms necessitate, puts the future of the reforms in doubt.

Ghanem feels this dilemma acutely. Indeed, he had to intervene at a GPC meeting in January when reformers and their opponents squared off. Ghanem argued for the right of the prime minister to make his own cabinet appointments, and for substantially increased cabinet power to push the reforms through. He also argued for a clear separation of power between the legislature and the executive to ensure that proposed legislation would not be hostage to what he described as “invisible” forces. He also demanded greater power for the judiciary.