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Wall Street Journal, May 20 2008
Gadhafi Revamps Libyan Economy
Roads Are Built, Private Assets Grow; Political Change Lags
By JAY SOLOMON
TRIPOLI, Libya -- Five years after the lifting of United Nations
sanctions on Libya, Col. Moammar Gadhafi is overseeing a vast
reshaping of his nation's economy. Fed by the soaring price of
oil, he is sharply shrinking Tripoli's bureaucracy, privatizing
state assets and spending billions of dollars on new roads,
bridges and ports.
At the same time, Libya hasn't matched its economic transformation
with significant political reforms, say activists and diplomats.
Col. Gadhafi's willingness to open up his country's politics as
well as its economy will likely determine whether Libya becomes a
modern state from one historically seen as a rogue.
The Journal's Jay Solomon discusses the impact of Libya's
expanding economy and the changing relations between the country
and the U.S.
Col. Gadhafi's desire for economic change was laid out in an
annual speech he made in March in which he lambasted Libya's
bureaucracy for corruption and inefficiency. The North African
strongman, 66 years old, who holds no formal government job, said
his nation must shrink the size of the state and shift Libya's oil
wealth into the hands of the population. He also said
private-sector firms would be better-positioned to provide
services to the public than the government.
"Oil has become a necessary commodity, and I think oil-rich
countries could face problems unless they find a solution to the
money they've earned in a way that satisfies their people," Col.
Gadhafi told Libya's General People's Committee in March.
The International Monetary Fund projects Libya's economy will
expand by nearly 9% during the current calendar year, compared
with 6.8% in 2007. Tripoli's foreign reserves, swelled by the oil
boom, are projected to double to $115 billion in 2008 from two
years earlier.
Officials and consultants working on Libya's economic policy say a
key component of Col. Gadhafi's reform initiative will be a sharp
reduction of Libya's 900,000-person civil service, perhaps by as
much as a third, through buyouts and alternative-job programs. In
recent months, Libya also sold controlling stakes in two
state-owned banks to Jordan's Arab Bank and France's BNP Paribas SA.
Tripoli's Housing and Infrastructure Board, meanwhile, is working
with American, European and Asian firms to implement a five-year,
$50 billion infrastructure program.
Col. Gadhafi established a sovereign-wealth fund last year with
$50 billion slotted for investment, joining the Middle East's
other oil-rich countries.
The Libyan Investment Authority says it is targeting a large
proportion of its investments for Africa and Europe but is also
joining with local and foreign firms to develop Libya's burgeoning
oil industry.
"Libya suffered with no justification" during the sanctions era,
said Mohamed Layas, the Libyan Investment Authority's executive
director. "But now there are no restraints and we can invest with
the best companies."
Col. Gadhafi has offered few signs that he will allow Libya's
political system to transform on pace with economic
liberalization. Human-rights groups charge Tripoli with continuing
to use torture while detaining political activists without trial.
Libya's security forces enjoy nearly limitless leeway in defining
who counts as a subversive.
The U.S. government has been at loggerheads with Tripoli over
political activist Fathi al-Jahmi, a onetime provincial governor
who has been detained intermittently since 2002 after denouncing
Col. Gadhafi. Mr. al-Jahmi, 66, is currently being held in a
state-run hospital in Tripoli. Human Rights Watch, a Washington
advocacy group, says he could die unless he seeks overseas care.
There are cracks appearing in Libya's dictatorial system.
Satellite-television broadcasts from Europe and the Middle East
cover much of Tripoli, exposing Libya's youth to Western talk
shows and pop music. Internet cafes are pervasive across Tripoli.
And the government has allowed a handful of independent television
channels and newspapers to begin operating in recent months,
though they are tied to Col. Gadhafi's son, Saif al-Islam Gadhafi.
On a recent afternoon in Tripoli, the staff of the independent
daily "Oye" gathered in its corporate headquarters to grill
Libya's health minister about recent shortages in medicines. A
recent edition of the paper has a cartoon in which a fat
government bureaucrat crushes a Libyan citizen.
"We'll let him go when he's ready for a hospital," the paper's
general manager, Mahmoud al-Bosifi, quips as the health minister's
interview continues. "We're free to write what we want here."
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