Economic reforms are key to stability in Libya

Reform-minded Libyans suggest that emergency economic meas­ures be introduced after minimum security conditions are established.

A 2016 file picture shows Libyans waiting to withdraw money from an automated teller machine (ATM) outside a bank in the capital Tripoli. (AFP)


2017/02/12 Issue: 93 Page: 12


The Arab Weekly
Mustafa Salheen el-Huni



Libya is facing a number of intracta­ble problems that make the idea of a workable state nearly irrelevant. Among them, two essential problems directly affecting the lives of Liby­ans and the future of the country: Chronic insecurity and the abysmal state of the economy.

By the end of the armed uprising of February 2011, manifestations of these two problems were appar­ent but the successive bodies and institutions that were supposed to ensure the functioning of the state in Libya failed to implement appropriate corrective and protec­tive measures, leading to a serious worsening of the situation.

Libyans are living a nightmare. They fear for their safety and that of their families. They lack basic goods and services. Deprived of a central administration, the country is a mess.

Different institutions and bodies, pretending to be in command, did nothing to prevent the interruption of exports of oil, Libya’s main ex­port and backbone of its economy. The situation continued until the Libyan National Army took control of the oil installations and handed them over to the National Oil Company.

The Libyan currency is seriously faltering and the parallel economy flourishing. Trafficking in people and goods has become a common practice.

Reform-minded Libyans suggest that emergency economic meas­ures be introduced after minimum security conditions are established. I would argue instead that appro­priate economic reforms are the best means of ensuring security.

The assumption behind this argument is that lack of economic opportunity is at the root of in­creased violence against people and property. It also explains why some join terrorist militias and others follow the desperate course of illegal immigration. It is only when Libya deals with the econo­my that insecurity will gradually disappear.

Libya has a small population — about 6 million — in a huge territory — 1.7 million sq. km. In such a context, quick remedies to the economic crisis are possible. One can begin with the following emergency reforms:

— Fix the exchange rate of the Libyan dinar for the transition pe­riod of three years. The official rate should be lowered 50% to encour­age citizens to return the cash from the banking institutions to the market and thus solve the current liquidity crisis.

— Implement infrastructure projects by commissioning private sector companies locally and from abroad. Priority should be given to projects — such as airports, roads, sanitation, and electricity — that have the greatest effect on improv­ing citizens’ lives. Related sectors such as commerce and transporta­tion will thrive in tandem with the implementation of the projects.

— The military production could be commissioned to produce durable consumer goods. One can learn from experiences in other countries. In the Libyan context, this would have the added value of providing jobs to demobilised mili­tia members who can be recruited as unarmed reserve forces.

— Engage in a complete overhaul of the energy sector by creating de­mand for consumer products and providing attractive investment opportunities for private capital in the sector.

— Create a mixed public-private sector that will take charge of creating and managing heavy in­dustries such as cement, steel and petrochemicals. These industries would be run on the basis of mod­ern market-driven business models and set standards for efficiency in the public sector and help develop a modern private sector.

— Start creating and implement­ing modern economic projects such as free trade zones, renewable energies and specialised agricultur­al projects. To encourage foreign investment and participation in the projects, appropriate legislation and policies must be created.

— Encourage the creation of small and medium-sized business projects by providing capital, mar­kets and training.

These programmes and meas­ures can be financed through the issuance of government bonds, both local and international, that would constitute an extra source of income to be added to oil and gas revenues and foreign reserves. Ap­propriate measures and regulations would be needed to carry out the economic reforms but should there be a will to introduce such vital economic reforms, there would be no shortage of possibilities.

Libyans, more than anybody else, have the necessary knowl­edge and skills to put their country back on track.


Mustafa Salheen el-Huni is the former first vice-president of the Libyan transitional council.


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