Libya

Politics:

• Analysis

  Libya politics: The knack of organisation

  Libya's Muslim Brothers: The knack of organisation

  The Muslim Brotherhood looks likely to make further gains

  A LIBYAN official proudly shows pictures of his one-year-old triplet daughters on his mobile phone: polka-dotted veils hide the hair of all three, even though Muslim tradition suggests that girls need not cover up until puberty. The official is a leading figure in the Justice and Construction party, affiliated to the Muslim Brotherhood, the conservative political-cum-religious movement that is burgeoning right across the Middle East. In Libya after the fall of Muammar Qaddafi it has so far done less well, getting only a fifth of the seats contested under party colours in a general election last July, compared with about half in Egypt and Tunisia. But that may change. The Justice and Construction party, founded only in March, is planning assiduously how to end up on top.

  For one thing, it is rapidly building a sophisticated organisation, even as most of its competitors dither or fight among themselves. Starting from a much weaker base than in Egypt and Tunisia, where the Brothers have been strong for decades, the Libyan party has opened offices across the country, including a seven-floor tower in Benghazi, the second city. It has signed up hundreds of members in places where other parties have handfuls, including 1,500 in Benghazi's central district alone.

  In parliament the party won only 17 out of 80 seats that were competed for under party labels. But of the other 120 seats, reserved for people running as independents, about 60 have since joined a Brotherly caucus. It meets regularly and has an elected leader. Its cohesion enabled the party to play kingmaker during the selection of a prime minister, blocking candidates it deemed unfriendly. Its party leaders hope to use its numerical strength to give a new election law an Islamist flavour.

  Outside Tripoli, the capital, the Brothers are represented in many local councils, often the best-functioning part of the new state. In Misrata, the third city, they ousted the elected mayor. Omar Sallak, a Benghazi councillor and longtime Brother, envisages a slow, consensual rise for the party. "We may win control eventually, but first we all have to work together," he says.

  The party's leaders are mostly academics and businessmen. They profess to be moderate, talking eagerly of democracy, human rights and a separation of powers, almost as if memorised by rote. "Worries about some forms of Islamism are justified," concedes Ramadan Eldarsi, a party bigwig in Benghazi. "But we just want to build a modern state. There is nothing new or scary that we will force people to do."

  This moderation is sometimes relative. One prominent Brother shouted at his wife, "Close, close, close the door!" when she tried to bring tea for this (male) correspondent, seated in the family living room. A football tournament in Benghazi organised by the Brothers did not welcome women as players. Asked about Ansar al-Sharia, the extremist group that killed the American ambassador to Libya, Chris Stevens, four months ago, Mr Eldarsi says defensively, "we should have a conversation with them."

  Such attitudes have made some Libyans suspicious of the Brothers. But most Libyans do not blame Islamists for Mr Stevens's murder. What fuels suspicion is a broad dislike of political parties and the noisy competition they foster. Many associate political rivalry with violence and prefer the consensual decision-making of tribal politics. Parties are still novel in Libya. They were banned by King Idris in 1952 and denounced as cancerous by Qaddafi.

  Libya's Brothers look hopefully at their successful counterparts in Egypt, Tunisia and Turkey. "We co-operate with the ruling parties there to teach our members the right skills," says Muhammad Sawan, the Justice and Construction party leader. With their discipline and determination, they plainly have a chance to emulate their Brothers abroad.

  January 12, 2013

• Background

  Libya: Key figures

  Mohammed al-Magariaf

  Mr Magariaf was elected president of the General National Congress (GNC) in August, beating an independent candidate, Ali Zaydan, by 113 votes to 85. A former economics professor, Mr Magariaf also served as the Libyan ambassador to India but resigned from his post in 1980 and over the next 30 years became one of Libya's strongest dissident voices. In 1981 he founded the National Front for the Salvation of Libya (NFSL), perhaps Libya's best-organised opposition group, which tried several times to assassinate the deposed leader, Muammar Qadhafi. Mr Magariaf himself was the target of several assassination attempts in the 1980s. The NFSL was dissolved in May 2012 and its leaders established the National Front Party, which now holds three seats in the 200-member GNC.

  Mustafa Abu Shagur

  Libya's first elected prime minister, Mr Abu Shagur took office in mid-September after defeating Mahmoud Jibril by two votes in the GNC. Mr Abu Shagur secured his lead after members of parliament from the Muslim Brotherhood's Justice and Construction Party switched their vote following the elimination of their preferred candidate, Awad al-Barassi, in the first round of voting. He was born in Tripoli in 1951, and gained a degree in electrical engineering from the University of Tripoli and a doctorate from the California Institute of Technology. He became a professor of electrical and computer engineering at the University of Alabama in 1995, and is also reported to have worked for NASA. He returned to Libya in May 2011 to become an adviser to the National Transitional Council (NTC). In November 2011 he was chosen by Abdel-Raheem al-Keib to be his deputy prime minister. Mr Abu Shagur was one of the original members of the NFSL (but is not currently a member of the National Front Party) and is close to Mr Magariaf. This positive relationship between the heads of the executive and legislature should be conducive to decision-making.

  Mahmoud Jibril

  A US-educated economist with a PhD in political science from the University of Pittsburgh, Mr Jibril returned to Libya in 2007 to head the National Economic Development Board, an initiative pushed by Saif al-Islam Qadhafi, the deposed Libyan leader's son. Mr Jibril defected from the Qadhafi regime in February 2011 to join the rebellion in Benghazi and was instrumental in garnering international support for the revolutionaries. He went on to become the NTC's de facto prime minister, resigning from his post in late October 2011 in keeping with a pledge by members of the NTC's executive not to participate in the next government. His latter days in office were marred by accusations of nepotism and criticism that he was trying to grab too much power. The National Forces Alliance, a broad coalition headed by Mr Jibril, won 30 out of 80 seats reserved for parties in the GNC election in July. Mr Jibril lost out to Mr Abu Shagur in the election for prime minister in September.

  Mohammed Sawan

  Mr Sawan heads the Muslim Brotherhood's Justice and Construction Party, which holds 17 out of 80 party seats in the GNC, making it the second-strongest party in the interim parliament. A Misuratan, Mr Sawan was jailed by the Qadhafi regime for several years until 2006, after which he worked as a hotel manager.

  September 27, 2012

• Structure

  Libya: Political structure

  Official name

  Formerly the Great Socialist People's Libyan Arab Jamahiriya. A new name has yet to be confirmed

  Form of state

  Libya had been a jamahiriya (republic of the people) since 1977 in accordance with the Third Universal Theory propounded by Muammar Qadhafi in his Green Book. The collapse of the Qadhafi regime brought his system of governance to an end. An election to the General National Congress (GNC, interim parliament) was held in July 2012. A committee will be appointed or elected to prepare a new constitution. This will pave the way for a full parliamentary election and the establishment of a more democratic political system

  Head of state

  Mohammed al-Magariaf is president of the GNC. Ali Zidan was elected prime minister in mid-October after the previous prime minister-elect, Mustafa Abu Shagur, was dismissed

  Executive

  The GNC has approved Mr Zidan's government, but referred six of the new ministers to the Integrity Commission, which will vet them. Mr Zidan's government will serve until after a full parliamentary election is held

  Legislature

  The GNC, which will perform the role of a transitional legislature, took over power from the National Transitional Council on August 8th. Of the 200 seats in the legislature, 120 have been allocated to independents and 80 to political parties. The National Forces Alliance, a moderate coalition, won the largest number of party seats in the election, but withdrew temporarily from the GNC in January. The Muslim Brotherhood's Justice and Construction Party came second.

  Prime minister: Ali Zidan

  GNC president: Mohammed al-Magariaf

  Key ministers (outgoing government)

  Agriculture: Ahmed al-Urfi

  Communications: Osama Siala

  Defence: Mohammed al-Bargati

  Economy: Mustafa Abu Funas

  Education: Mohammed Abubaker

  Electricity: Mohammed Muhairiq

  Finance: Alkilani al-Jazi

  Health: Nurredin Daghman

  Housing: Ali al-Sharif

  Industry: Suleiman al-Fitouri

  Interior: Ashour Shuwail

  Justice: Salah Margani

  Labour: Mohammed Suweilim

  Oil & gas: Abdel Bari al-Arousi

  Planning: Mahdi Ghania

  Social affairs: Kamila al-Mazini

  Transport: Mohammed al-Ayib

  Tourism: Ikram Imam

  Water resources: Alhadi Hinshir

  National Oil Corporation chairman

  Nouri Berouin

  Central Bank governor

  Sadeeq Omar al-Kabeer

  January 16, 2013

• Outlook

  Libya: Key developments

  Outlook for 2013-17

  • Political power has been transferred from appointed officials to elected representatives, but political uncertainty will remain high for much of the forecast period.
  • The transition process will face delays owing to security problems and political disputes. Failure by the government to meet or manage public expectations may spark social unrest over the forecast period.
  • Economic policy in the post-Qadhafi era is expected to combine a heavy central government role in reconstruction with market-oriented reforms.
  • Following a massive rebound in 2012, the Libyan economy will grow by an annual average of 9.6% in 2013-17 on the back of increased activity in both the oil and the non-oil sectors.
  • We estimate that inflation averaged 6.7% in 2012. We expect inflation to average 5.8% in 2013-17 as private consumption and government spending pick up.
  • We estimate that the current account recorded a large surplus in 2012 and forecast that the surplus will average 21.4% of GDP a year over the forecast period on the back of steady oil exports.

  Review

  • The National Forces Alliance has pulled out of the General National Congress (GNC), where it holds 39 out of 200 seats, in protest at delays in drafting a new constitution.
  • In mid-December the GNC voted to close the country's southern and western borders with Sudan, Niger, Chad and Algeria and declare large parts of southern and central Libya a "closed military zone".
  • In late December, the GNC passed a political exclusion law, which bars former members of the Qadhafi regime from political office.
  • The oil minister, Abdel Bari al-Arousi, has said that a new oil licensing round could be held in 2013 and could be preceded by an improvement to terms for international oil companies.
  • The GNC has passed a law phasing out interest on financial transactions in line with Islamic law. Legal entities, such as foreign companies, must cease interest-based transactions by January 2015.
  • New data from the Central Bank of Libya show that inflation averaged just 1.87% in the third quarter, as prices remained flat in August and declined by 3.1% year on year in September.

  January 16, 2013

Economy:

• Background

  Libya: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	6.4	Population growth	1.7
  GDP (US$ bn; market exchange rate)	34.2	Real GDP growth	-15.5
  GDP (US$ bn; purchasing power parity)	49.1	Real domestic demand growth	-9.6
  GDP per head (US$; market exchange rate)	5,325	Inflation	7.4
  GDP per head (US$; purchasing power parity)	7,654	Current-account balance (% of GDP)	22.6
  Exchange rate (av) LD:US$	1.22b	FDI inflows (% of GDP)	3.2
  a Economist Intelligence Unit estimates. b Actual.

  Download the numbers in Excel

  Background: Muammar Qadhafi led a coup against the king in 1969. He went on to nationalise the economy and established a new political system, known as the jamahiriya (republic of the people). During the 1980s and 1990s Libya was accused of involvement in international terrorism, and Western states and the UN imposed sanctions. After accepting responsibility for the 1988 Lockerbie bombing in 1999, Libya was gradually rehabilitated internationally, and by 2006 all sanctions had been lifted. In early 2011 a popular uprising quickly spread across the country. Colonel Qadhafi responded with extreme force, leading the UN to impose a no-fly zone and sanctions. With the help of NATO air power, anti-regime forces succeeded in ousting Colonel Qadhafi in late August 2011.

  Political structure: The General National Congress (GNC), an interim parliament, was elected in early July 2012 and took over power from the National Transitional Council in early August. Ali Zidan has been elected prime minister by the GNC. His government will manage the next phase of the transition process, which will culminate in a full parliamentary election, scheduled for late 2013. A new constitution will be put to a referendum ahead of the election.

  Policy issues: The previous government had been trying since the late 1990s to strengthen the economy, principally by moving it from a command to a market system. However, although foreign investment in the oil and gas sector has been strong, political machinations and sociopolitical concerns hampered progress elsewhere. Provided that post-Qadhafi administrations are able to maintain security and overcome political divisions, they are likely to pursue liberalisation with greater commitment than the previous regime.

  Taxation: Under Law 9 of 2010 on investment promotion, foreign companies are exempt from corporation tax for five years and from taxes on imports of equipment that is essential to the execution and operation of investment projects. The new government is likely to streamline the tax system but will continue to apply existing legislation in the interim.

  Foreign trade: We estimate that Libya's trade surplus recovered to US$34.2bn in 2012, from just US$3.9bn in 2011. We estimate that exports rose to US$52.3bn from US$15bn over the same period owing to a rebound in oil output, and that imports grew to US$18.1bn from US$11.2bn.

  Major exports 2009	% of total	Major imports 2006	% of total
  Hydrocarbons products	96.7	Machinery & transport equipment	49.3
  		Foodstuffs & livestock	12.7
  		Miscellaneous products	7.1
  		Chemical materials	6.9
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  Italy	21.5	Egypt	14.1
  Germany	13.5	Tunisia	10.8
  France	13.4	Turkey	7.4
  China	10.1	China	7.1

  Download the numbers in Excel

  Download text file (csv format)

  January 16, 2013

• Structure

  Libya: Economic structure

  Data and charts: Annual trends charts

  
  

  

  January 16, 2013

• Outlook

  Libya: Country outlook

  Libya: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The government of Ali Zidan took office in mid-November, completing the official transfer of power to an elected government, but political uncertainty remains high. In January, the liberal National Forces Alliance (NFA), the largest bloc in parliament announced its temporary withdrawal from the General National Congress (GNC) in protest at delays to the process of writing a new constitution. Security problems will continue to pose the greatest challenge to the new government, which will remain in place until a full parliamentary election is held. Under the interim constitution this is due to take place in late 2013, but the transition schedule has already slipped and the Economist Intelligence Unit expects further delays as the administration struggles to re-establish order and political rivalries impede effective decision-making. The success of the transition process will also depend on the government's commitment to wealth distribution and its ability to restore the state's capacity to provide Libyans with basic goods and services. Failure to meet high public expectations would probably lead to renewed social unrest over the forecast period.

  ELECTION WATCH: The GNC election was held in early July. Of 200 seats, 120 were allocated to independents on a simple-majority basis, and the remainder to party-list candidates on a proportional-representation basis. Mr Zidan was elected prime minister by the GNC on October 14th after his predecessor, Mustafa Abu Shagur, was ousted following only a brief stint as prime minister elect Under the March 2012 constitutional declaration by the National Transitional Council (NTC), the GNC was, within one month of its first meeting on August 8th, to select a committee to write a new constitution. The draft would be completed within four months of the committee's first meeting and put to a referendum within a month of its completion. However, just days ahead of the GNC election the NTC announced that a 60-member constituent assembly would be elected instead. The GNC is divided over whether to confirm the change, with the NFA, which has withdrawn partly in protest at delays to the drafting of the constitution, in favour. In addition, Mr Zidan has said that the government will submit a proposal to parliament to amend the interim constitution. Under the constitutional declaration a full parliamentary election was scheduled to be held within 14 months of the GNC's first meeting (that is, by October 2013), but the timetable has already slipped, and more delays are likely.

  INTERNATIONAL RELATIONS: The attack on the US consulate in Benghazi during September was the most serious assault on a foreign target since the end of the war. The US dispatched a Marine anti-terrorist team, FBI investigators and two warships to the country. Libyan officials strongly condemned the incident and made several arrests. Provided that the Libyan authorities demonstrate a strong commitment to protecting foreigners and restoring security, they will continue to receive political and financial support from the West.

  POLICY TRENDS: The restoration of security and re-establishment of government operations will be key priorities and prerequisites for economic development. The collapse of the Qadhafi regime and the installation of a new administration have generated popular expectations of an improvement in living standards and the provision of public services, forcing the government to raise spending. Policy will focus on increasing public investment, stimulating job creation and promoting overall development. On the monetary front, the government is fostering the development of Islamic finance. In mid-May it issued an amended banking law, which for the first time includes provisions for Islamic banking, and in early January the GNC passed a law phasing out conventional interest rates on financial transactions, indicating a shift towards a more vigorous application of compliance with sharia (Islamic law).

  ECONOMIC GROWTH: Expansion of the hydrocarbons sector will continue to support growth although oil prices may experience some volatility over the forecast period owing to a high geopolitical risk premium and weak demand in the euro zone. Foreign direct investment will pick up, provided that security is restored and the government succeeds in articulating clear policies towards business. The need for post-conflict reconstruction will provide foreign companies with lucrative infrastructure contracts. Beyond this, there is potential for the non-oil sector to grow rapidly, albeit from a low base, supported by government infrastructure investment programmes.

  INFLATION: Data from the Central Bank show that inflation averaged 10.3% in the first nine months of 2012, and we estimate that it averaged 6.7% for the full year. From 2013 inflation will be sustained by a revival in consumer demand and increased public spending. However, government subsidies will be maintained, which will ensure that prices for many staple goods are kept in check. In addition, the Libyan dinar's peg to the IMF's special drawing rights (SDR) and ample foreign-exchange reserves mean that the currency is unlikely to come under pressure. Inflation is forecast to average 5.8% a year in 2013-17.

  EXCHANGE RATES: The dinar is pegged to the SDR and tightly managed. In 2011 international sanctions prevented the Central Bank from selling foreign reserves, which resulted in a parallel market, but this has since been eliminated. The Central Bank remains committed to the peg and Libya's foreign-reserve stock of billions of US dollars will support the currency over the forecast period. We forecast that the dollar, which is the most heavily weighted currency (41.9%) in the SDR basket, will remain strong against other major currencies in 2013-17. In addition, any decline in the value of the euro, which makes up 37.4% of the basket, should be adequately balanced by the strengthening of the dollar. We therefore expect the peg to remain in place throughout the forecast period.

  EXTERNAL SECTOR: The current account will continue to be dominated by hydrocarbons exports. We expect export earnings to rise from US$52.3bn in 2012 to US$81.9bn in 2017. Imports will pick up steadily over the forecast period, as consumer demand recovers and the government invests in reconstruction and, subsequently, in the development of new infrastructure. The most important element of the services account is oil sector payments abroad. We expect the services deficit to widen from 2012, as these payments recover in line with increased activity in the oil industry. The current transfers account will return to deficit in 2013, and the deficit will widen over the forecast period in line with rising outward remittances by foreign workers. As more international companies enter the market, increased profit repatriation will result in a growing income deficit. We expect the current-account surplus to average 21.4% of GDP a year in 2013-17.

  January 09, 2013

• Forecast

  Libya: Country forecast summary

  Country forecast overview: Highlights

  • The political situation will remain unstable throughout the forecast period. In the short term, post-Qadhafi governments will face the challenging tasks of restoring order and managing a process of political transformation. Under the interim constitution, a full parliamentary election is scheduled to be held seven months after a new constitution has been passed in a referendum.
  • We expect delays to the transition timetable as a result of security issues in the wake of the civil war and political disputes between rival factions. These are unlikely to be serious enough to derail the transition process altogether, but they will undermine the effectiveness of early post-Qadhafi governments.
  • Sporadic clashes between rival militias and attacks by militants are likely to continue in the early part of the forecast period, as the government struggles to exert its authority over the whole territory of Libya and to integrate militias into official security structures.
  • Early post-Qadhafi governments will face significant pressure from higher popular expectations of an improvement in living standards and the provision of public services. The government will adopt an expansionary fiscal policy focused on increasing public investment, boosting private-sector participation and stimulating job creation.
  • The Libyan economy contracted by 61.4% in 2011 as a result of disruptions to oil production and exports. Oil output has recovered rapidly since the end of the conflict and has already reached near pre-conflict levels. We estimate that the economy will have grown by 92.1% in 2012 and forecast growth to average 9.6% a year in 2013-17, as activity picks up in both the oil and non-oil sectors.
  • We expect that institutional issues and ongoing security problems will constrain the government in its ability to disburse funds, particularly on capital projects, in the early part of the forecast period. The fiscal surplus will narrow in 2013-15 as expenditure rises. The surplus will widen in 2016-17 in line with higher oil revenue.
  • Inflation slowed significantly in 2012 owing to a helpful base effect and as supply disruptions associated with the conflict were resolved. As private consumption growth accelerates and government spending picks up, inflation will average 5.8% in 2013-17.
  • The current-account surplus will narrow over the forecast period as the economy recovers, resulting in widening deficits in services and current transfers. We expect the surplus to average 21.4% of GDP over the forecast period, with exports rising to US$81.9bn in 2017.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	92.1	11.3	9.0	8.6	9.1	9.9
  Consumer price inflation (av; %)	6.7	7.1	5.3	5.1	5.6	6.0
  Budget balance (% of GDP)	22.3	6.8	3.7	2.8	3.8	4.2
  Current-account balance (% of GDP)	35.5	27.8	24.5	21.3	18.4	15.2
  Exchange rate LD:US$ (av)	1.25	1.26	1.27	1.29	1.28	1.28
  Exchange rate LD:€ (av)	1.61	1.62	1.61	1.59	1.62	1.62

  Download the numbers in Excel

  Download text file (csv format)

  January 16, 2013

View detailed map

Country Briefing

Land area

1,759,540 sq km

Population

6.36m (2010 estimate, IMF)

Main towns

Population in '000 (2012 estimates, World Gazetteer):

 Tripoli (capital): 1,019

 Benghazi: 633

 Misurata: 286

 Tubruq: 138

 Sebha: 99

 Zawiya: 87

 Sirte: 78

Climate

Hot and dry with mild winters

Weather in Tripoli

Hottest month, August, 22-30°C (average daily minimum and maximum); coldest month, January, 8-16°C; driest month, July, 1 mm average rainfall; wettest month, December, 94 mm average rainfall

Language

Arabic

Measures

Metric

Currency

Libyan dinar (LD) = 1,000 dirham. Average official exchange rate in 2011: LD1.22:US$1

Time

2 hours ahead of GMT

Public holidays

Commercial offices and government establishments are closed on Fridays. Other than the usual Islamic celebrations, national holidays include Independence Day (December 24th); Evacuation Day (June 11th); and National Day (February 17th)

January 16, 2013