Libya's struggle for direction
By Dominic Moran for ISN
A draft of Libya's first constitution since the 1969 Green Revolution will be put to popular councils at month's end as the country looks to address domestic concerns regarding systemic governance dysfunction while negotiating its relationships to outside state and business partners.
No details of the constitution draft were released in domestic media statements on its completion, following a three-year formulation process. However, significant moves to modify the political system and bureaucratic structure in a manner that, at least symbolically, promotes the initial revolutionary goals of resource control and diffusion of power can perhaps be expected. The nature of any future substantive changes remains moot.
In a January address via satellite to students at Georgetown University in Washington, DC, sponsored by Exxon Mobil, Libyan leader Muammar Gaddafi said he was considering moves to take greater control over Libya's oil and gas sector. He added that dropping oil prices could lead to moves to nationalize the holdings of foreign energy firms. Gaddafi announced a sharp attenuation of Libyan oil production last month by 270,000 barrels per day (bpd) to 1.4 million bpd.
Libya has succeeded in recent years in renegotiating oil and gas deals with foreign companies. Libyan national representative at the African Petroleum Producers' Association, Seddigui Ismail, told external pageDow Jones news service in March 2008 that his country was seeking a 72 percent share in renegotiated and future deals, eschewing the previous 50-50 split.
The country has the world's eighth largest proven oil reserves. Plans to almost double production by 2012 would appear to rule out any rapid move toward nationalization.
Gaddafi's announcement could therefore be seen as a prod to foreign companies to up their stakes in Libya in light of the global financial crisis and a concomitant external pagereported drop-off in foreign oil and gas investment. The drop in global oil prices may serve to stymie rapid economic growth in recent years.
The leader's entreaty to the People's Congress this week to back his plans for the apportioning of oil revenues to the public to the tune of US$32 billion serves to underline the extent to which popular support for the jamahiriya (government by the masses) system has been undermined by public sector mismanagement, official corruption and system breakdowns. Gaddafi also pledged to do away with the current cabinet structure and urged major bureaucratic reforms.
With efforts at domestic governance and economic reform ongoing, Libya continues to attract international suitors keen to promote their major national industry players' roles in Libyan infrastructure development, defense and gas and oil extraction.
The first US ambassador to the country in three decades arrived in Tripoli on 27 December, in a move made possible by Libyan agreement in September to the provisions for final compensation payments to the families of victims of the 1986 Lockerbie bombing. Libya has not officially acknowledged responsibility for the bombing.
Houston-based ConocoPhilips now operates the Saha concession, Libya's largest collection of fields at 300,000 bpd, according to external pageForbes.
Despite Libyan efforts to smooth ties, and rapid US moves to re-establish contacts and business relations, significant tensions remain within the countries' bilateral relations. For example, the US vetoed a Libyan-sponsored UN resolution excoriating Israel for its recent Gaza operation. Libya answered in kind, vetoing a US-sponsored move to slam the Sudanese government over Darfur last week.
Through spearheading European moves to rehabilitate Libya, France has won an important role for its national industries in defense and energy contracts. A memorandum promising France a leading role in future Libyan defense purchases was reportedly amongst the external pagedealssigned by French President Nicholas Sarkozy and Gaddafi in Paris in December 2007.
In the week following the signing of the initial Franco-Libyan pacts in July 2007, EADS signed a US$405 million arms contract with Libya for the supply of anti-tank missiles and advanced communication systems.
The extent to which European nations are keen to build ties with Tripoli was confirmed by Italian President Silvio Berlusconi's agreement to the characterization of a September 2008 deal with Tripoli as a colonial compensation pact.
Under the deal, Italy will invest US$5 billion in Libya over the next quarter century and provide US$200 million in compensatory infrastructure and de-mining work. external pageGaddafi said that the deal gave Italy "priority over oil and gas and other forms of investment."
The deal is already paying off for Rome, with Libya's sovereign investment fund looking to invest in a number of Italian banks. Libya's Central Bank has already bought a 4.6 percent stake in UniCredit.
Despite the Franco-Libyan defense memorandum, the contest for a role in the rearming of the Libyan military is already intensifying, with Russia looking to parlay its traditional defense relationship with Libya into major energy, nuclear and defense contracts.
Then-president Vladimir Putin wrote off Libya's US$4.6 billion debt to Russia (largely racked up through Soviet-era defense deals) during a state visit to Tripoli in March 2008. Gaddafi visited Moscow in November 2008 for talks. Libyan officials have reportedly external pageexpressed an interest in purchasing fighter aircraft, tanks and helicopters, one or two diesel-electric Kilo-class submarines and short-range air defense systems.
Even more crucial for the EU and Moscow are Russian efforts to gain a key stake in developing Libyan gas fields, cemented through a cooperation agreement between Gazprom and National Oil and Gas Company of Libya.
external pagePayment problems in a US$2.2 billion Russian-Libyan railway deal may give pause to some potential foreign investors but are unlikely to have a significant impact on the race for influence.
While the new constitution may yet give flesh to the governance reform project proposed by Gaddafi, it is the future role of his expected heir, Saif al-Islam Gaddafi, that is of import to those looking to chart the future prospects for the country.
Saif has played a key role in promoting the constitution project and, despite ostensibly stepping aside, his ideals and goals for reform can perhaps be expected to be embodied in its articles.
The younger Gaddafi is a proponent of liberal economic and democratic reform and told external pageAsharq Al-Awsat this month that he is interested both in establishing a research institute in Europe and in fostering change in Libya, while reiterating his disinterest in a future leadership role at home.
Saif has played a peripatetic role both independently and as an indirect emissary of his father on the world stage, while often expressing views in sharp contravention of those of the Libyan leader and official policy positions. He ruled out assuming the mantle of leadership from his father in August 2008.
The Libyan economy remains in a transitional phase between state control of key economic levers and Saif's vision for the promotion of private business; with a rapid shift to a full capitalist structure promoted through the post-isolation advocacy of foreign investment and ownership.
The effective concentration of authority in the hands of one man and ancillary small leadership cabal fostered by the otherwise diffuse Libyan governance structure raises serious questions concerning the country's political direction in the event Gaddafi dies or is incapacitated.
Tellingly, in his interview with Asharq Al-Awsat, Saif revealed, "I become the axis around which all the projects, departments and institutes revolved." It is this centripetal pressure that may inevitably draw Saif back into a leading role in the Libyan political system.
Any moves to transform Gaddafi's discursive commitment to transformative governance reform or concrete moves to promote energy industry nationalization, while popular domestically, would portend significant disruption that would not be welcomed by international partners.
Unfortunately, the pressing need for genuine democratic and rights reform and for reinforcing the disintegrating state-popular social contract through public sector reform are unlikely to be met regardless of whatever changes ensue.