TRIPOLI, 25 April 2004 — Visitors to Libya are left with no doubt that the country is heading toward a market economy, but officials insist that this in no way contradicts Col. Muammar Qaddafi’s ideology.
Luxury shops, sidewalk cafes, Western magazines and tourists are the most visible signs of the economic liberalization that has been gathering steam over the past few years in the North African country. But the political slogans painted on walls and banners in Tripoli, taken from the Libyan leader’s “Green Book,” have not changed. “Partners, not wage earners,” is one of the most frequent slogans, posted in front of factories and companies.
It summarizes the economic credo of the Third Universal Theory detailed in the Green Book, a home-grown socialism claimed to be a remedy to the injustice of capitalism and the atheistic materialism of Marxism.
However, many Libyans now acknowledge that the economic system that resulted was little different from the socialism of the former Eastern European bloc.
When implementation of the Third Universal Theory began in 1977, eight years after Qaddafi’s rise to power, the slogan “partners, not wage earners” translated into collective ownership of the means of production. And this led in turn to a state-controlled economy.
Economics professor and director of Tripoli’s Graduate Studies Academy, Saleh Ibrahim, said this was “a wrong interpretation of the Green Book. Market economy does not contradict the Green Book.” “One can contribute with work, but also money, to a company. In the two cases he is a partner,” argued Ibrahim, an adviser to the government on transforming the economy.
The need to reform was felt and acknowledged as early as 1986, when an oil price collapse reduced the financial capacity of the government to provide jobs and subsidize production and services. A restrained privatization process began then, with ownership of companies transferred to their workers only.
Ibrahim said more than 4,800 industrial, fishing and farming companies were sold to their employees between 1997 and 2000. But the results were disappointing because there was no injection of capital into those companies, which also had to face the impact of the international sanctions imposed from 1992 until last year.
A 1997 law also opened the door to private foreign investments in the non-oil sector, in a bid to stimulate growth and combat high unemployment which hits mainly those aged under 25, who make up 60 percent of the five million strong population.
Until then, foreign investments in Libya were confined to oil and gas development and a few joint ventures with the government. With United Nations sanctions lifted, and a new economic interpretation found for the Green Book, the ground work has been laid for Libya to increase the role of the private sector and diversify its economy away from oil.
Now US sanctions have eased with Washington’s announcement Friday, this process could speed up, although US investors are likely to concentrate on the oil sector initially.
Qaddafi himself okayed in a speech last year the privatization of state-owned companies beyond their employees, implicitly giving the green light for the reformist Prime Minister Shukri Ghanem to proceed.
