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Libyan Writer Ghoma

Saturday, 17 September, 2005

DEVELOPMENT IN LIBYA: Squaring the Circle or Catch 22!

By: Ghoma

       The hum-drum gets loudest the more the monophonic monologues, if not soliloquies, get political. Not that there's anything wrong with being political. Except in the nature of politics and politology to be interest-bound and thus gets distracted from the main course by the narrow paths and by-ways it necessarily hits upon along the way. However, the noise gets soberer when the talk moves to counting the beans since it requires one to know what economics is all about: Economic reform and development! Case in point the huge shifts in direction, if not destination, of the ship of state in Libya and the re-directing of its main axis versus the gargantuan star that powers the solar system of the present constellation of states.

       If anything can be filtered from the cacophony of the diaphonic exchange taking place, one important thing, for sure, was neglected: the new political economy and the re-fitting of the country towards full re-absorption into the new world system. The question is there anything wrong with this? And what are the predicted pros and cons, in other words, the costs to average bu-me'rqa? Is the present regime, with more or less the same actors, agents, and gangs capable to affect a change in the economy, as we know it, into something even slightly different? Is development possible in a country like Libya or only a pipe's dream? How could an umpteenth-rate state in a middle income Third World country with problems of first-rate nations morph overnight into a playpen to the multinationals and an investment Mecca? Are privatization and dismantling of so-called cradle-to-grave system the steps necessary toward the take-off stage if there's any consideration to such a proposition?

       Where does Libya fall in the overall scheme of things? For sometime the country has been relegated along with the rest of them, the Oil-Stans of this world, to the rank of a milking-cow. Vital to the security and interest of the biggies but worthless in themselves except as a recycling places for the petrodollars that end up there. These countries have become pawns in the hands of the Big Sisters and easy chips to play with for the big powers when the necessity arises. Their societies, which have been built by others for the consumption of their products, are in limbo neither made up to the surface nor sank down to the bottom. Today, these states are more than ever before at the mercy of the vicissitude of the globalized system. They depend on outsiders -industrialized nations- for both their daily bread and the oven where it's baked! Libya, for instance, nowadays, more than ever before, dependent on the goodwill of those who've, in one way or another, tormented, chastised, and then shunned her until it came back humiliated and weak, after accepting whatever conditions were put on her. Perhaps some of these conditions were packaged under the garb of assistance and development but the real was merely intended to hook it more firmly to the free-market and its laws and iron-clad logic and to make room for energy companies to abstract whatever oil and gas still there as fast and as cheap as it's possible. Does Libya have a choice? Well, yes and no! The question is can Libya say no? In following the dictates of others a country can go only so far. A country which doesn't possess a will of its own and buckles under outside pressures is no candidate for serious reforms!

       The question of economic reforms and development in general, long overdue, but neglected by many so-called elites and intellectuals of third World stamp due to its complex nature in the first place, and second to perhaps not erroneous but deceiving conviction which assumes that the course of development passes by political stability which passes in its turn by political reforms and conciliation. As in all complex questions there's always some truths in all sides, however, on deeper reflection, the puzzle turns into a conundrum and this into an enigma, which one comes first the economy or the relations that organize it? Most of political failures were in major part due to lack of development, which in its turn, came short due to political instability and turmoil. A chicken-egg stuff? How to organize something which doesn't yet exist, how to get something done on a gigantic scale like the economy of a country if there are no rules yet to regulate and lead the endeavor? Squaring of the circle, as they say, or only a catch-22? Or, only the dog's chasing its tail!

       Let's start from facts! Before we do this, let's remind ourselves that factual and virtual factoids lend themselves not only to facts and factoids but also to fiction, which, to many is perhaps closer than statistics to the truth. [ Another of those smart-aleck's Murphy type piece of wisdom, playing on the fact that statistics is synonymous of the art of state, huh!]. Economy: the GDP of Libya, or let's assume that oil revenues as such, is ~$35 billions yearly, which comes to a per capita of ~$5,000. Population: somewhere in the vicinity of 6 million souls, half of them illiterates, with typical Third World population pyramid distribution: 55-60% either below the age of 18 or above the age of retirement. Employment: the government employs close to one-million with another 1/4- million looking for jobs, 1/3 million retirees, and 180,000 on welfare; with 1-million of foreign workers [high employment and high guest-workers, go figure!]. Social assessment: 180,000 [households?] live on 100 LD monthly income (below poverty line!], ~ 300,000 unit the shortage in housing, heavy subsidies to basic necessities [for instance a kilogram of flour costs 55 cents to the government and sold to the public for 4 cents!]. Services: health sector is a theoretical possibility, education is a big mess, other services survive on paper... The facts of the matter point to a third-tier income state with a 10th-tier government, economy and services - a state of underemployed and unemployed.

       How this unbalanced state came to be? If we set aside the worn-out bases on which Libyan society is still lumbering and recognized that the tyranny of Qaddafi is more a product of the political dysfunction inherent in a tribalistic set-up, and not the cause of it; then the causes of the present mess can be traced to: One part is, from what's called rentier- economy -not much different from an individual who lives by the rent collected from a real estate: building, land etc. [Oil abstraction economy is a peculiar beast. It's two salient characteristics: 1- It returns a relatively large amounts to concessionaire party, which is usually the state, and thus concentrates most of the wealth of a country in few hands. 2- While it requires huge initial capital investments, high tech and know-how but needs very little labor and has very little trickle-down effects -except the revenues, of course]. The other part is twofold: a- from the instability of the state, deficiency of the political order to direct and lead, and the inability of its bureaucracy to manage; b- the deadly and noxious combination the concentration of power and money in the hands of few amateurish wanna-bees politicos can do: if it didn't generate the turmoil it certainly increases the causes of it, such as, inefficiencies, unfairness, corruption, nepotism and cronism, etc.

       A country like Libya with deep structural problems and an economy, which in the absence of better terms, is in the realm of potentialities; the last thing it needs, if it really intends to affect any long and lasting changes, is to relegate such a project to a bunch of technocrats. Technocrats, in the best case scenarios, are task oriented, which means somebody has to give them directions: Guidelines, instructions, and objectives. In other words they can only be managers! They're not prone to leadership qualities, especially the political ones. So why the Big Kahuta, Qaddafi, let two technocrats of free-market stamp or aspirations or both [Dr. Ghanem who's a graduate of Tufts University, in a suburb of Boston, Mass.; and worked for OPEC in Vienna, practically a salesman's job (Read A. Mailer's "Death of a Salesman"), and the 'holy son,' Seif-al-Islam, who's an architect -turned-economist from that citadel of economic conservatism: Vienna School of Economics, and now London School of Economics!] lead the caravan of "dismantling" the vaunted marvel system, which, supposed to lead to heaven on earth, and implement in its place something undefined yet? Is it because finally the cold facts have hit him -Qaddafi- in the face, that what he thought was the ideal solution turned out to be a bunch of hooey, uncontrollable flight of imagination of an immature youthful, or something else? Perhaps, it's more the else than the facts which have persuaded him, or rather dissuaded him, to let those guys try something just to fail and then he'll come back and say, I told you so, even those you call experts have nothing better than what I'd, so stick with me, would you; I'll figure out something to last us the raging storm, and then we shall roll again on the magician carpet!

       The premises of the 'new trend' are still murky. What's transpired so far points to some hesitant attempts to bring some multinationals, some foreign investments, and to find a way to absorb as many as they could of the unemployed: tourism, huh! The question: Is it realistic to even think in such terms? If we look realistically to the Libyan economic picture we'll find it typical of backward, Islamic, oil exporting state: High rates of population growth living on fixed income. A relatively expensive labor market made out of illiterates, semi-literates and unskilled force. With no apparent attraction or marginal advantages. Which means continues impoverishment and decreasing consumption rates. Are these attractive to outside investors? Multinationals and adventure capital seek a rising consumer market with a stable political order and clear rules to follow and live by.

       The international oil market, due to war in Iraq, is in need of as much production as it could harness from all the other oil-producing states. Libya was the standby-reserve its time has come to bring it back from banishment, to boost its reserves, and thus production. Therefore some investments in explorations, improvements in well recovery, and pumping technology are to be expected in the coming days and years, as the queuing of oil companies to get back shows. Other than that no one in his/her right mind will waste their time on investing in a country of rag peddlers, shop-keepers, and commission-seekers.

       One may ask since Libya has plenty of cash, it doesn't need foreign capital flow? Libya's cash richness is a myth. With huge population growths, large subsidies to basic necessities, no other productive sectors, a million or so of guest workers [ siphoning out few billions of dollars yearly], a deficient service sector, a corrupted bureaucracy and unbridled consumer habits, etc. an income of $30-35 billions/year barely enough to meet the bills and few billions for the discretionary spending of the dictator. Actually the future is even worse. With population growth of 3+% a year and an economy that grows/shrinks only by the fluctuations of oil prices the continues drop in the "living standards," even with the chance of boosting oil production, is the only prospect!

       How to get out of the jam? There's no substitute for creative thinking and imaginative long-term solutions. A political leadership with a real will and deep understanding of history and its lessons are urgently needed. Not technocrats, please! Leaders with the determination of Mao tse tong, who urged his country-folks to tighten their belts, have one child and get rid of their corrupted culture and other bad habits; and the imagination of Nehru, who, amid the grinding poverty of India, signed in the same day of independence of the country also the creation of the Indian Institute of Technology, today is one of the best in the world in higher education and research,... A leadership able and courageous to tell Libyans, probably what they don't want to hear, they cannot go on increasing like rabbits in a country made out of desert, that's, they've to curb their appetites for kids and subsidies, change their millennial culture of laziness and waiting for a knight on horse-back to come and solve their problems, .... Only by slowing an overall population growth, if not reversing the trend to negative growth, with some painful but effective family planning policies; curbing demand on social services by slowing the rate of household formation (new family formations), and giving mission and objectives to a rudderless education system can any meaningful savings from the oil revenues occur. A low consumption and increased productivity will give rise to capital accumulation, which's needed to build the productive infrastructures, such as, good schools and higher education system(s), good labs and research facilities, factors, a network of communication and transportation, etc.

       Of course, all these steps need to be taken in concurrence with figuring out what's the future of a country like Libya in a globalized world ? The proverbial looking for a needle in a haystack: A niche preferably utilizing what we have plenty of: Sand, sun, oil and gas!


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