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The Finantial Times

Saturday, 11 February, 2006

Adviser Points To Libya's 'Old Guard' As Block To Reform

Adviser points to Libya's 'old guard' as block to reform
Published: February 11 2006 02:00
Last updated: February 11 2006 02:00

When Professor Michael Porter, the Harvard management guru involved in promoting Libya's integration into the global economy, began tackling sensitive political issues at a conference in Tripoli on Thursday, some delegates responded with a sharp gasp.

Speaking in a phone interview on the Libyan leadership's efforts to remodel the country's economy, the former adviser to Ronald Reagan said he had been blunt about the need for political change if economic reforms are to succeed. This, it seems, took some in the handpicked audience of more than 1,000 Libyan officials and businessmen by surprise.

On the invitation of Saif al-Islam Gadaffi, Libyan leader Colonel Muammer Gadaffi's son, Mr Porter has led an unprecedented collaboration between foreign and Libyan experts in reviewing the North African country's economy.

Mr Porter's blueprint for reform - his initial findings are contained in a 200-page document to which Cambridge Energy Research Associates contributed - prescribes ways for Libya's economy to break free of constraints that have made it dependant on daily production of 1.8m barrels of oil.

"We've identified Libya's strengths. We've also identified the things that need to be fixed. We have waded into the sensitive issue of the governance process. [The question is] can we drive these agendas to actual action?" Mr Porter asked.

On the down side, he said there was a "senior leadership layer", an "old guard" blocking change. However he sensed a "volcano underneath of Libyans dying to see their country move forward and become more productive".

In an interview with an Austrian newspaper yesterday, Saif al-Islam Gaddafi said Libya needed to privatise state-run industries, bring in foreign investors and attract more tourists.

The 33-year-old, who has been driving reform efforts since his father agreed to compensate victims of the 1988 Lockerbie aircraft bombing and abandon weapons of mass destruction in 2004, also called on Arab autocrats to embrace democracy.

Mr Porter said Libya's own unique "Jamahiriya" system - involving hundreds of "people's committees" set up in the aftermath of the 1969 coup that brought Col Gaddafi to power - provided a framework for public participation. But the system had become dysfunctional.

"There is tremendous confusion about who makes what decision, what the relationship is between the executive and the legislative. The net result is grid-lock," he said.

As well as providing "a long-term economic vision" for Libya, the blueprint for reform identifies eight near-term goals. These include the creation of an economic development committee to cut impediments to business and act as a "one-stop shop" for investors.

"If, in six months from now, this effort is stalled we will get a big hint as to the likelihood of true economic reform in Libya," Mr Porter said. Col Gaddafi has been busy recently, trying to make peace between Sudan and Chad and did not make a public appearance to endorse the reform strategy.

But Mr Porter said he believed Col Gaddafi was excited by the possibility of economic change, which adhered to the egalitarian principles laid out in his original political vision, the "Green Book". Mr Porter said he was waiting for a scheduled meeting with Col Gaddafi.

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