The ouster of Col. Muammar al-Gaddafi is a rupture point in the history of Libya. After this important event, the situation in this country is deteriorating from many points of view. The closure of many oil fields caused by the war, has throttled Libyan economy that depends on oil market for 70% of GDP, 95% of state revenues and as much as 98% of Libyan exports[1]. During Gaddafi era, the crude oil production was 1.6 million barrels a day (MBD), while after Gaddafi regime, the production collapse until the 200,000 MBD of the last summer[2].

The institution of the Libyan Stock Market in 2007 was certainly an opening of the Libyan economy to a greater flow of foreign investment and an attempt to diversify its economy, but, even today, this tool fails to be a driving force for the Libyan economy. In fact, in the Libyan Stock Market there are only 10 stocks including some banks (mostly Islamic) and insurance agencies[3]; with a value of around $3 billion, this market is too much tiny compared with its North African counterparts, Il Cairo $70 billion and Casablanca $50 billion[4]. Also the situation of small and medium-sized enterprises (SMEs) is not the best. Despite the agreements of November 2013 between the Libyan government and Islamic Corporation for the Development of the Private Sector (ICD), a member of the Islamic Development Bank Group (IDB), for the structuring of several Shariah-complaint finance mechanisms to address the needs of small and medium-sized enterprises (SMEs) and unemployed Libyan youth[5], the situation for the SMEs is not simple and is characterized by two kind of challenge: financial and technical. On the side of finance, the SMEs sector has a high risk due to the lack of information between creditors and clients or due to the lack of financial guarantee. On the other side, the technical problems are the lack of the required entrepreneurial and managerial skills from the entrepreneurs that have difficulty in reaching and/or using the most developed technologies used in their industries, which makes them less competitive with the larger enterprises. The smaller the enterprise, the harder it becomes to withstand the demand shocks[6]. Despite the GDP data that underline an incredible grow in the 2012 (104.5% after the drop of the 62.1% in the 2011) and a positive grow in the 2014 (prevision, 25.5%)[7], the real economy (that isn’t directly linked to the crude oil production and to the reconstruction industries) is in deeply difficult to return at the level that preceding the ouster of Col. Gaddafi.

This economic scenario is marked by a high social and politic instability. In the last three years, a representative group of who that toppled Gaddafi has taken the responsibility (under the auspices of the international community) to trigger the transition to democracy of the country[8]. A lot of rebel factions refuse to lay down arms and continue to fight for their own profits. Rebel militias and oil workers union seized control of oil export terminals on the Mediterranean coast and shut down production; there are also some rebel group that smuggle crude oil with tank carried by ships that sailed under other flags (like Maltese flag)[9]; this caused a crisis for the whole Mediterranean system of oil refinery and for the economy of Libya as well as it represent a challenge for the Libyan State and for the National Oil Company’s legal monopoly on oil exports. The government tried to stop this situation with both military efforts and political stability, through the democratic election of a constitution panel (the polls were between 20 and 26 February). But in the last days there were some problems between some ethnic groups, in particular Toubou and Tuareg, that stopped the electoral material from being dispersed in the southern regions, preventing people from electing a panel tasked to draft a new constitution; others minority groups, as the Amazigh, boycott the constitution panel[10]. On Sunday (March 02, 2014), some protesters entry in the Libyan parliament and demand to members of the interim General National Congress to resign due to the incompetence and the abuse of power[11]. Two men were shot and several others wounded[12]. The parliament elected in the 2012 is split into two parts: on one side, the Islamist and the revolutionaries that demand for more influence for religion and former rebels and on the other side, there are the liberals and the nationalists who want to limit the influence of the other side. This political split fall on the society that is frustrated and that in the last years has lost its cohesion: social and political fragmentation is dangerous because the government hasn’t the monopoly of violence and any political and social part has the military power to exert pressure to national level.

The instability creates an unfavorable economic mood for the foreign investors and for the national entrepreneurs; despite this, the leader of HB Group[13], Husni Bey, has confidence in bourse and says that it’s just a question of time and the bourse will move the Libyan economy[14]. The World Bank, in a report issued last month, stressed “the urgent need for economic diversification in order to ensure long-term financial and economic stability”[15]. These statements are true, but how African Economic Outlook says “Libya’s successful transition and sustainable development hinges on the evolving security situation, the new government’s economic strategy, the resolution of regional tensions over hydrocarbon resources, and the international price of oil”[16]. Libya needs first of all political stability; without stability, the crude oil production can’t work as it should and the foreign investors aren’t motivate to invest in Libya; without earnings of crude oil market, the economy and society cannot have the financial aid that need to start and to branch out; without economic opportunities and without security, the society will be not cohesive and without cohesion, Libya will be not stable. With the collapse of Gaddafi regime seems to have opened the Pandora’s box, situation of Libya is dire, without the weberian “violence monopoly” the government can do little to resolve this situation. The dialogue with all parts (minority and ethnic groups) founded on equality, is more important than an election (especially if it is not based on clear assumptions and with the evident attempt to exclude certain social and political parts); stabilize this geographical area is important not only for Libya but also for all Mediterranean States, for their migration politics and for their economy.

 


[1] Anon., Libya economy slumps, “News24”, February 16, 2014. http://www.news24.com/Africa/News/Libya-economy-slumps-20140216 [consulted on March 4, 2014].

[2] S. Khalid, Is Libya putting world oil markets at risk?, “AlbaWaba Business”, Jennuary 29, 2014. http://www.albawaba.com/business/libya-oil-crisis-550690 [consulted on March 4, 2014]. In July 2011, the production was 22,000 MBD. Anon., Libya on Recovery Path but Faces Long Rebuilding Effort, “IMF”, April 16, 2013. http://www.imf.org/external/pubs/ft/survey/so/2012/CAR041612A.htm [consulted on March 4, 2014].

[3] Libyan Stock Market – official website. http://www.lsm.ly/English/Pages/default.aspx [consulted on March 4, 2014].

[4] U. Laessing, Seeking cheap stocks, chaos no problem? Try Libya, “Reuters”, February 22, 2014. http://www.reuters.com/article/2014/02/23/us-libya-bourse-idUSBREA1M00820140223 [consulted on March 4, 2014].

[5] Anon., ICD, Libya to set up SME Finance Mechanism, “Libya Business News”, November 25, 2013. http://www.libya-businessnews.com/2013/11/25/icd-libya-to-set-up-sme-finance-mechanisms/ [consulted on March 4, 2014].

[6] M. R. Kamel, SMEs in Libya: Promises and Challenges, “Libya Business TV”, August 31, 2012. http://libyabusiness.tv/video/smes-in-libya-promises-and-challenges-1 [consulted on March 4, 2014].

[7] IMF, World Economic Outlook 2013 DataMapper, October 2013. http://www.imf.org/external/datamapper/index.php [consulted on March 4, 2014].

[8] This year, during the National anniversary of the “Revolution Day” (February 17) many people decide to stay away from the celebrations because of the dissatisfaction that the people feeling towards the government. J. Karadsheh, M. Basu, Unease hangs in the air on anniversary of Libyan revolution, “CNN”, February 17, 2014. http://edition.cnn.com/2012/02/17/world/africa/libya-anniversary/ [consulted on March 4, 2014].

[9] S. Khalid, Is Libya putting world oil markets at risk?, “AlbaWaba Business”, Jennuary 29, 2014. http://www.albawaba.com/business/libya-oil-crisis-550690 [consulted on March 4, 2014].

[10] Anon., Libya announces new voting date, “PressTV”, February 20, 2014. http://www.presstv.ir/detail/2014/02/22/351758/libya-announces-new-voting-date/ [consulted on March 4, 2014].

[11] The parliament decides to extend its mandate until the end of the 2014. Libya’s transitional Parliament had once pledged to disband by Feb. 7, 2014. D. D. Kirkpatrick, Frustrated With the Pace of Change, Rioters Storm Parliament Building in Libya, “The New York Times”, March 2, 2014. http://www.nytimes.com/2014/03/03/world/africa/frustrated-with-the-pace-of-change-rioters-storm-parliament-building-in-libya.html [consulted on March 4, 2014].

[12] Anon., Libya is still in crisis, “DieWelt”, March 3, 2014. http://www.dw.de/libya-is-still-in-crisis/a-17469725 [consulted on March 4, 2014].

[13] One of the most prominent businesses in the Libya private sector.

[14] U. Laessing, Seeking cheap stocks, chaos no problem? Try Libya, “Reuters”, February 22, 2014. http://www.reuters.com/article/2014/02/23/us-libya-bourse-idUSBREA1M00820140223 [consulted on March 4, 2014].

[15] Anon., Libya economy slumps, “News24”, February 16, 2014. http://www.news24.com/Africa/News/Libya-economy-slumps-20140216 [consulted on March 4, 2014].

[16] Anon., Libya, “African Economic Outlook”. http://www.africaneconomicoutlook.org/en/countries/north-africa/libya/ [consultated on March 4, 2014].