The outlook for Libya's economy remains favorable.
International Monetary Fund, February 15, 2011
Libya is a nepotistic cult focused on Muammar al-Gaddafi, his family,
and friends. The erratic and eccentric leader, known as the Guide of the Revolution, has ruled since he helped lead a military coup against King Idris in 1969. He developed his own style of Arab revolution outlined in The Green Book. Of interest, the title of the first section is , The Solution of the Problem of Democracy: 'The Authority of the People''. (Image Google Maps)
Gaddafi has felt the heat of that authority since February 17 when large protests began all over Libya.. Despite a ruthless security apparatus, Libyans had simply had enough. Reports now have the anti regime forces in control of the nation's second largest city, Benghazi, and losing other major cities.
Reportedly, Gaddafi used fighter jets against his own people in the last twelve hours. Aljazeera reports
that advertisements are running in neighboring African states offering
$2000 a day for mercenaries to augment the ranks of state security
The violence against the Libyan people by the government led the Libyan Ambassador to the United States to withdraw support for Gadhafi. The ambassador to India and other diplomats are doing the same.
Unlike the former dictator of Egypt, Hosni Mubarak and Tunisian strongman Ben Ali, Gaddafi has no real friends in the White House or European Union. He has cultivated better relations by giving up his weapons of mass destruction in 2003 and supporting the United States invasion of Iraq in the same year. But his history of erratic behavior and state sponsored terrorism are not quickly forgotten.
With several major cities in the hands of protesters, only the capitol remains habitable by Gaddafi. That will be lost soon. A just released report tells of security forces deserting the government and joining anti regime forces in and near the capitol. The Guide of the Revolution has nowhere left to go and few willing to accept guidance.
Like Richard III before the Battle of Bosworth Field, Gaddafi watches supporters vanish from top to the bottom of his army. His response has been no less brutal than Richard's, with assaults on his own people by hired thugs that he bought in neighboring countries. It will not end well for him, but it will end soon.
Since the 2003 rapprochement with the EU and United States, Libya allowed a foreign bank to take control of the nation's largest domestic financial institution. In addition, Libya has also opened to foreign equity investment::
"Another potentially important trend starting to emerge in Libya is private equity investment. One of the pioneers is Tuareg Capital, a firm set up last year in Bahrain by two Libyan expatriate investment bankers, Adel Saudi and Adbulla Boulsien (Mr Saudi's father was the founder of Arab Banking Corporation in 1980, one of the largest pan-Arab financial institutions). " Economist, February 27, 2007
Recently, the International Monetary Fund released the following in a report on Libya:
"An ambitious program to privatize banks and develop the nascent financial sector is underway. Banks have been partially privatized, interest rates decontrolled, and competition encouraged. Ongoing efforts to restructure and modernize the CBL are underway with assistance from the Fund. Capital and financial markets, however, are still underdeveloped with a very limited role in the economy. There are no markets for government or private debt and the foreign exchange market is small." IMF, Feb 15
The report went on to reach a favorable conclusion on the nation state:
"Executive Directors agreed with the thrust of the staff appraisal. They welcomed Libya's strong macroeconomic performance and the progress on enhancing the role of the private sector and supporting growth in the non-oil economy. The fiscal and external balances remain in substantial surplus and are expected to strengthen further over the medium term, and the outlook for Libya's economy remains favorable." IMF, Feb 15
Did policies of global capitalism light the flame that turned into the Libyan revolution? Privatization, "market" policies, and IMF style financial and fiscal management preceded the Egyptian revolution. Time will tell.
One can only wonder what the authors of the IMF Report of February 15 are thinking. It all looked so good to them. Two days later, a regime ending civil insurrection began that will topple the oligarchs with whom IMF had been striking deals.
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