Colonel Qadhafi visits Italy

Libya is currently at a crossroads. It is in the throes of decision-making on a host of key issues that will affect the eventual succession to Colonel Qadhafi. This includes an internal struggle about whether the political structure will be changed, with the establishment of a constitution based in liberal democratic principles, or remain under the leadership of a single strong-man.

Also at stake is the degree to which the economy is to be state controlled or extensively privatised. The political situation is currently fluid, and engendering intense rivalry among the Qadhafi sons and a visible polarisation between conservative hard liners and the modernisers who would completely cut back the revolutionary roots of the Jamahiriya.

The last five years have seen gradual economic liberalisation that should provide a springboard for the transformation of Libya's moribund economy which is financed by rising oil revenues. There are excellent prospects for the expansion of infrastructural assets and for the large-scale development of the oil industry with special emphasis on natural gas resources.

The inflationary strains of a booming economy and the partial ending of consumer subsidies have dismayed many Libyans who have previously only known only a system of cradle-to-grave paternalism. The gradual transition to a normal market economy could prove difficult and a possible flash point for the regime which has tolerated increasing income disparities which is greatly resented by a largely unconvinced population.

The current political restiveness plus erratic shifts in foreign policy, in what is potentially a rich market for Western trade partners, rewards those companies which accurately monitor events in such a complex business environment. For more information about Libya Focus, please contact us here.