Libya building its foundation for growth

Though bureaucracy and corruption persist, migrant workers are flocking to Moammar Qadafi's Libya as its isolation ends and its economy grows.

Tripoli's skyline John Thorne / The National

TRIPOLI // It was a clear winter evening in the Libyan capital, and in an upmarket coffee shop near the waterfront, a birthday party was underway.

A dozen guests - Libyan, British, Filipino - were dividing a chocolate cake at Caffè Casa and wishing happy birthday in various languages to a Libyan named Mohamed.

"A few weeks ago, most of us didn't know one another," said Rodwan al Ejlase, 21, a Libyan student who organised the party. "But we all go to this café, and now we're friends."

The scene embodied Libyan hopes for prosperity at home and friendships abroad as the country emerges from years of isolation. But while economic opening has raised living standards, slow-moving bureaucracy and political vagaries still hamper development.

A half-century ago, the country that the Roman poet Horace called "the arid nurse of lions" became a playground for foreign oil companies under the pro-western King Idris. In 1969, the king was toppled by Libya's current leader, Moammar Qadafi, then an army captain, who erected a system of committees with himself as "brother leader and guide of the revolution".

Out went foreign firms and in came a state-led economy. Meanwhile, Libyan backing for militant groups ultimately brought international sanctions.

In 1999, Libya surrendered suspects in the 1988 Lockerbie bombing, starting rapprochement with the West that saw all sanctions lifted by 2004. The same year, private enterprise was formally reinstated.

"You could feel the country opening up," Mr al Ejlase recalled. Inspired by an artist sister, he now studies internet design at Tripoli's Al Fateh University and works part-time for a state building company.

The birthday party progressed raucously; someone smeared chocolate frosting on Mohamed's nose as a joke. In the background, an Egyptian waiter named Amr was collecting empty coffee mugs.

One of tens of thousands of immigrants who increasingly do Libya's menial jobs, Amr, 30, makes 550 Libyan dinars (Dh1,600) a month, sending around a quarter to his widowed mother in Cairo.

"There's money to be made in Libya, especially in anything related to tourism," he said.

A trickle of foreign visitors are discovering Libya, while Libyans themselves are rediscovering leisure after years of austerity.

Libya's private sector, however, remains dwarfed by state companies and the state-controlled oil sector.

The government wants to boost private enterprise and considers the country a potential commercial hub, said Rajab Khalil, assistant chairman of Libya's official privatisation and investment board. "We're in a prime position to play middle-man between Europe and Africa."

The government has recently streamlined regulations and opened one-stop-shop business licensing offices in Tripoli and Benghazi, Libya's largest cities.

While such innovations have helped, public offices that provide many of Libya's work contracts remain crippled by too few staff and too much corruption, said Jamal Abeida, a private management consultant based in Benghazi.

Libyan authorities recently froze spending on major projects to assess where the money was going. Mr Abeida said that private sector leaders should play a greater role in crafting development policy.

For now, Libya lacks a clear growth strategy, said John Hamilton, a Libya expert at Cross-Border Information, a British risk analysis firm.

One example is recent state funding for hotel and airport projects, Mr Hamilton said, noting Libya's strict visa requirements. "Who will fly into these airports? Who will stay in these hotels?"

A few hundred yards from hotel complexes on Tripoli's waterfront, street vendors lay out their goods among potholes and crumbling buildings.

Jackhammers echo from above as workmen shorten tower blocks whose owners exceeded height regulations, according to local residents.

"Maybe next year this street will be beautiful," said Fadel, a taxi driver taking a break between fares. "Things are moving, but it's step-by-step."

That stop-and-go progress is mirrored in Libya's oil sector. While some foreign firms are exploring Libya, stringent contracts and failure to make discoveries are prompting others to leave.

The economy is also subject to diplomatic turmoil, such as a row this year with Switzerland that spiralled into a two-month visa ban for nationals of 25 European countries.

"Without rule of law, independent judiciary, developed media and separation of powers, you cannot realise other objectives," said Youssef Sawani, the director of the Gaddafi International Charity and Development Foundation, a non-profit organisation that was set up by Mr Qadafi's reform-minded son, Saif al Islam.

An annual report last week by the foundation accused Libya's government of meddling - sometimes illegally - with trade unions and professional associations, and called for new laws allowing more media freedom.

While a 2008 initiative by Saif al Islam Qadafi to draft a constitution has yet to bear fruit, Mr Sawani said that the government has adopted new business and labour regulations proposed by the Gaddafi Foundation.

At Caffè Casa, Mr al Ejlase was mulling his prospects of building a career after graduation.

"I think I have a pretty good chance, but I don't really know what to expect," he said. "Everything depends."