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January 10, 2005

Orchestrating Libya’s Metamorphosis

Reprinted from Tufts E-News

After decades of being walled-off from the world by sanctions and a history of terrorism, Libya is emerging from its authoritarian confines with Tufts-educated prime minister Shukri Ghanem (F’73) at the helm.

"The state used to run most things but the performance was not up to the level we’d hoped," Ghanem told The Times of London. "So now our policy is to open up internally and externally. We’ll do this in two stages: to privatize existing activities and then to open the door wide to the outside world."

In the past two years, the Islamic socialist state has renounced weapons of mass destruction and admitted responsibility for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, that killed 270, agreeing to pay a $2.7 billion settlement. These gestures have opened the doors to foreign investment, tourism and entrance onto the global diplomatic stage.

The key, Ghanem says, was a gradual realization that stockpiling weapons would not help the nation in the long run. Despite being rich in oil, Libya was by all accounts economically and technologically backward. To take advantage of its oil reserves, sanctions needed to be lifted, so the country took steps to repair its past.

"Economically it’s not wise to develop weapons," he told the Financial Times. "You find that they’re eating all your money. North Korea went into starvation."

Ghanem, who became prime minister in 2003, emerged in the mid-1990s as a member of a growing chorus of voices advocating change in cash-strapped Libya. Though criticized by some in his country for defying the longstanding principles set forth in Col. Moammar Gadhafi’s "Green Book" blueprint for Islamic socialism, he realized that change was needed.

"The government spent so much money on the public sector, on industrial projects, but it proved that whatever it touches it spoils," Ghanem told the Financial Times. "We ended up with a number of white elephants in the country. It's a problem of lack of decision, of coordination, of firmness in government."

Ghanem received a doctorate from The Fletcher School in 1973. Prior to assuming his post as prime minister, he served as economic minister for Libya and also worked for OPEC in Vienna.

Change hasn’t been easy, especially amid opposition from those who flourished under the old ways of doing business.

"Some people have privileges which they hate to see changed," he told The New York Times. "Lots of people prefer the status quo to having a shot in the dark."

Ghanem is not interested in trying to win over those who would indulge in corrupt political practices.

"We don’t need to convince a few inept managers," he told The Times of London. "The people are already converted and want things to get better."

There is still a long way to go. Despite the lifting of sanctions, Libya is still on the United States’ list of states sponsoring terrorism. Also, the authoritarian country’s government is fraught with corruption. Ghanem is hopeful that other nations will believe that Libya is trying to change its stripes.

"I think they should trust us, because they know that we are genuine. We know they have to trust us because we voluntarily came and said, ‘Now we want to abide by the regulations,’" Ghanem told the CBS news show 60 Minutes II.

The oil-rich nation of just over 5 million people has already attracted hordes of American oil investors, who left the country amid conflict in the 1980s. Libya’s oil reserves, while estimated to be vast, are largely unexplored – all the more exciting to investors from abroad.

"The Libyan oil industry needs a lot of investment," Ghanem told Time. "American oil companies will be able to spend and take risks."

In signs of the changes taking place in the once-reclusive land, the sole luxury hotel will soon encounter competition, ads for consumer goods are replacing portraits of Gadhafi, and duty-free shops are opening in Tripoli’s airport.

"Our real challenge is how to mobilize our resources – so many are untapped – and make everyone take part in the development of our economy," Ghanem explained to the Financial Times.

To that end, increased tourism is a goal for Ghanem. Sites ranging from pristine coastline and vast deserts to the ancient Roman city of Leptis Magna are ripe for foreign visitors – and foreign spending.

"Tourism is a resource that has not yet been tapped," he told The Times of London. "We think that the development of the last and biggest shore on the Mediterranean will be a win-win situation for investors and Libya. But we need to build an infrastructure and we need to lift travel restrictions."

Libya still has many hurdles to overcome – most of all, its own past.

"The mission is not easy," he told Financial Times. "Hopefully it is not mission impossible."

Posted by jessica at January 10, 2005 02:01 PM