Don’t let Libya follow Iraq’s economic path

It has only been three months since the death of the former Libyan leader Colonel Gaddafi. Nobody quite believed the media reports at the time — and nobody would ever have believed that just three months on, a UAE delegation of over 100 business leaders would be landing in Tripoli to begin talks with new Libyan leaders on how best to rebuild the war-torn nation.

A lot has happened in a very short space of time, most of it positive. Our chief reporter Shane McGinley was on the first Etihad Airways flight into Tripoli last week. What struck Shane, and for that matter most people who have been to Libya post-Gaddafi, is just how bad things are. Mass poverty. Crumbling infrastructure. Failing services. Huge unemployment. Dwindling education standards. It makes you realise just how spectacular a job Gaddafi did of ruining his own country, especially when you consider Libya had a GDP close to most European nations, and the world’s ninth largest oil reserves.

Little wonder some of the UAE’s biggest business leaders were keen to be on the first Etihad flight there. Libya needs $8bn of investment just to rebuild its airports. Add to that the oil and gas production and seaports, education, technology and health services, and you are soon talking about numbers well over $50bn.

Alongside Qatar, the UAE is well placed to strike good deals. Both countries officially recognised the Libyan rebels as the official government of the country long before Gaddafi was toppled, so there is no shortage of goodwill.

But goodwill on its own won’t be enough. Just look at Iraq — it’s been more than eight years since the US invasion and over a trillion dollars has been pumped into the country but its economy is hardly worth shouting about. Nearly a quarter of Iraqis are still living below the poverty line, while unemployment is at fifteen percent — including one million people under the age of 34. The country still only manages to generate 60 percent of the 15,000 megawatts of electricity needed per day, while 25 percent of Baghdad’s residents are without clean water.

The lesson of post-war Iraq was that the decision making process was flawed — nobody really took charge, and corruption was quickly rife. And everything took just too long to happen (or just never happened).

The UAE currently has $2bn of investments in Libya and is hoping to quickly turn that into $5bn. Will it happen? As Mashreq boss Abdul Aziz Al Ghurair, also on the Tripoli trip, told us:

“If it turns out to be a very slow process then UAE companies will go somewhere else. We can wait a year or two but we can’t wait ten years for a country to open up to business. I think Libya is at a crossroads. We were all optimistic with Iraq at the liberation time and we thought Iraq was a goldmine and everybody was preparing to go to Iraq but it is almost many years, six years since and nothing has happened in Iraq. Very few companies in Iraq were able to go and set up business there.”

He couldn’t be more right. The very fact that the UAE business leaders were in Tripoli within three months of Gaddafi’s death is a sign that countries are keen to move fast. Just as importantly, the Libyan people quickly need to see signs of progress. The euphoria of the revolution will only last another couple of months, after which progress must be seen to happen. So far the signs are that Libya won’t turn into another Iraq. But the next twelve months will also determine whether it will become the oasis of opportunity that Gulf companies are expecting it to.

(Anil Bhoyrul is the editorial director of Arabian Business. The opinions expressed are his own.)