Making Peace with the Colonel: By rewarding Libya with the resumption of diplomatic ties, the United States is hoping to transform Moammar Gadhafi’s regime from rogue state to model Muslim partner. With plenty of oil and a cosmopolitan elite, the country’s chances at rehabilitation aren’t half bad. (Bernhard Zand and Volkhard Windfuhr, 5/22/06, Der Spiegel)

[W]hat does the reconciliation mean for the power struggle in Libya? America’s diplomatic initiative could benefit the reformers in the bizarre jumble of contradictions that is modern Libya. Or it could be their doom in the place formally known as the Great Socialist People’s Libyan Arab Jamahiriya. The initial winners are clearly the urban elite of Tripoli, Benghazi and Tobruk, whose lives are already leaning to the West.

The oil boom has made them rich. Libya earns about $80 million a day and will take in more than $30 billion this year on petroleum. The wealth is now becoming palpable. Mid-size cars wait in traffic jams along the coastline near Tripoli. Gadhafi’s son Hannibal pilots a white Humvee, a military jeep that represents the US invasion of Iraq in other parts of the Arab world. The airport in Tripoli now has a business lounge even though elsewhere in the country Libyans refuse to sit in the back of a taxi, careful not to make the driver look like a servant.

The hip drink of the moment in the seaside towns along the Mediterranean is the macchiato, a remnant of the officially hated Italian colonial period. Today, the milk foam peeks over the edge of a paper cup, just like it does in America. But men’s fashion is all Italian — dark suits, light-blue shirts, thin brown shoes.

The style has been made popular by yet another son of Gadhafi – Seif al-Islam, 33, an eccentric but bright son who has trouble hiding his ambitions. He’s already confessed to having no interest in Libya’s presidency, not to mention becoming a revolutionary leader like his father. But as head of the organization that pays restitution for the Lockerbie and “La Belle” bombings, his intentions have become very clear.

In the spring of 2005, he invited Harvard Business School economist Michael Porter to Libya. Porter is a former economic adviser to Reagan and a leading expert on competition. Gadhafi’s son met him at the World Economic Forum in Davos, Switzerland. For ten months, Porter and a 25-member team of international experts investigated Libya’s ministries, oil industry and economy. Recently, they published their report. “It is,” said an experienced European diplomat in Tripoli, “the most revealing document that has ever been written about the internal state of an Arab nation.”

The diagnosis is brutal. The bureaucracy, education system and health care sector come off far worse than they were portrayed in an earlier United Nations report. Only three percent of Libyans work in the oil sector, but they account for 60 percent of the gross national product. More than half of the population works in the service sector but make up just nine percent of the gross national product. Unemployment has crested 30 percent. Without oil, the country would be a disaster.

But the solution is heartening. Libyans were “motivated and open” when they spoke to one of the researchers, an experience “without comparison to what we’ve experienced in other countries.” The country’s energy sources are large with guaranteed reserves of 40 billion barrels of the lightest and most sulfur-free crude — all within proximity of oil-thirsty European markets. With smart leadership, Libya could become an exemplary country by 2019 — the 50th anniversary of the revolution — “egalitarian, productive, democratic and green,” according to the report.

The study’s preamble is a masterpiece of Middle East diplomacy that touches on the Achilles Heel of the whole experiment: “Our strategy attempts to improve Libya’s global competitiveness while maintaining its unique character as a government of the masses (jamahiriya).” This refers to Gadhafi’s theory that a government must only implement the decisions taken by an elite inner circle despite the convening of hundreds of people’s congresses — currently 468 — that meet for two weeks four times a year.

This raises yet another question, which the geostrategists in the State Department must also be asking after the debacle in Iraq — Can Arabic autocracies be reformed even if the autocrats and their regimes remain — at least temporarily — in power?

Because they can’t fix their economy without reducing autocracy, the autocrats who want a functional economy more than they do political power are worth working with.

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