Far and Away: Reporting from the Brink of Change

Earnings from oil exports account for about 80 percent of the national budget. In the heyday of Libyan oil production, the country produced 3 million barrels a day. That number has dropped to 1.7 million, but the National Oil Company plans to get it back up to 3 million by 2010. Libyan oil is of high quality, low in sulfur, and easily refined. Libya has proven reserves of about 40 billion barrels of oil, the largest in Africa, and may have as much as 100 billion. Several major oil companies have ranked Libya as the best exploration opportunity in the world. The Libyans have lacked the resources to conduct extensive explorations themselves. In the fifteen years since foreign companies left, Libya’s extractive resources have been seriously mismanaged. “If Dr. No were trying to muck up the Libyan oil economy,” a British adviser to the Libyan government said, “there is nothing he could think of that hasn’t been done.”

Still, oil money continues to make possible Libya’s subsidy programs—the socialism in the Great Socialist People’s Libyan Arab Jamahiriya concept. NASCO pays twenty-six dinars for a 110-pound bag of flour and sells it to bakers for two dinars; you can buy a loaf of bread for two cents. Rice, sugar, tea, pasta, and gasoline are also sold for a fraction of their cost. Economic reform will involve scaling back these subsidies (which currently amount to about $600 million a year) without impoverishing or starving people—which is all the more difficult given that wages have been frozen since 1982. Meanwhile, little credit is available in Libya: no Libyan-issued credit cards can be used internationally; no financial institution meets international banking standards.

“The oil absorbs all the mistakes, of which there have been many,” one Libyan official told me. “The oil money means that there is stability, and it makes the country easy to run. It’s this little country with all this oil—it’s like if you decided you wanted to open a 7-Eleven and you had a billion dollars to back it.” The oil is a curse as well as a blessing. The SPLAJ system has produced a population unhampered by a work ethic. Libyans work five mornings a week, and that’s it—assuming that they have jobs. “If they were willing to take jobs in, say, construction, there would be jobs for them,” Zlitni said sternly. “But we’re a rich country, so the youngsters don’t want to work hard.” Economies based on resources such as oil generate few jobs unless they diversify. Many university students I spoke to were convinced that, for all the talk of reform, their talents would remain unexploited. “When I finish my MBA, chances are that I won’t be able to get a job,” one complained to me. “The whole country runs on oil, not on employment. The wealth doesn’t come out of anything you can get by working hard, which I am prepared to do, but what’s the point?”

“If we hadn’t had oil, we would have developed,” the minister of finance, Abdulgader Elkhair, told me. “Frankly, I’d rather we had water.”

For him, and for aspirants to Libya’s emerging private sector, the main outrages are the sclerotic ministerial bureaucracy and its endemic corruption. The nonprofit organization Transparency International gives Libya a Corruption Perceptions Index of 2.5, ranking it lower than Zimbabwe, Vietnam, and Afghanistan. The Heritage Foundation’s 2006 Index of Economic Freedom ranks Libya 152nd out of 157 countries evaluated. “You need twenty documents to set up a company,” Elkhair told me, “and even if you bribe all the right people, it will take six months.”

One day, I sat in bumper-to-bumper traffic with a Libyan human-rights activist who gestured in despair at the roadwork and said, “They dig it up and close it and dig it up again, for enormous sums of money every time and with no other purpose. This corruption makes me late for my meetings. Necessary things are not done here, and unnecessary things are done over and over.” I met the previous head of the National Cancer Institute, described to me by other doctors as the best oncological surgeon in the country, who had been removed from his job to make way for a friend of the Leader’s. The displaced doctor is now working at a small clinic without essential equipment. The administrator who served under him sells fish at a roadside stand nearby.

“Qaddafi is very happy to have corrupt people working for him,” a Qaddafi insider said to me. “He’d much rather have people who want money than people who want power, and so he looks the other way and no one threatens his total control of the country.” (Tribal loyalties, which intersect with simple cronyism, also play a role here: Qaddafi has filled many high-level military and security posts with members of his bedouin tribe, the Qathathfa, along with members of a large tribe to which the Qathathfa have long been allied, the Warfalla.) A Tripoli lawyer added, “Corruption is a problem, and sometimes a solution.”