Thursday, 3 May 2012

Libya: NTC finds running of the state an expensive operation

The National Transitional Council (NTC) is finding that the running of the state is an acrimonious and expensive operation. For example, as not in previous issues of Libya Politics & Security, the costs of providing overseas health care to both those wounded fighters and the wider Libyan population has caused major recriminations. In recent weeks a bitter atmosphere has arisen from the decision of the NTC chairman, Mustafa Abel Jalil, to maintain his own power base by keeping the government representatives unchanged. It now seems that there will be no definitive alteration in the formation of the government until in the end of the year – i.e. six months after the June 2012 election. In this situation of uncertainty Abel Jalil is attempting to keep the NTC going as a functioning entity in the face of severe criticism of both his own conduct and the policies espoused by his ministers.

The political implications of the unexciting short term prospects for the Libyan economy are important because it means that there will be very limited available cash to pay for the inevitable crises that will arise during the rest of the year in the health service, the provision of schools, and repair of war damage. The NTC will therefore be under great strain to maintain itself in power sufficiently well in order to guide the country into an era of relative democracy following the elections in June. That said - they are succeeding in making some progress.

During its first year in power and, if the wide-ranging expertise of the Libyan private sector is mobilised in peaceful conditions and foreign interest in the potential market that Libya represents is sustained, a modest rate of growth of 3%-5% in real terms may be achieved in the near future, It is also possible that a number of state and private sector companies will survive alongside the well organised oil sector which is currently defying its sceptics return to pre-war levels of oil production much quicker than most analysts thought possible. If, however, the IOCs decide that their Libya operations are likely to remain far less profitable than other exploration hotspots then Libya would be in a tight corner. Without the IOCs assistance Libyan oil production probably could not be maintained at current levels and the country would once again become a peripheral marginal producer.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2012 Menas Associates

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