Russia finally recognises NTC as Libya's acting leadership

Reports have emerged that Russia has recognised the National Transitional Council (NTC) as Libya's acting leadership. The news came hours ahead of an international summit in Paris aimed at planning-out Libya's future. The summit, consisting of 60 world leaders, will also look to unfreeze billions in Libyan assets to assist the TNC, and reconcile international differences over the NATO led campaign that helped push Colonel Mu'ammar Qadhafi out of power.

The meeting is the first of its kind for the NTC, which has recently taken Tripoli and now controls most of Libya. The Council is expected to present detailed plans, and may seek assistance from member countries in a form of short-term loans from the International Monetary Fund and the World Bank. It is also thought that the Council may seek a civilian UN police presence in the country to help with the transitional period and aid with the running of a country ravaged by months of civil war and four decades of dictatorship.

Russian was one of several countries to criticise NATO over its military undertakings in Libya. A statement on Thursday 1st September, however, release by Russia's Foreign Ministry said that the country now recognised the TNC as Libya's official authority. It is thought that other countries such as China and Algeria will be pressured to follow in Russia's footsteps.

China agreed to send a convoy to the Paris conference but is yet to recognise the NTC. It did, however, stress the fact that the UN should take a leading role in Libya's future. China's Foreign Ministry spokesman Ma Zhaoxu said that China respects the "role played by the National Transitional Council in the settlement of the Libyan issue."

The conference will focus mainly on the issue of unfreezing assets linked to Qadhafi in banks worldwide. The funds were blocked by a UN resolution earlier this year in a bid to deter Qadhafi from combating anti-government protests. The French authorities estimate at least $50 billion linked to Qadhafi across the world, but UK officials have put the figure as high as $110 billion.

Speaking about the issue, France's Foreign Minister Alain Juppe said: "France has just received authorization to transfer €1.5 billion which belongs to the Libyans…We have to aid the transitional council because the country is devastated. The humanitarian situation is difficult. They lack water, gas, electricity."

Qadhafi's whereabouts are unclear, after he was refused refuge in neighbouring Algeria. His wife and three sons, however, were granted asylum on Monday 29th August. As it stands, Libya now faces a tricky transitional period which will test the NTC to the full as it tries to restore law and order within the country.

Sources: BBC News, AFP, AP

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Egypt: Essam Sharaf calls for patience

Egypt's interim prime minister Essam Sharaf has called for patience. He urged Egypt to give the government time, saying: "It is difficult, even impossible, for us to deal with and realise all factional demands...on an individual basis," he said. "The problem isn't financial problems only. A lot of (the problems) depend on institutional and administrative reform. I hope that you cooperate with us and give us time to meet these demands in a way that is fair for all."

The protesters, however, do not like the way thousands are arrested and tried before military courts; that the government seems to have done so little other than condone the persecution of former regime officials.

Their expectations are impossibly high. There remains a naive belief that somehow Egypt will be able to recover the billions taken out of the country by its former rulers, senior officials and corrupt businessmen and that this will be redistributed to the poor and needy.

It will not happen.

The pledges of aid from international donors may give some temporary relief. But, the underlying economic structural imbalances of the Egyptian economy remain daunting.

Critics of the type of structural adjustment programme proposed by the International Monetary Fund say that it led to labour unrest in the textile industry which, in turn, helped fuel the protests that brought down the regime. But the alternative to neo-liberal economic policies, the kind of state control of the economy that appears to be the default position of the finance minister and others in the cabinet, will not generate the economic growth that is needed to provide jobs for the extra half million young people entering the labour market each year.

Egypt needs some plain speaking. There is hardship, and lots of it, ahead.

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Egypt on track to beat its budget deficit target

According to the Egyptian finance minister Youssef Boutros-Ghali the Egyptian government is on track to beat its budget deficit target for the second year running. Talking at an investment conference in Cairo Boutros-Ghali said that the deficit will, “very likely,” decline to 7.5 per cent of gross domestic product in the fiscal year through June from 8.1 per cent in the previous 12 months, official target for the deficit is 7.9 percent.

The International Monetary Fund recommended that Egypt reduce the shortfall by 1.5 per cent to 2 per cent of gross domestic product this fiscal year, to demonstrate its intentions of reducing the gap to 3 per cent by 2015. The Egyptian government relies heavily on borrowing from domestic banks to subsidise the deficit and thereby tends to crowd out lending to the private sector.

The finance minister said that the country may grow 6 per cent or more this year, driven by a, “very lively domestic demand component,” within the country's economy. He also said that despite the fact that both domestic investment and consumer spending had been affected by the crisis both sectors, “still held up”.

The government estimates that the country might attract as much as $9 billion in foreign direct investment this year, up from $6.7 billion in the previous year. Foreign investment, along with revenue from tourism and the Suez Canal, helped the economy expand at an average rate of 7 percent in the three fiscal years through June 2008.

Source: Bloomberg

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