There are signs of a new phase of nationalism gaining ground; an enhanced mood of pro-Arab and anti-foreign sentiment. It appears to spring from Colonel Qadhafi's old ideas on the role of the State and the ownership of the factors of production by the people. Such views are, as expected, welcome to the Old Guard and to the revolutionary committee movement. In essence, the ambition of the conservative right is the salvation of the Jamahiriya and with it, the concentration of economic power in the hands of the State.
Among the current sectors feeling some of the cold draught of growing nationalism is the banking quarter, where the regime appears to be caught in two minds about its future expansion. Saif al-Islam and his colleagues see the banking sector as an important backstop for the provision of credit to the private sector and want this task accomplished by private banking operations. Despite this, the banking privatisation programme has been considerably reduced in recent months.
The allocation of banking licences permitting the opening of new joint ventures has been distorted by the acquisition of a large stake in Italy's UniCredit on grounds of private interest by the Leader and Italy's Prime Minister Silvio Berlusconi.
The delay in granting a banking license to a second foreign bank, which was promised and forecast by the government earlier in the year, gives some credence to the belief among the banking community that the gains in efficiency and honesty in the banking system are not the regime's principal aims. Foreign companies operating in Libya will benefit from some of the banking reforms that have been recently achieved but a dramatic dedication to any continuing improvement cannot be guaranteed.
For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.
© 2010 Menas Associates
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