IRAQ WAR WINDFALL:

In Libya, chance for new start (Charles A. Radin, May 26, 2004, Boston Globe)

A quarter-century of being identified as a leading enemy of the United States and listed as a state sponsor of terrorism, combined with economic policies based on Khadafy's personal leadership and philosophy, have stagnated the economy despite the country's substantial oil revenues.

Many government buildings and community centers are shabby, in need of plaster and paint. Public works and public services have deteriorated. Roadsides and forests near cities are full of trash; highway maintenance is spotty. Large, government-owned hotels and other public facilities are strongly evocative of China and the Soviet Union before the demise of socialism in those countries.

US-based oil companies, which have major interests in Libya, have not operated here since 1986, when President Ronald Reagan -- who also launched US airstikes against the country and broke diplomatic relations in response to alleged Libyan involvement in terrorism -- ordered the companies out and stopped all energy-related Libyan trade with the United States.

When suspicions arose that Libyan officials were linked to the Lockerbie bombing, most other developed nations joined the US sanctions regime, and the Libyan economy nosedived. Without tourists or business travelers, internal air routes withered in the Alaska-sized country, most of whose 5.5 million people live near the coast. Ferries to Morocco, Turkey, Egypt, and Malta also came to a halt.

The lifting of sanctions by other countries in 1999, when Libya acknowledged responsibility for the airliner bombing and surrendered two suspects for trial, did not do enough to modernize the oil industry and reinvigorate the economy. There are stiil very few foreigners on the streets of Tripoli and in major tourist destinations.

Posted Green Book slogans say things like "there is no freedom for the people when food comes from overseas," but a huge selection of food products, such as yogurt, cheese, pistachio nuts, and breakfast cereals, are imported. Neither the material failings nor the limitations on political speech have engendered the tough political opposition that has arisen in defiance of repression in other Arab countries, such as Syria and Tunisia. A middle-aged history teacher explained with a Libyan saying: "A satisfied stomach has no ears."

Khadafy may not have succeeded in keeping up with modernity or developing the economy, but he apparently did not engage in the gross corruption of many other Arab regimes, and he used Libya's oil resources to subsidize the population's basic needs.

"Oil was everything," said a professional tour guide, with a hint of resentment. "That's why tourism is only just beginning. Quite frankly, until now we did not need it."

A textbook illustration of the way oil retards both political and economic development.

Posted by Orrin Judd at May 26, 2004 8:04 AM