And then he [Qaddafi] takes a further look around and sees that the Bush administration comes in with a strong foreign policy and with a determination to respond to the threats. And so he watches that a little bit, and then he sees what happens in Afghanistan and Iraq. And he says to himself, you know, it's time to get out of this.24
This connection to Iraq was furiously denied by the Qaddafi regime. Shalgam claimed that any suggestion that Libya had been scared into making concessions by the Iraq invasion had been put about by malevolent journalists.25 The regime also insisted that it had been working to build relations with the US for at least a decade. Few could argue with the fact that Libya had demonstrated a willingness to engage on the WMD issue prior to 2003, and that its decision to abandon its non-conventional weapons programmes was the culmination of longstanding efforts to normalize relations with Washington, dating back to 1992.
However, one cannot discount the impact of the Iraq war altogether. For a man who displayed such obvious paranoia about the US, the invasion of Iraq must have served as serious food for thought. Just before Libya made its March 2003 overture to the US and the UK on the WMD issue, Qaddafi warned Shalgam: ‘They [the US and the UK] will laugh at us and document that we have WMD. They implicated Saddam Hussein and they want to implicate us too.’26 Moreover, there was an unmistakable mood of anxious anticipation in Tripoli at the time of the Iraq invasion, as Libyans quietly wondered whether their leader might end up sharing the same fate as Saddam Hussein. Graffiti appeared in Tripoli warning ‘Today, Saddam. Tomorrow, Qaddafi’, and a boisterous crowd at a football match taunted Qaddafi's football-mad son, Saadi, chanting ‘Saadi, don't think you are a big guy … Your destiny will be like Uday's’ – a reference to Saddam Hussein's son, who was killed following the US and British invasion.27 While Libyans had no desire to see American or British boots on their soil, these sentiments reflected the population's utter desperation for change, as well as their deterministic sense that Qaddafi's hold on the country was so completely overwhelming that they would never find a way to oust him themselves.
In such a climate, it is perhaps unsurprising that Qaddafi should continue to fear that the whole WMD agreement was yet another political trap. Such was the Colonel's paranoia that even once the agreement had been made, working out how to announce it to the rest of the world proved torturous. On 18 December 2003, after the Americans and British proposed that he should publicly renounce the country's WMD programmes, after which Blair and Bush would offer their thanks and praise for his decision, the Leader declared: ‘I refuse that totally. They will laugh at us. I will speak and they won't speak after me. This is a trick and a conspiracy.’28 The following day, the usual suspects – Shalgam, Musa Kusa, Mohamed Zwai and Abdel Ati Al-Obeidi – gathered in Shalgam's office to try to figure out how to announce the news in a way that would be acceptable to both sides. It was a long day: discussions dragged on from 9.00 a.m. until 8.30 p.m. and involved more than fifty phone calls to MI6 and the CIA, and countless others to Qaddafi and Saif Al-Islam. Things were so tense that Musa Kusa almost passed out.
With pressure mounting, the Libyan team eventually persuaded the US and the British, who were more desperate than ever for a good-news story from the Arab world, that Shalgam, rather than Qaddafi, would make the crucial statement. For all his desire to get the matter sorted, Qaddafi could not bear to humiliate himself by having to announce publicly what he knew would be seen across the Arab world as a demeaning climb-down. In the end, Shalgam made a statement, following which a statement in Qaddafi's name, supporting what his minister had said, was broadcast by the Libyan news agency, JANA; after that, Blair and Bush duly came out and offered their messages of thanks and support.
For all that the announcement was toe-curling for Qaddafi, it marked a momentous occasion for Libya. This was the beginning of the country's real rehabilitation into the international community. In March 2004, British prime minister Tony Blair visited Libya, memorably shaking hands with the Brother Leader in his tent. The meeting was later dubbed the ‘deal in the desert’, as it was announced at the same time as the Anglo-Dutch oil firm Royal Dutch Shell signed a major gas exploration deal with Tripoli. In June 2004, the US and Libya re-established diplomatic relations, and an American diplomatic team set itself up in Tripoli's towering Corinthia Hotel. Three months later, the US lifted its unilateral sanctions, and finally removed Libya from its State Sponsors of Terrorism list in June 2006. By the time of the uprising, in 2011, the two sides had developed their relations to such an extent that they had signed a number of bilateral agreements on a range of issues, including trade and investment, economic development, defence and counter-terrorism. In an indication of just how far relations had moved on, the two countries signed a Defence Contacts and Cooperation Memorandum of Understanding in January 2009. A few months later, Qaddafi's son Moatassim made a visit to Washington in his guise as National Security Commissioner, and there he met US Secretary of State Hillary Clinton. Even more surprising, in September 2009, Qaddafi visited the US for the first time to participate in the UN General Assembly in New York. As a young revolutionary, hell-bent on standing up to the West, this simple Bedouin of the desert can hardly have imagined that one day he would find himself in the heart of the ‘viper's nest’. While the visit inevitably caused controversy – not only over where he should pitch his trademark tent, but also over the fact that he used the UN platform to deliver a rambling speech that was full to bursting with his trademark rhetoric – the fact that he was there at all was proof that, for all the lingering suspicions, Tripoli and Washington were cautiously entering an era of new relations.
Looking inwards
Libya's rehabilitation and its bleary-eyed emergence from the years of isolation prompted speculation in Western capitals and beyond that the eccentric Qaddafi would seize this opportunity to turn the country into something more akin to a conventional state. Normalization created expectations inside Libya, too, that the Colonel would finally get down to the serious business of reform. After UN sanctions were suspended in April 1999, there were high hopes that the Leader would use his annual speech at the 1 September anniversary of the revolution celebrations to announce a raft of reforms that would herald a new era. There was even talk that the Colonel would move to transform his unique Jamahiriyah into some kind of ‘presidential republic’. The stage was set for a big announcement; the Libyan capital was decked out with flags, lights and victory arches, and Green Square sported enormous white electric candles to mark what was to be the revolution's thirtieth birthday.
Yet, as anticipation filled the air and regime loyalists filled the public squares, Libyans were to be bitterly disappointed. There was no talk of reform. Rather, Libyans were treated to yet another outpouring of revolutionary rhetoric. The main event of the anniversary was the unveiling of Qaddafi's latest invention – the Jamahiriyah Rocket, a rocket-shaped car designed to minimize road accidents. The sleek-looking vehicle was launched at a summit of the Organization of African Union that had been specially convened for the thirtieth-anniversary celebrations. Dukhali Al-Meghareff, chairman of Libya's domestic investment company, which produced the prototype of the car, declared: ‘The Leader spent so many hours of his valuable time thinking of an effective solution. It is the safest car produced anywhere … the invention of the safest car in the world is proof that the Libyan revolution is built on the happiness of man.’29 The Colonel seemed to be playing a cruel trick on the Libyans, who had suffered so heavily over the past decade and more from the repercussions of his revolutionary misadventures. Such insulting triviality at this crucial juncture in the country's history was a stark reminder to Libyans of just how far their Leader was removed from everyday reality, and of how much he was wrapped up in his own bizarre world.
Hopes for change were dashed further in late September 1999, when Qaddafi stated categorically to a meeting of People's Committee representatives that there would be no political change in Libya. The Colonel was still
talking about the need for ‘permanent revolution’, as if the Cold War had never ended. As if to make the point, in March 2000 he dissolved the entire General People's Committee (cabinet) overnight, transferring some ministerial functions to local people's committees and abolishing others altogether.30 The following year, he tried to initiate a revolutionary revival in the universities, announcing that he needed a new inner team of young revolutionaries who would reinvigorate the ideas in his Green Book.31 This was ‘reform’ Qaddafi style, sending Libya into a spin with chaos-inducing arbitrary decisions sold as ‘furthering the revolution’. It was becoming clear that, as far as the Leader was concerned, Libya's rehabilitation was not going to be accompanied by an overhaul of his Jamahiriyah system, and that the country would continue to be hostage to his eccentric political vision.
However, Qaddafi knew he had to put on some sort of show. If Libya was going to achieve full rehabilitation in the international arena, it had to demonstrate to the rest of the world that it was serious about opening up. It had to do something to bring its grinding economy into the twenty-first century. With international sanctions suspended, Qaddafi could no longer hide behind the international embargo as an excuse for the country's crumbling infrastructure and poor living standards. Something had to change. While he continued to lambast international investors, dismissing them as ‘a handful of speculators and traders’,32 the Colonel adopted a parallel discourse aimed at convincing the rest of the world that Libya was open for business. In September 1999, he told a group of foreign businessmen attending a symposium on Prospects for International Investment and Trade in Libya: ‘If you want to invest in Libya, you are welcome.’33 He reiterated these sentiments at another investment conference in 2000, when he noted: ‘Libya wants to encourage foreign capital investment and partnership … We will create the right atmosphere for the investor.’34 Qaddafi also repeatedly spoke of the need to diversify Libya's economy away from its reliance on the energy sector. While there was an ambiguity about his discourse, the Leader wanted to send a message to the West that its money would be more than welcome in the Jamahiriyah.
Qaddafi's talk was accompanied by some action, and Libya took several important steps towards bringing its economy into line with international standards. In June 2003, in a bid to encourage foreign investment, the Central Bank unified the dual-rate exchange system, under which individuals requiring foreign currency used a ‘commercial rate’, while transactions undertaken by state companies were at an official rate.35 That same year, Libya showed itself willing to be part of the global economic system, when it accepted its obligations under Article VIII of the International Monetary Fund's Articles of Agreement; in October 2003, it released the details of the IMF's first Article IV consultations that called for wide-ranging structural reforms, improved macroeconomic management and the removal of trade barriers and price subsidies.36 Accepting a role for the IMF was a major step for a regime that had so fiercely rejected any hint of foreign, yet alone Western, interference and that had stood by its socialist-style economic principles for so many years.
There was reform, too, in the energy sector. In August 2004, the National Oil Corporation (NOC) announced a licensing round, in which exploration and production agreements were to be awarded under a transparent bidding process. The licensing round proved popular with international energy firms, which were champing at the bit to get back into the country. January 2005 saw the return to the Libyan market of many US firms in particular: eleven out of the fifteen blocks on offer went to US companies, including Occidental, Marathon, ConocoPhillips and Hess. This was a triumph for the Libyans, not only because the terms of the contracts they awarded were on the tough side, but also because the upgrading of its energy sector could begin in earnest.
Perhaps the greatest indication that Libya intended to reform its economy came in June 2003, when a little-known oil economist, Shukri Ghanem, was parachuted into the post of general secretary of the (reconstituted) General People's Committee (effectively, prime minister). Ghanem was a friend and ally of Saif Al-Islam, who had taken on the mantle of being the user-friendly reformist face of the regime. This slick son of Qaddafi's had completed an MBA in Austria, was a keen advocate of free-market economics, and spoke a new language that seemed light years away from the anachronistic rhetoric of his father. ‘The old times are finished’, he proclaimed to the Davos summit in January 2005, ‘and Libya is ready to move onto a new stage of modernization … [which will] be conducted in a well organized manner that ensures new ownership and ownership by the people of Libya, not just a small class of oligarchs like Russia or Egypt.’37
This breath of fresh air managed to persuade his father that Ghanem, another proponent of liberal economics, was the hand that Libya needed on the tiller to steer the country in the direction of reform. Ghanem's appointment was not uncontroversial. It ruffled feathers among those of a more traditionalist bent, who viewed the westernized technocrat, who had headed the OPEC Secretariat in Vienna, as an outsider whose new-fangled ideas might threaten their own privilege and position. Indeed, Ghanem was something of an unknown quantity. His appointment was all the more unusual because the Jamahiriyah's formal political structures had always been dominated by the narrowest of elites. For the first thirty years of the revolution, Libya had had a total of only 112 secretaries (ministers) in the General People's Committee, some of whom stayed in their posts for only one or two years.38 The same few faces were simply shuffled around the pack ad infinitum.
Anticipating the stir (and likely hostility) that the appointment of this newcomer would elicit, Qaddafi delivered a special address to the General People's Congress, telling it that Ghanem had been brought in to transform the economy and to sort out the country's economic difficulties. The economist, Qaddafi proclaimed, did not ‘need’ Libya thanks to his international reputation; the Colonel also told the Congress that Ghanem was ‘worth his weight in gold’ – although he also quipped that unfortunately Ghanem did not weigh very much!
The Colonel's overt backing of Ghanem certainly gave the impression that Libya was serious about change, and the technocrat set about trying to shake up the country's archaic and dysfunctional economy. However, he soon learned that the path to change was to be beset with obstacles. One of his first tasks was to try to pare down the unwieldy state sector. The public sector employed more than 800,000 Libyans, out of a population of almost 6 million, and was a serious drain on the public purse.39 Ghanem sought to draft employees out of this sector. He also vowed to tackle the problem of ‘ghost employees’ – those who drew salaries, yet never turned up to work – as well as to weed out those salaries that were being paid to workers who did not exist or who had died.40
However, turning these ambitions into reality was fraught with difficulty. Despite having supported Ghanem so publicly, the Leader openly contradicted his efforts through his repeated insistence on expanding the country's administrative bodies at whim. In March 2005, for example, he suddenly announced that an additional 100,000–200,000 Libyans should be drafted into the security services. More importantly, however, attempts to reduce the public sector were hampered by the fact that there were no real opportunities opening up in the private sector.41 There was strong resistance both inside and outside the regime to pushing people out of their jobs while there was no private sector alternative. On top of this, Ghanem also had to deal with the fact that the regime's insistence on acting as a distributive state over the past three decades had spawned a culture of reliance: Libyans had come to look on a public sector job as a rite of passage and as a source of income for which they generally did very little in return. As Ghanem summarized matters,
The first and the most important requirement of reform is to work strongly in order to change the thinking, the mentality and the culture of the people which could be summarized in their general feeling that the state is their father and it is their guarantor that has to pay everything for them and provide them with housing, [medical] treatment, wor
k and everything else.42
Ghanem's efforts to lift state subsidies on basic goods were hardly more successful. While he managed to remove subsidies on some goods, his doing so angered many Libyans, who felt they were being robbed of their much-needed entitlements. Ghanem soon earned the nickname ‘Shukri Tomato Paste’, for his efforts to lift the subsidies on tins of the same. He was also blamed for the sharp increases in utility bills that took effect in 2005; these were all the more galling to the many Libyans who lived in blocks of flats that were regularly without water and other basic utilities. Ghanem's efforts to lift the subsidies also brought him into conflict with what came to be referred to as the ‘old guard’ – regime loyalists, many of them members of the revolutionary committees, who saw it as their duty to uphold the ideology of the revolution.
Yet while some of the resistance of this old guard, which had lived on a diet of Qaddafi's revolutionary slogans, was related to ideology, much of it was associated with the desire to protect its privileges. The members of this group had been the great beneficiaries of the Jamahiriyah system that Qaddafi had set up, and they all had their various wheezes to siphon money off from the state. State subsidies were one area where they had been able to profit, and they were not about to let this newcomer take that away – even if he was backed by the Leader's son.
This group was equally determined not to let Ghanem make headway with his privatization programmes. The new general secretary came to power with the plan to privatize 360 companies, completely transforming the Libyan economy. However, the hardliners were determined to put the brakes on the plan. In 2005, for example, Qaddafi's cousin, the much-feared Ahmed Ibrahim, who was then deputy secretary of the General People's Congress, annulled Ghanem's resolution to privatize a marine transportation company that was under the control of Qaddafi's son Hannibal. A furious Ghanem engaged in a very public spat with Ibrahim during a session of the General People's Congress in January 2005 and complained of ‘invisible forces’ that were working against the policies of his government. The upshot was that Ghanem was left with the dregs: while he managed to oversee the transfer of forty state-owned companies to the private sector, many of those companies were small firms, and their privatization had negligible impact. As one member of the privatization board, Abdullah Badri, complained, many of the companies that Ghanem had planned to privatize were already dead in the water.43
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