Freed of Gaddafi, Libyans expect post-war economic boom

Businessmen are eyeing what could be an investment bonanza: an oil-rich nation with largely untapped potential for tourism and construction

Airlines are readying their return to Libya, ports largely shuttered during the fighting are receiving cargos and foreign oil companies that had fled the country's civil war are making tentative steps back.
And waiting eagerly on the doorstep are businessmen looking to get in on what they believe could be a bonanza for investment — an oil-rich nation with large tourism and construction potential that went largely untapped under an eccentric and often closed 42-year-long regime.
Slowly, Libya is reopening its doors after seven months of fighting, even as former rebels still hunt for ousted dictator Muammar Gaddafi.
"Definitely, Libya is an El Dorado," said Husni Bey, one of Libya's biggest entrepreneurs. "It has great resources that really allow it to turn around in no time."
The optimism is tempered by the challenges the country faces in overcoming decades of underdevelopment and corruption that helped fuel the uprising against Gaddafi.
In the immediate term, the nascent government has to jump-start the economy even as it tries to establish its authority in a country that remains unstable.
Libya's economy largely ground to a halt when the brutal regime crackdown on a popular uprising was met by international sanctions and opened up a civil war. An embargo by air, land and sea — exempting humanitarian supplies and food — froze most trade. Inventories ran low. Hundreds of thousands of foreign workers fled, abandoning construction sites, bakeries and oil fields.
For the Libyan public, improvement is coming gradually. Food and fuel prices are dropping nearer to prewar levels and waits at gas stations now last hours instead of days.
Links to the outside world are reopening, though NATO is still only granting case-by-case exceptions to its air embargo.
Royal Jordanian resumes daily flights to Benghazi on Thursday, with an aim for flights to the capital Tripoli later this month. Turkish Airlines plans to start before the end of the month. Already, Libya's national carrier offers three daily flights between Tripoli and Benghazi, the country's second largest city.
Hadi Elayeb, whose Horizons Travel Agency made bookings for 17 airlines before the war, said most intend to come back, including Air Malta, which contacted him and said they hope to resume flights soon. He hasn't booked a flight since March 1, but hopes to be back in business by October.
Beyond that, Elayeb — like many — dreams of a boom.
"It's going to be fantastic," he said. "Libya, in good hands, will be even better than Hong Kong."
The reasons many see a gold mine are clear. With a small population of only 6 million, Libya raked in $40 billion last year from oil and gas exports. Long-term possibilities are many, including tourism in a country that boasts pristine Roman ruins and hundreds of miles of undeveloped beaches just across the Mediterranean from Europe.
Gaddafi opened up the country somewhat in the 2000s, but the arcane political system, unpredictable business and visa rules and other restrictions kept much business away.
"Now Libya is a very easy place to work. There's lots of money and it has huge investment needs," said Ahmed Maiteeg, who owns three hotels and was involved in a major construction project.
He said he's already been contacted by about a dozen European companies about partnerships.
Local business leaders are making plans. Bey wants to build a 36,000 square meter (387,500 square foot) mall, and Maiteeg envisages a 35 million euro ($49 million), 50-bed, heart hospital employing Libyan doctors currently working in the U.S.
That earlier Gadhafi opening, however, provides a lesson in investment gone wrong.
Foreign firms — particularly international oil majors — streamed into Libya after decade-old sanctions against Gadhafi were lifted in 2003.
Luxury hotels arose, shopping malls and hypermarkets opened. New German and Japanese cars sped along paved highways and trendy coffee shops brewed espressos and blended coffee drinks. Oil exports filled coffers, with Libya's foreign reserves climbing past $100 billion and the country enjoying no real foreign debt.
But the prosperity was a veneer enjoyed by those closest to Gadhafi. Private sector growth was stunted and industry remained firmly in the hands of Gaddafi, his immediate family and his supporters.
The wider population saw little benefit, facing shortages of affordable housing, substandard education and little opportunity in the private sector — all problems that still exist.
With Gaddafi gone, oil companies are putting tentative feet forward. Foreign firms were the backbone of Libya's pre-war production of about 1.6 million barrels a day. Experts say it could take about a year or more to get back to that level.
Output has begun at one of the eastern fields, the acting prime minister said this week.
At the offices of Mellitah Oil & Gas, a partnership between state-run National Oil Corp. and Italy's Eni North Africa, human resources manager Ramadan Gushti is contacting more than 240 foreign employees to return. Many of its 4,000 Libyan workers are already back on the job, and Gushti expects production to resume in a month.
The company produced more than a third of Libya's oil output and delivered natural gas directly to Italy via pipeline.
Traffic is resuming at Tripoli's port, where under the wartime embargo only shipments of food, medicine and humanitarian supplies were allowed. The Overseas Shipping Co. said it expects two container ships from Malta this week, carrying spare parts for cars, furniture and personal effects.
To lure back investors, the National Transitional Council — Libya's new, Western-backed government — promised to honor international contracts.
But it is leaving the drafting of a new economic policy largely to the next, elected government, said Wafik al-Shater, an economic adviser to the NTC.
For now, "it's a priority for the government to kickstart the economy as soon as possible so people can get back to work," he said.
Shopping in the open-air market next to Tripoli's central square, history teacher Zahrah Dabbah said she's now paying 3.5 dinars for a kilogram of chicken — about $1.13 a pound — half the wartime price.
A few of the gold traders in Tripoli's historic market have opened their shop doors. But they are keeping their wares locked up and the display cases empty, leery of weapons that flooded the streets since the uprising began.
With expectations that Gadhafi-era nepotism is over, some Libyan business leaders are calling for review of contracts signed under the old regime.
But that could backfire, warned Said Hirsh, the London-based Mideast economist with Capital Economics.
"Whatever happened during Gadhafi's time, corruption and bribery, the foreign investors should not be penalised," he said. "Otherwise, that will probably send the wrong signal."