/ 21 March 2005

Libya back in favour

Libya is breaking out of its political and diplomatic isolation from the Western world and attracting kudos for its macroeconomic policies.

Last week, the oil-rich North African state got what amounts to the good housekeeping seal of approval from the International Monetary Fund (IMF) after an investigation earlier this year.

The lifting of a dozen years of United Nations sanctions in 2003 and soaring oil prices have got Libya’s economy pumping.

Gross domestic product (GDP) growth rocketed to 9% in 2003 and stayed at a very healthy 4,5% last year. Oil revenue made up more than half of the GDP.

The IMF welcomed Libya’s good macroeconomic performance in 2003/04, reflecting the favourable developments in the world oil market.

The fiscal and external current account balances registered large surpluses, and international reserves rose sharply.

IMF directors commended the authorities, increased efforts to reform the economy since international sanctions were lifted — including measures to encourage foreign investment, enhance the role of the private sector and liberalise the exchange system and external trade.

Last week, Deputy President Jacob Zuma, accompanied by a business delegation, joined the caravan to Tripoli. South African business has largely missed the Libyan bonanza despite former president Nelson Mandela’s role in breaking Moammar Gadaffi’s political isolation. The country has been ignored in the doling out of oil exploration rights and contracts for ground-up rebuilding.

The government maintains it has done the diplomatic spadework to prepare bilateral agreements that protect and promote South African investment and business. The fault, say South African officials, lies with the private sector being either too cautious or too complacent.

Libya’s return to Western acceptability has lost it favour with its former friends in the Third World.

It has also lost influence in the African Union (AU). The barely concealed chequebook diplomacy it once practised in African affairs — buying support by paying member-states’ dues to the AU and its predecessor, the Organisation of African Unity — has now disappeared in the face of greater transparency and accountability lauded by the IMF.

Despite denials by both Pretoria and Tripoli, rivalry over AU leadership remains a very real factor in bilateral relations.

Human rights organisations say the jury remains out on the way in which Brother Leader Gadaffi and his officials treat citizens.

In its most recent report, Amnesty International says that hundreds of political prisoners are held in Libyan jails — some of whom are routinely tortured.

Libya continues to attract negative attention for the death sentence passed last May on five Bulgarian nurses and a Palestinian doctor who were found guilty of infecting 400 Libyan children with Aids.

As a candidate state for European Union membership, Bulgaria has strong support from that continent for its campaign demanding that the medics be freed.