Libya is rich but bankrupt

Fayruz Abdulhadi writes: Libya has been an especially difficult place to live over the past few weeks. With a string of high profile assassinations, a jailbreak, and a series of sometimes thwarted car bomb attacks, there is plenty for Libyans to be exasperated by. Yet amidst the lawlessness of recent weeks, nothing has frustrated the Libyan streets more than the daily power outages, sometimes running up to an excruciating 16 hours at a time.

The government has offered explanations, from overconsumption in the summer months to lack of maintenance, a legacy underinvestment in the network, and even sabotage by Qaddafi loyalists. This may be post-Revolution Libya, but given the country’s vast riches, a lack of electricity is a problem that seems especially hard to explain away.

The country boasts some of the world’s largest proven oil reserves, substantial capabilities for natural gas production, $168 billion in foreign assets and an enviable 2000 km-plus stretch of coast on the Mediterranean. For all these assets, Libya (pop. 6.4 million) also has a relatively small number of mouths to feed. In other parts of the world, the combination of small population and ample natural resources has generally proven a surefire formula for success. Why does Libya fail to follow suit?

During Qaddafi’s reign, at the very least it was clear why infrastructure and public services were lacking: the Colonel and his cronies were visibly enriching themselves on the back of oil exports, leaving little of the country’s bounty for the average Mohammed to enjoy. Now that the Qaddafi family and their business associates are gone, however, the lack of public investment is more puzzling. In a nascent democracy, it is also far less tolerable.

Truth be told, conditions for ordinary Libyans have not improved in the two years since the Revolution. The hospitals are “unfit for human beings,” in the Health Minister’s own words. The schools are decrepit. Sewage spills pungently into the once-pristine Mediterranean shoreline. Even an internet connection is a serendipitous occurrence. For Libyans and observers alike, it is not immediately obvious why Libya should be in such dire straits.

Incompetence and widespread corruption top the list of popular explanations for the country’s current condition. Both are, to some extent, true. Emerging from dictatorship, public servants are equal parts unskilled and corruptible. But the reality is that even a competent and fully transparent government would find governing today’s Libya an impossible task. The reason is simple: despite its apparent wealth, Libya is broke. [Continue reading…]

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