Tag: Libya
The rich get richer
Yesterday’s conference on investment prospects in the wake of the Arab Spring over at the World Bank’s Multilateral Investment Guarantee Agency (MIGA) was a lively couple of hours–these economic types are briefer and more to the point than their political counterparts–but the bottom line was gloomy: the GCC states and Iraq are likely to attract the lion’s share of investment while Egypt and Tunisia (Syria, Yemen and Libya weren’t even mentioned) go begging in the short term. There was disagreement on longer-term prospects, with Ian Bremmer registering a strong minority view that the geopolitics are unfavorable, both because of Iran and the Israel/Palestine conflict.
An upbeat and indefatigible Afshin Molavi started off underlining that we live in a world of surprisingly interconnected risk, that there is a lot of diversity in what we should not really label “Arab Spring,” and that the Middle East and North Africa region (MENA) has a young population, many unable to get married because of the lack of jobs and looking for “dignity.” Growth has now slowed, hurting their prospects.
Citibank’s Hamid Biglari said investors have adopted a wait and see attitude toward the more revolutionary part of the region and are shifting their attention towards the GCC and Iraq, whose prospects are good if Baghdad can get security under control. Multinationals are not pulling out. Egypt is a larger and better known market than Tunisia, which however is more homogeneous, more secular, more middle class and better educated. Tunisia is more likely to succeed economically, but Egypt is the bigger prize. The immediate concerns of investors are about legitimacy and whether the new governments will treat the old elite decently, but it will be a decade before “equilibrium” returns.
Ian Bremmer of Eurasia Group admitted enthusiasm for the Arab Spring (“it feels good”) but noted that Ukraine and Georgia felt good at first too. Tunisia seems to be moving in the right direction, Egypt less so but will likely muddle through. Iraq is the most exciting investment opportunity in the region. U.S. influence is declining, and Saudi influence is increasing. Saudi policy objectives and conditionality will differ from those of the U.S. Overall though the immediate political risks have been overvalued. The problem is in the longer term, both because of Iran and the Israel/Palestine conflict. Europe and the U.S. will increasingly be occupied with other problems.
Cairo-based Walid Bakr of Riyada Enterprise Development, Abraaj Capital, was more optimistic in the medium and long term. Egypt’s big market and tourist attractions are not going away. Half the population is under 24, well educated and internet savvy, with lots of entrepreneurial spirit. The revolution has unleashed strong feelings of national pride and dignity. Youth is the engine of growth and can contribute to the all-important creation of small and medium enterprises so vital to job creation and wealth distribution.
Dubai-based Yasar Jarrar of PwC Middle East underlined that we are still at the beginning of the changes in the Middle East, which suffered a long period of stagnation (not real stability). The GCC countries are moving well to kickstart job creation for youth, major infrastructure investments and dialogue between their governments and the citizens. But it is going to be a long spring in a region that really does matter. Philip Haddad of Mubadala Infrastructure Partners agreed that we need to take the long view, but in the meanwhile as much as $38 billion is being invested in infrastructure, which is not bad.
The Omani ambassador, Hunaina Sultan Ahmed al-Mughairy, led off with a very upbeat assessment of the Sultanate’s prospects. The message was “yes, we can” reform ourselves, if we put our minds to it. Jean Francois Seznec of Georgetown said he was very pessimistic about Bahrain, where the basic issue is governance. In recent weeks, only 5% of the hotel rooms in Bahrain have been occupied.
There was a good deal of agreement that the issue everywhere is at least in part governance. Citizens did not feel they were benefiting under the old regimes, because of a lack of accountability. Political and economic reform need to go together, but it is not clear that new parliamentary democracies will credit competence and choose economic reform, which is discredited because it is associated with the old regimes.
Wrapping up, Ravi Vish of MIGA confirmed the importance of governance, addressing social inequality and the income gap, and job creation, mainly through a stronger and more entrepreneurial private sector. He also reviewed MIGA’s portfolio of political insurance products, for which demand is naturally rising in the region.
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No harm done, maybe some good
The State Department has let it be known that Assistant Secretary Jeffrey Feltman met with Libyan government (as in Gaddafi) representatives in Tunisia over the weekend to underline that Gaddafi must go. Gaddafi and Co. are suggesting that this is the beginning of a negotiation.
I certainly hope that isn’t really so. Sure there are things that might be negotiated–like where in the desert Gaddafi can pitch his tent, or which mode of transport he’ll use to go to Sudan, where President Bashir, also indicted by the International Criminal Court, can welcome him. But from the way the information was leaked it is clear the State Department understands perfectly well that Gaddafi’s leaving power is a sine qua non.
The only thing that makes me scratch my head about this is that Ambassador Gene Cretz was present. If we have recognized the National Transitional Council as the legitimate authority in Libya, as we did on Friday, he should be getting himself to Benghazi as quickly as possible and shunning contact with the Gaddafi regime, until it is ready to get out of Tripoli. It might have been better given the diplomatic signal intended if Cretz had not been there.
Others have raised the question of why Derek Chollet, the National Security Council’s strategic planning director, was there rather than dealing with more important issues than Libya, like relations with the BRICs (Brazil, Russia, India and China). This is just the latest example of how the urgent overtakes the merely important. But if Chollet can help straighten out policy towards Libya, I’m all for it. The BRICs will be around for a long time after Gaddafi is gone.
We’ve been less than decisive from the first on Libya and it hasn’t helped: clarity and forcefulness from the United States still count for a lot around the the world, including in Libya. So if the message was clear and forceful, I imagine no harm was done, and maybe a bit of good.
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Does recognition make a difference?
The United States today joined 32 other countries at what is being called a “contact group” meeting in Istanbul in recognizing the National Transitional Council (NTC) as the “legitimate governing authority” in Libya. What difference will that make?
Obviously it is a big psychological boost to the NTC, but the real difference is money. If the UN and U.S. lawyers can figure out how to unfreeze Libyan assets (more than $30 billion in the U.S. alone) and move even a fraction of them to Benghazi, the NTC would have all the financial resources required not only to defeat Gaddafi but also to govern the country far more effectively than he ever did. Of course what they actually do with the money is another question, but they aren’t going to be able to do a whole lot without some of it.
The devil, as always, is in the details, not only the lawyerly ones. Secretary of State Clinton’s statement was importantly nuanced:
…I am announcing today that, until an interim authority is in place, the United States will recognize the NTC as the legitimate governing authority for Libya, and we will deal with it on that basis.
Behind the quiet reference to an interim authority lies concern that the NTC is not fully representative. How could it be? Tripoli is still under Gaddafi’s control, so the Tripoli representatives on the current NTC are people who have left the capital with their families and gone to Benghazi. As the rebels succeed in “liberating” territory, Washington expects them to expand the NTC and eventually to reformulate it entirely as an “interim authority,” including representatives from throughout Libya. This is consistent with the NTC’s own declared intention not to become the government of Libya (and with its reported pledge that its members will not seek future offices, but no one seems to take that entirely seriously).
Precisely how this and other important steps–like writing a constitution–will be done, is unclear, even if two well-informed Libyan Americans tried to explicate it yesterday. What is clear to me is that Libyans are not going to accept a hastily drafted constitution prepared by 15 experts behind closed doors without extensive public discussion and debate. Have a look at this NDI report from early May: the people who have agitated and organized themselves so quickly and well are unlikely to swallow someone else’s handiwork without getting their fingerprints on it.
Yes, recognition as a legitimate governing authority by the people who are sitting on a lot of your money makes a difference. But Libya still has a long way to go before it has a government whose legitimacy is not based on the use of force, but rather one whose use of force is legitimate. It is the Libyan people’s recognition that will make the really big difference, when the time comes.
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A Libya busman’s holiday
I’ve got a paper coming out on Libya over at the Council on Foreign Relations in the next couple of days, but I mosied over to the Carnegie Endowment this afternoon for a discussion on Libya’s post-Gaddafi transition featuring Esam Omiesh of the Libyan Emergency Task Force and Fadel Lamen of the American-Libyan Council, Carnegie’s Marina Ottaway in the chair.
Marina started off with a cautionary tone: the transition has to be fast enough to provide the country with some semblance of order and governance, but not so fast that legitimacy is brought into in doubt. The country was already devastated by the Gaddafi regime even before the fighting, which has now split it east and west. The security forces are also divided. Political agreements take time, elections are not urgent, but some sort of interim administration is necessary.
Esam outlined the process as currently foreseen by the Transitional National Council (TNC). The goal is a united, constitutionally based, democratic Libya. In the immediate future, the NTC hopes for a ceasefire and withdrawal of Gaddafi’s forces, creation of humanitarian “safe zones,” release of prisoners and removal from power of Gaddafi and his family.
The NTC thinks of itself as a temporary umbrella group, a hybrid executive and legislative body. It has already expanded from the original 31 members to 60 and will need to expand further as more areas are liberated. Tripoli will be a particular challenge. Tribal cleavages will not be an issue in Libya, as so many foreigners seem to think. Nor will ethnic differences emerge as important, as Berbers are thoroughly integrated and have been fighting with the rebels in the Nafusa moutains.
The NTC foresees a committee of 15 to write a new constitution within 45 days by a committee of 15, then approved in a referendum. Legislative elections would follow in 4 months, with presidential elections 2 months later. Fadel and Marina preferred a provisional constitution, subject to subsequent revision in an unspecified way. The new constitution, it has already been decided, would cite Islam as “a” (not “the”) source of law.
All this would be done in line with international mandates and seeking international support through a reconstruction conference. International nongovernmental organizations will be welcomed, provided they are well informed and seek the trust of the Libyans, and especially if they have Libyan American staff. The NTC may negotiate with Gaddafi, but it will not agree to allow him or any of his family to remain in power.
Fadel, noting that Libya under Gaddafi was a stateless state, or worse a stateless autocracy, surveyed the key players. The TNC, he said, is accepted as legitimate everywhere, as is its chair Judge Abdul Jalil. There is controversy about some of its other members, and it does not always make good decisions, but it has served well so far.
Local councils have grown up in liberated areas as well as in Gaddafi-held territory, including Tripoli (where there are thought to be four). They are the ones governing at the local level. The February 17 coalition of lawyers and judges is influential. A relatively moderate Muslim brotherhood seems to dominate the Islamists part of the political spectrum, at least for the moment. Technocrats from the Gaddafi regime, military officers, militia leaders, “syndicates” (regime-sponsored guilds of lawyers, doctors, etc.), secular democrats will all have roles to play.
An international honest broker will be needed, but not Qatar or the Arab League. The UN and EU will play important roles, but Fadel wants the U.S. not to lead only from behind. There will be a real need in order to ensure security for Muslim and Arab peacekeeping boots on the ground.
My comment: A lot of wishful thinking here, especially about the speed and ease of the transition. But what’s a revolution without a bit of idealism and hope? I’m not one to fault people for wanting a good outcome, moving quickly, and being inclusive.
The local councils are the real news here: few conflict societies generate bodies of this sort with palpable legitimacy. For some reason, Libya does. It will be difficult but important to preserve them from the depredations of the foreign invasion of embassies and NGOs, who will want to hire away everyone in sight who speaks English or has a decent education.
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What if Gaddafi holds on?
The Atlantic Wire has usefully assembled all the occasions on which Muammar Gaddafi has indicated he will step down. Obviously that hasn’t happened, and it may not, malgré Juppé. The question is what do we do if he continues to hold on to power in Tripoli and the rebels are unable to make real headway in taking territory? What is plan B?
Failure is definitely an option, at least in the near term. While the rebel National Transitional Council (NTC) in Benghazi has not lost any ground in weeks, it hasn’t gained much either. It is managing more or less to administer the territory it does control, where street crime is down, local councils have been set up and humanitarian assistance is delivered. Electricity and water are still ample, but fuel and medicine is reportedly low in some areas.
The NTC is viewed as legitimate outside of Tripolitania (Tripoli and the western portion of the country), not least because it is not claiming to be a government-in-waiting but only a stopgap until a full interim administration with representation from the whole country can be formed after a ceasefire takes effect. Its roots are particularly strong in Cyrenaica (the eastern portion of the country, where Benghazi is located).
If Gaddafi manages to hold on to Tripoli and there is no ceasefire, my guess is the NTC will need to do more than it currently plans. This creates a great moral hazard: the more we help the NTC to govern the country separately from Gaddafi, the greater the likelihood Libya will split into two (or more) pieces, something that most in the international community would find highly objectionable.
What would be needed then is a concerted effort to broaden participation in the NTC and keep its governing structure as open as possible to eventual reformulation. This might mean incorporating more prominent representatives from Tripoli, creating a Tripoli administration-in-exile and maintaining some degree of consistency between how Cyrenaica and Tripolitania are governed. It would mean maintaining insofar as possible those infrastructure networks that still function across the front lines between Gaddafi’s forces and the rebels.
It will also likely mean finding a way to get at least some of Libya’s oil and gas flowing again. This will not be easy: oil company lawyers are rightfully cautious about property rights, which would remain “sketchy,” as my kids say, if Gaddafi is still around. I gather it is legal to buy from Arab Gulf Oil, which is under rebel control. A mechanism for depositing revenues into a UN or other fund, with transparent and supervised drawdown by the NTC, might help get the oil and gas moving again.
The question of currency is likely to arise sooner or later. Libyans seem still to be using Gaddafi-era dinars, but what if they run short in areas outside Gaddafi’s control, or if people lose confidence and want a substitute? Issuance of a new currency would be a big step in the direction of dividing Libya. It would likely be better to allow euro-ization or dollarization to proceed according to market forces, something that has worked reasonably well in a number of conflict situations.
The UK-led International Stabilisation and Response Team, which visited Libya May 20-June 30), has prepared an excellent draft report on what to do once a ceasefire is in place. Is it time to consider more deliberately what happens if there is no ceasefire?
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Diplomacy stirs
I won’t claim it is due to what I asked three days ago on peacefare.net (where are the diplomats?), but there are stirrings in the last day or so of American diplomacy. Ambassador Robert Ford made his way to Hama in a show of support show of support for the Syrian demonstrators there, along with French Ambassador Eric Chevallier. Anti-terrorism “czar” John Brennan met with Yemen’s President Saleh in Saudi Arabia and let it be known he had asked Saleh to sign the Gulf Cooperation Council agreement that would begin a transition with Saleh stepping aside. Less visible: U.S. Ambassador to Libya Gene Cretz has cancelled a scheduled Middle East Institute event this week, I understand in order to meet with Libyan National Transitional Council people in Doha about planning for the post-Gaddafi era.
All good, if a bit late and less decisive than I might like. Ford is in a particularly sensitive spot, as the Syrian-government sponsored “national dialogue” is supposed to have started today, with a good part of the street opposition staying away. The Americans still have not asked for President Assad to step aside, and it seems unlikely he would even if they did. That said, there is likely more to be gained from the American perspective from a successful transition to a more democratic society in Syria than just about any place else, since it would presumably offer less cooperation to Iran and Hizbollah. Ford needs somehow to signal clear support for transition without getting out ahead of the demonstrators or President Obama, who inexplicably hangs on to the hope that Bashar al Assad will undertake serious reform.
Brennan’s visit with Saleh to read him the riot act and get him not to return to Sanaa is likewise a good move, but one that comes late in the game. Saleh shows no signs of wanting to sign an agreement he has repeatedly promised to sign. Brennan is the right guy to deliver the message because he controls the military assistance to counter-terrorism in Yemen that Saleh values. But I trust he is also lining up the Saudis not only to say the right things but to do them: they should not allow Saleh to leave for Yemen and they should make it clear his allowance will be zeroed out if he manages somehow to get back to Sanaa.
As for Libya, it is high time Europeans, Americans and Arabs put their heads together to plan the post-Gaddafi era. As I’ve previously note, there is a lot to do, and the international community is thoroughly occupied elsewhere. But somehow we’ve got to put together a serious post-conflict reconstruction effort in Libya, if only to prevent a failed transition: restoration of a Gaddafi or Gaddafi-like dictatorship, split up of the country, or breakdown into chaos. Any of these outcomes would discredit the Security Council-authorized, NATO-led intervention and put American interests at risk, if only by providing our terrorist enemies with a new platform. We need a Libyan-led post-Gaddafi effort, one that can command broad legitimacy not only in Benghazi but also in Tripoli. Easier said than done, but I’m glad to the effort beginning to move ahead.
PS: For those with Arabic, and even for those without (watch Brennan’s unhappy face) here is a video report on Brennan’s meeting with Saleh:
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