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March 25, 2011

The Spirit Level of Libya

By Spear's

Sophie McBain, Spear’s new staff writer, lived in Libya for two and a half years. Recently returned, she writes about the stasis, depredation and surprise renaissance of the Libyan people
WHEN A LIBYAN friend of mine took part in the anti-Mubarak protests in Tahrir Square last month, his fellow Libyan protestors joked with one another that ‘I don’t know what these Egyptians are complaining about, they’ve got it so good!’ For me, the joke becomes more tragic with every retelling.

Compared to Libyan leader Muammar al Gaddafi, Mubarak was almost cuddly, but when Egypt’s longstanding dictator fell and Gaddafi found himself wedged in a revolutionary sandwich, few inside the country saw Libya’s uprising coming. The main reason for this myopia was economic: unlike Egypt or Tunisia — or even Yemen, Bahrain, Syria and Algeria for that matter —it seemed that Libya could easily afford to purchase political acquiescence: it has a population of only 6 million and is sitting on the largest proven oil reserves in Africa.

According to conventional wisdom, this is after all how oil states work. In countries like the UK, where the government’s main source of revenue is tax, people expect a say in how their money is spent. Oil-rich countries are under less pressure to democratise. Citizens pay little or no tax and so their relationship to the state is different: the government is not a service they pay for, but rather a service that pays them, by redistributing oil wealth to the population. On this model, citizens are less likely to call for more responsive government than to demand a bigger share of the oil wealth, and when the going gets tough, the government coughs up. Serious, revolutionary problems arise when the government doesn’t have enough cash to go round, or when one group accuses the other of hogging all the oil wealth.

Libya certainly didn’t suffer from the first problem. When I spoke to an IMF consultant seconded to the Libyan Central Bank in December 2010, he admitted that the government doesn’t know what to do with all of its money — and that’s even after Gaddafi’s cronies have spirited away as much as they can. The government was floating the idea of doubling public sector salaries this year, a move that would have affected around 70 per cent of the country’s workforce. The Central Bank and the Libyan Investment Authority, the country’s sovereign wealth fund, own foreign assets worth over $150 billion, according to the IMF.

Whether Libya was afflicted with the second problem is a little harder to determine. The gap between rich and poor in Libya is smaller than in neighbouring countries. An extensive social welfare state and subsidies on basic goods reduced the number of citizens living in extreme poverty, and decades of socialist experimentation and diplomatic isolation in the 1970s-1990s had a levelling effect on the population.
GADDAFI’S 1969 REVOLUTION systematically chipped away at the wealth of the old elites, by dismantling the private sector, emptying private saving accounts and introducing schemes such as bayt li sakinihi which meant those who owned multiple homes which they rented privately had their property requisitioned by the government. In 1980 the government announced a change in Libyan currency and gave Libyans one week to trade in their old money for a limited number of new notes. Within seven days, the lifesavings of many Libyans became worthless. Undoubtedly there was ample opportunity for the creation of new elites as government bigwigs and members of Gaddafi’s tribe siphoned off oil funds, but by the 1980s the abolition of retail and private trade and the imposition of international sanctions meant there wasn’t much to spend money on anyway.

Inequality increased when international sanctions were lifted in 2004 and the government was able to push forward its plan to revive the private sector it had devastated a few decades earlier. Hitherto unobtainable consumer goods flooded the market, and for the first time a gap formed between those who could afford Western designer clothes, flashy cars and hip electronics and those who could not. Ordinary Libyans, in low-paid public sector jobs, struggled more than they ever had. Their wages had barely increased since the 1980s, and before the global recession inflation reached double digits.

But the majority were not desperate or starving: the state provides free (albeit shoddy) healthcare and education and subsidies on basic goods kept living costs down. The poor in Libya are not as poor as those in Egypt or Tunisia.

Furthermore, for some Libyans the changes taking place in their country gave them new opportunities and aspirations, although society was far from meritocratic. The government privatisation programme was slow and halting, and didn’t allow for the emergence of a new, wealthy entrepreneurial class: most people still relied on the largesse of the state for their money. Gaddafi supporters in government expected lucrative contracts in exchange for their loyalty, and bodies such as the Committee for Oversight and Audit made sure that patronage was duly granted.

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The major exception to this rule is businessman Husni Bey, whose HB Group controlled the franchises for many of the Western brands imported into Libya in recent years. Bey was skilled at navigating the shifting alliances within the regime, but when relations soured with top government officials he had to pay a high price. Bey has been jailed at least four times, and been subject to numerous travel bans, most recently in 2007 following a public bust-up with reactionary Prime Minster Baghdadi el Mahmoudi.

By late 2010 tensions were certainly showing within the regime as a result of Gaddafi’s patrimonial politics. Commentators depicted internal rifts in the ruling classes during this period in terms of ‘conservatives’ and ‘modernisers’, with the latter led by Gaddafi’s son Seif al Islam, but the disputes were not only ideological. While the government aimed to market Libya as an exciting new business destination, it simultaneously realised its own limitations. If Libya were to really ‘open up’, politically or economically, Gaddafi’s elites would have to relinquish their total control over the government coffers and public contracts.
THE FIRST STIRRINGS of Libya’s uprising suggest that it was in part motivated by economic discontent. In the wake of Tunisia’s ‘Jasmine Revolution’, squatters occupied government housing projects across the country. They claimed that they had been pushed to the bottom of the waiting list for affordable housing in favour of families with more wasta (political connections) and money. But it was also a political protest against the system of political patronage that allowed connected families to enjoy Libya’s economic revival and left others behind. A rejection of state patronage need not only focus on the material side of nepotism and corruption, but can also be a statement about individual worth, a belief that those excluded from a country’s economic life deserve to be included.

The takeovers of government apartment blocks were surprising for other reasons too. 41 years of Gaddafi’s capricious and ruthless rule, bolstered by state spies and violent security service crackdowns, meant that many Libyans had effectively turned their backs on public life and seemed despondent and fatalistic.

The experience of one Libyan friend of mine seemed quite typical. His excellent language skills had not secured him a high-salaried position in an oil company, but as a freelance tour guide he didn’t pay tax and received 500 dinars (£250) a month in dividends on shares given to him under a government wealth distribution programme for low-income families launched a few years ago. Sometimes he borrows from the bank, and after a few years his outstanding debts are waived, either by the government or because the bank is too inefficient to keep track of him.

Neither of his twenty-something sons work, or feel they have any hope of finding a job, but he was saving to build them each a house on his plot of land outside Tripoli. Things weren’t great, but he didn’t need for much, he said. 41 years after Gaddafi’s revolution, it seemed that Libya had given up the fight.

It is to my great discredit that I believed that Libyans had effectively been bought off, but I was not the only who thought this. Many Libyans had reason to feel peeved for economic reasons, but they were primarily politically oriented. I doubt that Libya would have resisted Gaddafi had events in Tunisia not brought about an Arab spring and reminded ordinary North African and Middle Eastern citizens that change was possible, and that they deserved it.
A FRIEND TOLD me recently that when his Libyan office had held elections to vote a local representative his Libyan staff appeared delighted, and several of them approached him to point out that they had never been asked to vote before. This was important to them, because whether the Libyan government is taking money or giving it away, it treats citizens with the same disdain and disregard for what they want.

Older men and women are tired of having the course of their adult lives directed by barking government officials, and the hundreds of thousands of chronically unemployed young people are no longer happy with gimmicky wealth distribution schemes and cheap fuel, they want the freedom to participate in the country’s life on their own terms.

A Libyan friend recently posted the Benjamin Franklin quote on Facebook that ‘they who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.’ Perhaps it was in part a reproach to her countrymen for staying quiet for so long, certainly it is a sign that despite Gaddafi’s years of America-bashing, liberal democratic ideas can still inspire. At the moment, Libya has neither liberty nor safety, but now Libyans know they deserve both.

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