World Report

The Libyan authorities have started talks to join the World Trade Organisation and remove trade restrictions

Abdulgader O. Elkhair
Secretary for Economy & Trade
‘British investments are small in number and we hope to see an increase’

ibya is keen to develop and diversify its economy in order to reduce its dependence on non-renewable oil resources and export a wider range of products. The government aims to promote businesses such as food processing, textiles, handicrafts and cement, and to encourage development of the private sector.

“Diversifying the economy has been an objective since the early 1970s, however the ways and means we adopted at that time were perhaps not the most efficient,” says Abdulgader O. Elkhair (INTERVIEW), Secretary for Economy and Trade.
“Our potential lies in working as a free-zone country, providing trade routes between Europe and Africa. Libya is a promising economy and there are many trade missions coming here. Our relations with the EU are improving. We have very good contacts with most of Europe.”

Libya’s leading export markets are member states of the European Union such as Italy, Germany, France and Spain, who buy almost all of the country’s oil production. While oil is far and away the country’s dominant source of foreign exchange, Libya also exports some manufactured foods, food products and raw materials.

Imports of machinery, transport equipment, food and manufactured goods also come mainly from EU member states, including the United Kingdom. “Our main trading partner is Europe,” says Dr Elkhair. “Eighty-five percent of our exports are to the European Union, which accounts for 75 percent of our trade overall.”

Colonel Gaddafi’s visit to the EU Commission headquarters in April has been seen as the first step towards Libya becoming a full partner in the Barcelona Process, the trade, aid and culture pact between the EU and southern Mediterranean states.

Libya has also declared its desire to join the World Trade Organisation and remove trade restrictions. Negotiations have already started, following the WTO’s acceptance of Libya as a membership candidate in July.

Historic moment: a handshake between Tony Blair and the Libyan leader Muammar Gaddafi symbolises the start of a new era in relations between their two countries

Britain keen to normalise relations

With United Nations sanctions lifted and Libya’s WMD programmes abandoned, the British government and Libyan authorities have been working to improve relations, and to encourage trade and investment links.

Britain played a significant part in securing the crucial agreement over Lockerbie that led to the final lifting of UN sanctions in September last year. British diplomatic relations with Libya were resumed in 1999 when the sanctions were suspended and have progressed markedly since Libya’s surprise announcement in December that it was giving up its efforts to acquire nuclear, biological or chemical weapons.

Libya’s reengagement with the international community was acknowledged by Tony Blair’s landmark visit to Tripoli in March – the first by a British Prime Minister since Winston Churchill went there in 1943. The visit symbolises the reestablishment of normal diplomatic ties and has given the green light to British companies wanting to invest in the country.

A £563.5 million deal signed at the same time between Royal Dutch/Shell and Libya’s National Oil Corporation (see page 6) is being seen as the cornerstone in a renewed trade relationship between Britain and Libya.
In April, Trade Minister Mike O’Brien headed a visit by senior executives from British business. Other British companies have been investigating opportunities, including BAE Systems, which has been holding negotiations on possible aircraft deals.

According to Abdulgader O. Elkhair, Libya’s Secretary for Economy and Trade, there are currently around 40 British companies operating in Libya. Dr Elkhair is eager to see more involvement by British firms. “The investments are still small in number and amount, and we hope to see an increase,” he says.

“Trade relations are improving but Britain is still trailing behind Italy, Germany, Spain and France. We used to have extensive trade relations with Britain. There were cultural ties and many of our students used to study in the UK. These are the kind of assets that need to be capitalised on.”

Like Britain, the United States – which imposed bilateral sanctions on Libya in 1986 – has been working to normalise trade and investment. It lifted economic sanctions and the barrier to US investment in April, and direct diplomatic relations resumed in June. American oil firms were quick to start negotiating deals and Libyan oil exports to the US have resumed.