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The glittering prospect of a Libyan gold rush

By Philip Eliason - posted Thursday, 12 January 2006

Here is what Sayf al-Islam al-Gadhafi, head of the International Foundation for Charitable Societies and Libyan leader Muammar al-Gadhafi's son, told a reporter at the Hanover Trade Fair on April 27 about Libya's current economic situation:

When sanctions were imposed on Libya, US firms were absent and the Japanese and Canadians were hesitant. The Europeans were in complete control and monopoly of the Libyan market. The country was in a state of confrontation. It was under an embargo. All these things have now changed. The market is now open and competition is greater. The European monopoly has been broken ... circumstances are now appropriate to develop the infrastructure, to strongly restore investment in Libyan projects, and adopt wiser and more efficient policies. In the past, a group of technocrats and state employees arbitrarily handled things and acted as if public firms were their personal property. Accordingly, neither the Libyan state nor the Libyan people were in control. A group or class of technocrats and civil servants dominated the economy. They became the absolute master. This has now changed.

There is an air of a gold rush about trade development in Libya. Traders press for deals in Libya's capital Tripoli.


The November 2005 visit to North Africa by the Federal Parliament's Trade Sub-Committee follows its hearings into trade development with the region's five countries - Morocco, Algeria, Tunisia, Libya and Egypt. Australia has had notable ties with Egypt for some time, growing interest in Algeria's gas resources but little to do with Morocco or the more European Union-oriented Tunisia.

The standout country in the region is Libya which has large, bankable, proven oil and gas deposits in a yet only partially prospected territory. Libya is the new frontier for hydrocarbon-based economic development.

Eyes are focused on Libya's large proven reserves of mostly “sweet” crude oil (about 39 billion barrels) and gas (1.32 trillion cubic litres) and expectations that another 35 billion barrels of oil and large gas reserves will be proved by current and near-future exploration. Cash from energy sales will fund Libya's physical and social recovery from years of international sanctions. Libya is likely to spend $US30 billion on refitting or replacing its energy export infrastructure.

In Libya’s state-based economy, trade and politics are inseparably bound together. A review of events in Libya indicates that the sooner Australia stakes its claim to a share of this potential export bonanza by opening a full diplomatic mission in Tripoli, the better. At present, bilateral official representation is unbalanced. The People’s Bureau (embassy) in Canberra has seven Libya-based staff. As at the end of 2005, no Australian official was in Tripoli although an Austrade contractor will officially open a consulate-general early in 2006.

Our trade competitors are investing in the political-trade game. Senior US Departments of Commerce, State and Education visitors have reinforced America's preparedness to work again with Libya. Britain's Tony Blair, France's Jacques Chirac and Germany's Gerhardt Schroeder all visited Libya. The leading Asian economies of Japan, China, Korea and even Thailand are doing the same.

China, running a new initiative to improve relations with the Arab world, sent its Assistant Foreign Minister Lu Guozeng to Tripoli in early August to discuss bilateral co-operation. Korea has achieved major engineering and construction deals, Greece has won tourism development projects and as a sign that politics always plays a part, Italy, a leading contender for oil-prospecting leases, got nothing from a bidding round in early 2005 in a result seen to be linked to Rome's delay in concessionally financing a huge highway development.


Those seeking to export to Libya understand that going to Tripoli and showing the respect a visit conveys helps smooth relations and prepare for the inevitably complex sales process.

Geophysical parallels were behind the growth of Australian-Libyan relations during the 1970s. Libya’s national economic development plans instituted by its revolutionary government after 1969 made agricultural technology transfer, training in the earth sciences and crop and pasture improvement techniques natural areas for co-operation throughout the 1970s and 1980s.

There is continuing strong contact with Libya by the governments of Western Australia and South Australia through their agricultural and educational facilities, with counterparts in Libya. Western Australia renewed and formalised its operational ties with Libya through its memorandum of understanding established in 2002 and has made efforts to grow its educational ties.

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About the Author

Philip Eliason, Director of Philip Eliason and Associates, advises Libya on issues relating to bilateral political and commercial links. He prepared Austrade's case to Government to open an office in Tripoli and has worked on issues relating to Iraq's post-war reconstruction as well as assessments relating to Middle East countries readiness for Australian consulting services.

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