Deja-Vu in Tripoli

There was a clear reminder this week that Libya remains a country full of pitfalls for foreigners (western or non). In an all too common scene, witnessed so many times during the drawn out trial and appeal of the Bulgarian nurses throughout most of the past decade, a Libyan court has postponed the trial of two Swiss businessmen, who have been detained in Libya since July 2008.

The two men have been charged with unspecified immigration and tax evasion crimes; they have found refuge in the Swiss Embassy. Relations between Libya and Switzerland have deteriorated sharply since that time in 2008, when the Swiss police detained Hannibal al-Qadhafi, the Libyan leader’s son, for physically attacking one of his domestic servants during a trip to Switzerland. Swiss citizens Max Goeldi and Rachid Hamdani were arrested in Tripoli, two days after Hannibal and his wife were released from two days of custody in Geneva police station after being charged with beating their servants.

Mu’ammar al-Qadhafi expects to be treated like an important political leader, and Libya as an important power, wherever he travels and any measures taken against highly visible Libyan citizens or interests are considered an affront on the country’s dignity and honor. Libya’s abundant hydrocarbon resources, of course, are the buttress that allows the regime to act despondently. The optimism that had been brewing since late 2003, when Libya adopted a far more pragmatic foreign policy aimed at attracting foreign investment to help further develop its oil industry and diversify the economy has been blemished by the ‘Swiss’ incident. Indeed, the incident adds some credit or foresight to the way the Scottish government handled the compassionate release of, last August. Despite the outcry in the UK (and especially the United States), and the many explanations proffered, including those in Newnations, it is clear that had al-Megrahi died in a Scottish prison, the Libyan government would have reacted against British interests and citizens in the country. In a sense, Libya’s newly found pride has adopted a vindictive nature that is getting in the way of pragmatism.

The Swiss debacle also indicates there are some cracks appearing within the regime of col. Mu’ammar al-Qadhafi. While the Libyan leader’s son Hannibal has earned a reputation for being an international man of nuisance (he allegedly destroyed a London hotel room on new Year’s eve), his other son Saif ul-Islam, who would seem to be the likeliest successor to Libya’s leadership, has been cultivating a far more positive international image (more on that in the next issue of The North Africa Journal). In early December, Saif-ul Islam sponsored an unprecedented conference on Libya’s human rights record, which featured the NGO Human Rights Watch (HRW). During the tormented appeals process for the Bulgarian nurses, Saif ul-Islam had publicly stated that the blame for the infection of 400 children with AIDS at a Benghazi hospital lay with the inadequacy of Libyan infrastructure and poor hospital management. Saif ul Islam does not have an official government role and he faced considerable opposition from the anti-reform minded Revolutionary Committees. Saif ul Islam has clearly emerged as one of the main promoters of openness, along with his ‘protégé’ Shokry Ghanem (the director of the National Oil Company and former prime minister). Some security service staff attended the press conference and arranged for some members in the audience to heckle the speakers.The human rights conference brought into the open the tensions that exist between Saif, who has a very western outlook favoring social, political and economic liberalization and the Revolutionary Committees and related apparatchiks, having closer ties to Saif’s other brothers.

The ‘Swiss episode’ serves as a reminder that Libya remains a risky place to invest. It is subject to unpredictable dangers for foreign (and of course local) citizens as well as arbitrary government decisions which counter international business norms, such as banning Canadian oil company Verenex from selling its Libyan oil prospecting assets to a Chinese company, only to have the Libyan government buy it at a much lower price.

Libya is also taking risks. By failing to enforce predictable norms and to follow through on the many plans that it had announced in the past five years to attract foreign investment, foreign oil companies have become less interested in Libyan oil and gas, fearing norms that are ever more restrictive and lower margins for profit. The Verenex, Swiss businessmen and human rights conference ‘cases’ indicate untrustworthy decision-making and contrasts and power battles between government departments – such as the powerful security institutions – will likely impact foreign companies' investment and oil-development plans in the future. Already, Libya has had to revise its growth predictions to achieve a 3 million BPD oil production rate by 2011 until 2016/2017. Libya’s capacity remains at 1.8 million BPD.