Libya, unlike the two other states in the region on path to realizing ambitions of being democratic states, has had its house of state gutted. Whereas the other two, Egypt and Tunisia have much of the furniture of previous regimes in place, and will, and are, sorting through what they wish to keep, what they want to refurbish and what they wish to discard, Libya comes to the threshold of democracy untrammeled on two counts of previous clutter.
The personal nature of much of the previous ownership in Libya means that, with the transfer of the assets to the new Libyan government at one stroke, so to speak, the cleaning is done. Libyans can dispense the Gaddafi and associates wealth and ownership as they see fit.
The other side of this is more onerous. The closed nature of Libyan society for the past 40 years means that, from a commercial point of view, Libya is undeveloped. Property and tourism are two areas in which Libyan could enjoy growth. Let’s put those aside for a future discussion.
With so much wealth concentrated in a very few hands, a greater concentration than for any other country in the region, Libya enjoys a unique position where the financial slate can be completely rewritten with little disruption to existing interests.
In fact, the majority of the hands holding that wealth will likely, one way or another, not able to wrest any of the wealth back.
As the situation improves inside Libya, more and more information will feed to those countries where the regime’s wealth is held, and more and more of it will join the other already frozen assets. We really have only seen the tip of the iceberg at this point.
In the reasonably near future, Libya should be in possession of a substantial amount of untrammeled wealth, and there will be a rush of advisers and bankers from all over the world with freely given advise as to what to do with the money and how to invest it. Libya would be advised rather to look to those states which have successfully applied the principles of a sovereign wealth fund and, in the process, Libyans, all six million of you, will make the pleasant discovery that Libya is a reasonably rich country.
Libya enters the 21st century, at least in some respects, in an enviable position; a good bank balance, an almost absence of debts, no immediate calls to spend vast sums of money, and best of all, with a financially blank slate.
In considering what kind of state Libya wishes to be in the future, the Interim National Council of Libya has free reign to decide. There is no existing constitution which would require amendment. There are no power brokers, such as the army, to appease, and existing financial interests to serve, as there are in Egypt. Nobody is pointing a gun at Libya’s head as to pressure of time. The people of Libya are preoccupied and will be for some time. Libya has the time, and is in the position to, design well chosen financial systems which can be based on the best practices upheld elsewhere.
It is in this spirit that one can approach Interim National Council of Libya’s A Vision of Democratic Libya, dated 29 March, 2011, and consider that the vision is an expression of the kind of society and state that Libyans, as expressed by the Interim National Council ,would like to build. And, given that the vision does indeed represent the aspirations of Libyans, there is no reason why it should not successfully come about.
Thus, Clause 1 of the Vision statement, which states in part, “The constitution will also clarify the rights and obligations of citizens in a transparent manner…,” looks to a state built on this principle.
Clause 6 commits to the principle of peace, truth, justice and equality. Clause 7a talks of “creating effective economic institutions..” and Clause 7b stresses “genuine economic partnerships between .. a strong and productive public sector, a free private sector and a supportive and effective civil society.”
There is no impediment to Libya designing and building, not just a civil society, and a fully representative democratic government, but also, because it has to, a set of sound financial systems. While Switzerland is renowned as a banking haven to a few, to the rest of the world, the country is a model for financial rectitude. Why shouldn’t Switzerland serve as a model to Libya?
Given the principles upon Libya wishes to build its future, as outlined in the Vision document, there are other models upon which Libya could base its systems, Hong Kong and Singapore being two examples. Whichever model Libya does choose, there seems no reason for it not being one that offers sound financial systems. Why, given the position Libya is in, would you want to choose anything other than a good model?
In putting into place a state which serves as a financial model for the region, a number of benefits immediately come to mind. Libya is sufficiently far away from the Gulf States to not be in competition with them, and the states close to Libya, some of whom have offered little in the way of financial rectitude in the past, will benefit from a financially stable state, that remains conservative in its fiscal policies. And, with no debt, there is no reason that Libya should not stay in that position for at least the foreseeable future.
Malcolm D B Munro, 29 March, 2011