SPEAKERS:
*Dr Charles Gurdon Managing Director Menas Associates
*Claudio Cassuto Director General EU-Libya Chamber of Commerce
*Amelia Steward, founder Simoon Travel
*Ahmed Forti, political activist
Chairman: The topic today is Libya after the elections: a new dawn? Dawns are short lived sometimes but the day is going to be as exciting as the dawn breaking. I leave it to the eminent speakers to share their expertise with us.
Dr Charles Gurdon, Managing Director Menas: What I wanted to talk about today was the combination of both politics and economics. I think one of the central issues I would like to look at is some of the challenges which Libya faces today. It is very difficult when there has been a revolution and a dictatorship has been overthrown to be pessimistic.
At the same time we also need to be very wary about the sort of challenges which Libya is facing today. They are not only political but also economic and business orientated. I want to look at this from the perspective of foreign companies and what their attitude is towards Libya because we need to remember that despite what anybody says Libya is going to remain an oil economy for a long time. Oil will remain critical in terms of the government revenue and therefore the economy as a whole.
So what is needed for companies to be attracted back to Libya and for new companies to arrive? There are lots of people going on trade missions to Libya or planning to go on trade missions to Libya but the reality is whether or not the country is ready for them if debatable. The reality is that oil fuels the economy so if you don’t have the predominantly foreign oil companies there it is going to be very difficult for other companies to go and for there to be extensive business extensive business there.
Oil companies and other foreign companies need stability and security. One could argue that there was stability for 40 years – obviously the wrong type of stability. One had a country and a state that was dominated by a single person and that is obviously going to change. It is changing. In many ways democracy looks very messy. I would not expect Libya to become politically stable for some time. There are bound to be hiccups both in terms of the constitution and the elections which will take place next year. And there are a whole set of issues to be resolved as our chairman pointed out.
Six months ago I stood up at a conference in Rome and I was talking about the problem of Salafists and the destruction of Sufi shrines. A number of Libyan officials got up and said this is absolute nonsense, you are denigrating the country, this is not true, it is not happening. One sees what is happening at the moment.
I also talked about the issue of minority groups and the issue of those people who are perceived to have supported Gaddafi in the past, particularly the Tebu and other black Libyans. I was told that racism did not exist in Libya, it was not a problem and the reality is that it is and it will remain a problem in the post revolutionary era.
I think therefore there are going to be teething problems for Libya in the coming months and year. The prime minister is going to be chosen tomorrow and one will see a government being formed. But that will only be there for a year and the next elections are going to be critical. They will really decide Libya’s future and political path. There are a number of issues to resolve, primarily the constitution. Nobody is sure how Libya is going to function in the future whether one if going to have a figure head and a powerful prime minister or whether it is going to be a alternative system and what the relationship is going to be between the different regions.
The problem was that for many years the east was marginalised. Cyrennica was seen as first of all being supporters of the monarchy and then as hot bed of Islamists and it was marginalised. Benghazi was marginalised. Misrata was largely marginalised as well and in the same way the south. This balance is going to have to change and those areas which were supported and favoured by the Gaddafi regime are going to have to acknowledge that there needs to be some form of change.
As far as the economy is concerned the oil sector is critical. The issue here is that the oil industry is a competitive one and there are lots of reasons for going elsewhere other than Libya. It is very easy for Libyans to feel that things will undoubtedly get better after the revolution. The reality is that the oil companies are able to go anywhere. Companies were already deciding to leave Libya before the revolution and they are now making those decisions.
The critical point there is that the EPSA 2 rounds which were signed in 2005 were very favourable to NOC and there were companies which in their enthusiasm to get into Libya signed deals which were really unattractive. They signed deals where they would only get seven, eight or nine percent of production if they found a lot of oil. And they did not find a lot of oil. Therefore they were considering leaving. A number had already done so, people like BG, Woodside, BHP and a number of others had already left and a number of others were deciding to leave.
If you went to the offices of the oil companies in 2010 you would find a lot of them pretty much empty. They were going through their work programmes but then they were deciding whether or not to stay.
The oil industry moves like a herd and it is moving elsewhere. Whether you like it or not Israel is now a hot area as far as the oil industry is concerned. So is Cyprus. The Mediterranean is opening up. People are looking at Lebanon. But above all East Africa. People are moving into East Africa and are likely to continue to do so. We have done more work on sub Saharan Africa in the last six months to a year then we have in the last ten years. In many ways, not only Libya but also Algeria, Tunisia and Egypt could miss the boat unless the situation changes quite rapidly the companies will move elsewhere.
One will see companies like Total, ENI, Repsol etc with southern European companies remaining there because they are close to market. But those companies which are independent and are only exploring and not necessarily producing may decide to move.
So my overwhelming message to Libya and to the Libyan people is that if they want foreign oil companies and if they want the foreign oil service companies etc than Libya has to be both politically stable and stable in terms of security but also in terms of making Libya an attractive place for foreign companies to operate. Above all that means stability politically and also contractually.
Claudio Cassuto Director General EU-Libya Chamber of Commerce: I am not speaking from the point of view of a trained economist nor a manufacturer or exporter. I have spent a long time organising events and as such you tend to have the perception at what point a country needs to be promoted and how best it needs to be promoted. I do believe that we are at a point where Libya has reached that position in terms of the global world scale looking at countries which are emerging and have opportunities.
So from that standpoint and looking at Libya today just from the perspective of trade and investment is rather like navigating in unchartered waters with rather outdated navigational equipment.
Why do I say that? Because there is no immediately obvious comparison of a developing country, dependent on a single commodity, which has just emerged from a tyrannical dictatorship one large family and their chosen few dominated so much of the economy and controlled its purse strings.
So what are the nearest comparisons with Libya’s nearly 6.5 million inhabitants? Only the other oil producing countries economies of the former CIS: Azerbaijan with nine million population. It is below Libya in oil production. Kazakhstan with approaching 17m. It ranks 22 in oil production countries and Venezuela which is a totally different economy with nearly 30 million population and ranking 12th in the oil production map?
So what does all this tell us and what does it have to do with trade and investment? Firstly that oil – crude oil like that which Libya produces – generates a huge income and allows well managed revenue to be ploughed into a sovereign wealth fund. Of the cited four basic comparable oil based economies only Libya falls within the first 12 of the major sovereign wealth funds. So it is quite high up in the rankings.
It all depends on how those assets and valuations do differ and are distributed by the new government when it takes its position and who the main beneficiaries – which ministries and which sectors – will be. This is still a somewhat speculative scenario. Where will they lean to for their skilled labour needs. They are desperate for skilled labour and technology transfer. Sound joint ventures with experts are desperately needed. How many projects and memorandums of understanding will be honoured. This is still under discussion. And which countries will lobby the hardest to try and position themselves and seize market share.
Pre-revolution Europe took over 70 percent of Libya’s exports and supplied approximately 52 percent of its imports. But the UK did not feature even among the first ten of the leading import sources. They were way down the league.
The IMF reports on developing countries are normally quite harsh and the one released this April more or less follows this pattern but it also confirms that the bulk of the frozen assets have been released and the banking system is improving. Now we have two or more foreign banks with controlling managements, fully operational and a third and possibly more on the way.
The oil production has reached its pre uprising volumes. The oil price has remained fairly stagnant and output could be considered subject to demand and other factors political or a change in the agreements with the foreign operators.
The advantage of the dollar based single commodity economy is that there is no shortage of foreign exchange which is often not the case with some of the other developing countries which I mentioned. So who will be the gainers and losers. It is still to early to tell but the indications are that the Italians who were so tied to the Libyan economy are beginning to lose ground. The Turks who were strongly committed – they were the last to leave Libya and the first to come back are gaining ground. And somewhere in between the Koreans and the Indians are flexing their muscles to a greater degree whilst the Qataris seem to have a political agenda and want to engage more and more in the financial services sector and possibly real estate and infra structure.
The UK still has untapped potential in the high tech areas and in education and training, risk management, health care and seven other sectors but this will require constant effort and reliable partnerships which are not that easy to come by. There are many trade missions but do they come back with any concrete results? I fear not.
Multinationals operating across the MENA region have to engage with Libya as part of their blanket strategy. McDonalds are not yet present but they have stated that Libya is on their radar screen. Coca Cola after the February 2011 fiasco as reported by Wikileaks is now planning a fully fledged marketing effort there.
To illustrate the mine field of doing business in 2011 the Wikileaks report states that we have been living the movie the godfather. A businessman involved in a dispute was quoted in the cable as telling an official from the US diplomatic mission in Tripoli. The cable was made available to Reuters through a third party. It centres on a bottling plant in Tripoli that was shut down for three months. It had been seized by troops loyal to Mutassim Gaddafi a son of Muammar who at the time with feuding with one of his brothers, Mohammed.
Another State Department cable suggests a third son, Saadi, better known as the family’s professional soccer player may have also been involved in the squabble though no details of his role are given.
Eventually the American Diplomatic Mission in Tripoli, then known as the US liaison office sent a firm protest to the Libyan government. The document states that around the same time Mohammed Gaddafi, possibly under pressure from his sister Aisha, a family peace maker apparently agreed that shares owned by the Libyan Olympic Committee which she led, would be sold to a third party. Shortly afterwards the cable says that Mutassim’s men left the coke plant ending the family standoff but not before employees of the plant received threats of bodily harm and a Gaddafi cousin was stuffed in the trunk of a car.
So this is the sort of scenario which our friend will verify. You have to keep your eyes very wide open, your mouth fairly hurt, your ears fairly open and your friends very carefully chosen.
On a more positive note General Electric listed number six in the US by Forbes recently commented in a follow-up to a high level US trade delegation headed by the Assistant Secretary of State Joseph Fernandez: “As the momentum builds up Libya could be another Iraq, another Saudi Arabia.” This is a mind boggling statement.
“There are going to be huge infrastructure projects over the next three to four years. It will begin anywhere between US ($) 5bn and 6bn in revenue for our company.” This came from the president of GE.
So we have a perception of what the market could be for a global multinational. He has that vision. He probably has experience in similar countries and sees this potential So this is the other extreme. The obvious potential and the pitfalls.
The economy which contracted by some 60 percent in 2011 is now expected to grow my nearly 100 percent in the fiscal year 2012, some say 110 percent. It will slow down again up to and including 2014 when high levels of spending may put the country into a deficit for the first time in 2015.
This is all dependent on oil prices as light crude is calculated into Libya’s budget at $(US) 91 per barrel in the fiscal year 2012 and in excess of $100 in 2013. Brent crude the nearest equivalent trades today at around $115. So the prospects are looking very good in terms of flow from the oil reserves.
Subject to the composition of the new government and its unity and ability to adopt a more Western style of economic planning the signs are relatively positive for business. A private sector will start to emerge and the former culture dependency for ministries to rely on companies to make proposals and share their knowledge on what they think is needed is likely to change. Choice will be made more on merit and with greater transparency.
After the black list was drawn up and then revised it now appears that the previous involvement of companies with the old regime will not automatically be precluded from involvement with the new Libyan government.
So I would like to close with three examples of projects which exemplify the high-risk high reward nature of the Libyan market. The first project was well grounded, not too overly ambitious was speedily brought to fruition and more or less according to plan and budget. It was a German project for a conference centre. I don’t think the budget was huge but that was finished in 2010 without any major hindrance.
The second project that went belly up and impacted badly on one of the world’s most severe architects Zeinab Hadid whose firm was forced to retrench its aspirations in the region. It is a major palace of the people, mega bucks and of course it never took place and is highly unlikely to take place.
The third one was contractually signed and approved on September 7th. It is very interesting. It is very visionary. It is called the Median Tower and its is put together by the Corthinia Group, Malta based, traditionally very active in Libya. They built the Corthintia Hotel, they built Sahara City. Corthinitia has been almost full since it was built with very high occupancy rates. It is a cash cow. The Sahara City was also very successful and almost fully let as of 2010 and now they have a large commercial, shopping and residential complex and it was won through perseverance, through having had success with previous projects and good connections and plodding along no matter what. Not accepting that the project could fail. That has been approved. It could change the skyline of Tripoli and change the image of Tripoli.
So the choice is yours. On balance I think it is a country well worth keeping a close watch on and if you are active in the area you can’t but not be active in Libya as well.
Amelia Stewart, founder Simoon Travel: There is no doubt about Libya’s tourism potential – not only does it have about 1800 kms of unspoilt beautiful beaches but also the finest and best –preserved cities of the ancient world in the entire region, …And not to mention the vast Sahara in the south embracing oases and hiding galleries of prehistoric rock art as well as the ancient caravan trading towns of Ghadames and Ghat.
I first went to Libya in 2004, at the time it was a country coming in from the cold; Blair had recently visited and relations were thawing. I had been working for a specialist company in the Sinai and Western deserts of Egypt and was curious about Libya so I took the opportunity to visit, eager to explore Libya’s vast heritage of hidden treasures, and very quickly realised what a wonderful country it is – but it was really the people who struck me most – as hospitable, charming, and welcoming.
I quickly set up my company Simoon Travel on my return and up until the start of the Revolution in February last year, the company was doing well and we had become known as the specialists for travel to Libya. Over the years I have been lucky enough to travel many times to Libya accompanying the groups myself or having guest lecturers accompany them. I’ve taken school groups such as Eton College and Uppingham High School, press tours, tours over the music festivals of both Ghadames and Ghat, a solar eclipse expedition into the central Saharan region of Wau al Namus in 2006, and in 2008 organised a journey to follow in the footsteps of the long range desert group crossing nearly 1500kms of Saharan desert from the city of Jagbub in the east to the Tunisian border crossing of Ras Ajadir in the west. Perhaps most memorable was a trip in 2010 taking 46 gentlemen and their wives from the Mayfair Club Boodle’s in London. We journeyed deep into the south – into the Ubari Sandsea – a long line of Toyota land cruisers racing up and over towering dunes to eventually reach our camp deep in the desert. We were a team of about 70 in total and our berber and tuareg drivers and guides had built a huge fire to welcome us as the night chill set in. This was the month of February and the desert really gets extremely cold at night– I spent a sleepless night worrying about everyone in their small igloo tents and in the morning as the sun weakly crept over the dunes it was clear that the majority of my guests were really freezing and trying their best to warm up. I suggested a football match so we draw out a vast pitch in the desert and put a wonderful gentleman – in his late 80’s– in goal. Two teams: Tripoli and Benghazi. We soon warmed up.
There are over 13 World Heritage sites in Libya, all of them breathtaking and many little known outside of the country. The leading ones are:
Leptis Magna
Arguably the most outstanding archaeological settlement in Libya. The city lies about 90kms east of Tripoli and was abandoned to the desert after the Arab invasion in the 7th C and never built over.
Sabratha
An early Phoenician settlement dating from the 6th C BC in a stunning location on the sea. The theatre is undoubtedly the most striking and impressive monument and is one of the largest in Roman Africa.
The sites of the Pentapolis
These lie in the eastern region of Libya known as Cyreneaica of which Cyrene is the grandest and a highlight for any visitor. The smaller pretty site of Apollonia lies at its feet and served as the port for the city.
Ghadames
This old oasis town was once a significant trading hub balanced on the borders of Tunisia and Algeria. Tourism became the dominant trade there – really only in the past decade, and it was calculated that about 25,000 visitors passed through each year.
Tripoli
And the capital itself, with a medina, souk and a main museum containing some beautiful mosaics, as well as some great architectural remains such as the arch of Marcus Aurelius.
Returning to Libya in March this year I was keen not only to see everyone again but also to go back to the sites and see with my own eyes what damage had been done. I met up with many of my guides again – some of whom had fought on the frontline, many of whom had quietly rallied around the main sites of Leptis and Sabratha to protect the treasures. I sat with them at Leptis hearing their stories – of how they had wielded shut the museum doors after taking some of the most precious artefacts and hiding them in cupboards and under beds at home. This was one of many encouraging stories I heard about people coming together as a community under their own initiatives to safe guard their heritage. Astonishingly there has been very little overt damage even though we knew Gadaffi’s forces were stockpiling weapons at both sites. The Libyan Society here in the UK along with help from the antiquities departments in Tripoli and Cyrene have been involved in extensive studies to assess the sites in great detail and what is most concerning currently is how under threat they are – mainly from looters and booty hunters.
Working with Libya has never been easy: there were obvious drawbacks most notably that
- Visas were difficult and time-consuming to arrange.
- The hotels were not up to a standard such as that of neighbouring Tunisia and Egypt
- The country was covered in rubbish
There is no doubt in my mind that it is the travel accommodation market that needs the biggest boost. In terms of hotels, the 5 star Corinthia led the market and imposed prices regardless of any competition – really because there wasn’t any. The State and privately run hotels were so poorly managed and often went bust within a year of opening and my groups would often find ourselves being booted out as business still took priority. However, now InterContinental, Marriott, Moevenpick and Rixos are amongst those also targeting this market.
For people coming to Libya on business these hotels are fine but for discerning travellers I feel there are more opportunities for the smaller more boutique style hotels that are so popular in Syria and Morocco. The Zumit and the Khan hotel based within the medina in Tripoli show that these can be done however what is absolutely key is proper management. Libya does not have a good service industry and badly needs outside help in this area.
Prior to the Revolution, the government had finally developed a Tourism Master Plan for the short period up until 2013, with some thought given to growth over a much longer-term period through to 2025. The plan anticipated inbound tourism would grow to 1.8 million trips to Libya by 2013, and also highlighted the need to expand adventure tourism and domestic tourism. Investment started pouring into the country’s travel and tourism industry, with those named hotels being developed in the capital Tripoli alone, as well as ambitious development plans for airports, ports, roads and rail projects in the country, linking Libya to its neighbouring countries. Investors saw significant potential in targeting this market at such an early stage and there is no doubt that all of these forms of infrastructure would greatly improve the lives of Libyans and attract more inbound tourism.
Aside from its archaeological marvels, Libya is also home to mountains, parks, WWII cemeteries, and nature reserves, and presents interesting opportunities for adventure travellers and the development of ecotourism. There is, therefore, a large untapped market to consider for the growth of travel and tourism in the future; one which could be looked at more closely by any new government in the future.
On a more personal note, what I noticed on my return visit is the explosion in art and music – an expression of freedom and hope – not only wonderful street art but the great work of artists such as Mohammed Bin Lamin who has used materials from the war in his artwork and is now able to openly showcase his art. What is also apparent is the re-birth of berber culture and a renaissance of their ancient language and culture that was brutally suppressed under the old regime. I also strongly feel that my tours to Libya in the future will now incorporate a visit to Misrata and the war museum there which showcases the extraordinary ways in which people defended their city.
So what comes next?
The future is uncertain, and Libya’s travel and tourism industry is expected to suffer losses for at least another year, I hope not more … There is a great deal of reconstruction needed, and efforts will be geared towards getting the country back on its feet before engaging in more tourism developments. There is the ongoing issue of safety and practically, it is still not possible to process a tourist visa. That said Libya is doing much better than I expected and is to be encouraged all the way. The annual World Travel Market comes around in November again and it will be interesting to see if the country is represented.
I think the longer-term prospect may end up proving more encouraging if a new government aims to truly improve the lives of Libyans and the image of Libya abroad, in an effort to boost the travel and tourism industry.
Yusef Forti, political activist: Good evening Ladies and Gentlemen, Welcome and thank you all for attending this meeting. There are many question marks about Libya’s future. There are many worries about the events happening at the moment in Libya. I would like to assure everyone that these events are natural consequences of 42 years of tyranny and dictatorship. These events were expected.
We must understand that Libya will go through 3 stages of progress to reach the level of stability and progress.
1- Stage one: as we all know, the formation of the National Transitional Council (NTC).
2- Stage two: the formation of the present General Conference.
3- Permanent Government system to lead the country to progress and catch up with the International Community.
4- Formation of National Army
Recently,, we have seen the delivery of the Gaddafi’s spy chief ( Abdulla Senousi), since then new Libya has gained more respect and made Gaddafi’s cronies think twice before adding to the suffering of the Libyan people as if they haven’t done enough already.
Libya is now better than ever before, Libya now can be trusted by the International cronies Community.
Libya will now help in building a better world for us, for our children and grandchildren. The Libyan people are peaceful people. It is Gaddafi and Gaddafi alone that caused havoc in the world, and before that in his own country. So friends we can only expect prosperity in Libya from now on. The future is bright.
One of our priorities in my opinion is to look after our injured revolutionaries wherever they are. Without them victory would not have been achieved and I want everyone to understand this.
*Dr Charles Gurdon Managing Director Menas Associates.
Charles Gurdon joined Menas Associates as a researcher in 1980, and later oversaw the restructuring of the company, its stable of publications and consulting portfolio. He has a PhD from SOAS, where he specialised in Africa and the Middle East. Menas Associates is a boutique political risk consultancy specialising in providing analysis and consulting services to multinational companies and governments operating in emerging markets.
*Claudio Cassuto spent his formative years in the City working with Financial Times Group firstly in International Business Development and then in support of the start up of FT Conferences working on Summits worldwide. He then spent two years with National Journal of Washington DC, primarily developing a top Investors round table at the White House and a global renewable energy Congress in San Francisco . The next 25 years were spent as founder Director of Euroconvention opening up many emerging markets in Central, Eastern and South Eastern Europe, Western Balkans and former CIS and more recently in Egypt , Libya Lebanon and Saudi Arabia . He set up the EU-Libya Chamber of Commerce in February 2012, and the Chamber is due to host its first Libya Investment Summit in Tripoli this October and then plans to host Libya road shows in various EU Capitals.
*Amelia Stewart founder of Simoon Travel in 2004 which specialises in the organisation of cultural and desert tours to Libya and was the first UK travel company to start tours to Libya. She has taken many people (schools,clubs, media etc) to the country and personally accompanied many of the tours. She recently returned to Libya in March this year.
