Major economic steps by new Libya leaders unlikely

AP News
|
Posted: Nov 10, 2011 8:29 AM
Major economic steps by new Libya leaders unlikely

Libya's interim government is unlikely to award new oil concessions or take major economic decisions, saving those for an elected leadership, as it focuses instead on restoring security after the country's eight-month civil war, the outgoing finance minister said Thursday.

The transitional government is being formed by Prime Minister Abdurrahim el-Keib, who said Thursday that he needs up to two more weeks to complete the job. El-Keib's government would remain in place until June, the deadline for electing a 200-member national assembly that would choose a new prime minister.

Restarting oil production has been a major focus of Libya's interim rulers. The industry was virtually paralyzed during the fighting that ended in late October, with the capture and death of dictator Moammar Gadhafi.

Ali Tarhouni, the outgoing finance and oil minister, said Libya is now producing about 570,000 barrels a day, compared to the daily pre-war output of 1.6 million barrels. He said daily output could surpass 700,000 barrels by the end of the year, and that natural gas exports via pipeline to Italy will resume in coming days.

The main challenge of the incoming government is to establish functioning security services, including an army and border guards, Tarhouni told reporters at his office. Currently, semi-autonomous militias that had fought against Gadhafi still control key locations, including Tripoli's main airport.

"I don't anticipate that this transitional government will make major decisions" on the economy, Tarhouni said. "It's (in power for) eight months, and most of these big infrastructure projects most likely will be delayed until you have a constitution, an elected government. I don't expect, for example, that this transitional government will give new concessions for oil."

An elected government will likely push to diversify the Libyan economy and strengthen the private sector, Tarhouni said. The old regime relied almost entirely on oil revenues, while private business was hampered by restrictions and corruption.

Tarhouni said tourism and financial services could become major sources of revenue in the future.

"I think that that's one of the major shifts, strategically, for the economy of Libya," he said when asked about decreasing the dependence on oil. "Hopefully, the elected government will take this issue seriously, and there are enough people who believe in what I just said."

Tarhouni said the transitional government is in no rush to win access all at once to billions of dollars in Libyan assets abroad that were frozen as part of international sanctions against the Gadhafi regime.

Monitoring and controlling such huge sums would be difficult, he said. Instead, the interim government is trying to get a better idea first of how much money is needed for various tasks, such as building the security forces.

"We don't want this wholesale unblocking or unfreezing of assets," Tarhouni said. "I don't think we will have a problem accessing funds (in the future), based on what we have been told so far."

The minister said surviving members of the Gadhafi clan, who have fled to neighboring countries, including Algeria, are believed to have smuggled "sizable" sums of public funds out of the country, but declined to give an estimate.

The Gadhafis used Libya as a private bank, he said, citing the National Oil Corp. as an example.

The NOC had eight known accounts, he said, in addition to 20 secret ones that were discovered since the fall of the regime. "They were selling oil for cash (that) nobody kept track of," he said. "It's just mind-boggling."