Libyan economy depends on oil

Demonstrators hold up flags of the old kingdom of Libya, used by Libya's National Transitional Council during a protest against Kadhafi outside the Libyan embassy in Ankara.

Stacey Vanek Smith: After more than 40 years of Gaddafi rule the Libyan economy will need a lot to get back on its feet.

Here to talk about that with us is Shadi Hamid, he's the director of research at the Brookings Institution's Doha Center and he joins us now. Good morning, Shadi.

Shadi Hamid: Hi, how are you?

Smith: Good. We just heard a moment ago from Stephen Beard about oil in the Libyan economy. Besides oil, what does the Libyan economy look like?

Hamid: The Libyan economy is underdeveloped. It suffered from decades of neglect under the Gaddafi regime. International isolation, sanctions, have had a very negative effect in that regard. So Libya is still overly dependent on its oil and energy sector. I think we'll continue to see that distortion economy and that will be a big challenege for the transitional government to diversify Libya's economy.

Smith: What will it take to get Libya's economy up and running?

Hamid: Well, it will take good governance. International support is going to be crucial. Libya has to rebuild and its going to take billions and billions of dollars and that's why follow-through from the international community and donors, and international institutions like the World Bank and the IMF are going to be critical at this phase. The transitional council has been wanting funds to be released -- frozen assets from the Gaddafi regime -- and that's taken a long time. So there is the kind of beauratic red tape -- that's why getting the necessary funding to the transitional government is going to be crucial right now.

Smith: A lot of countries have had a hard time building, even with resources, after a corrupt regime. Do you think Libya will fall victim to that problem, or do you think it's in a different situation?

Hamid: Well no one said it was going to be easy. I think we have to remember that even in the midst of all this euphoria, democratic transitions are messy and uncertain, and often times even bloody. So I think we should kind of keep our expectations low.

Smith: Shadi Hamid is the director of research at the Brookings Institution's Doha Center. Shadi, thank you.

Hamid: Thanks for having me.

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