Jeremy Hobson: There are reports coming from Libyan rebel forces that former Libyan dictator Muammar Gaddafi has been killed. The Obama administration is not confirming those reports yet. Now there are lots of implications for the oil rich country, for the region, and for the world.
We’re going to talk about the economic effects now with Marketpalce’s Mitchell Hartman,
who reported from North Africa at the beginning of the Libyan rebellion earlier this year. Good morning, Mitchell.
Mitchell Hartman: Hi Jeremy.
Hobson: So I assume oil is where we should start looking for economic implications?
Hartman: You know, when I was in Cairo back in February, it was pretty clear that any major conflict breaking out next door in Libya was going to cause a lot of economic trouble — and it did. It hit tourism really bad. And it’s part of what made global oil prices volatile.
Peter Kemp of Petroleum Intelligence Weekly in London thinks there may be a momentary “euphoria” now with oil prices coming down. But he says it’s not going to last long. He described the situation this way:
Peter Kemp: Extremely chaotic still, with a lot of damage in some of the oil fields. There’s a chronic shortage of just about everything, so it’s going to be many, many, many months before production normalizes.
And he thinks Libya’s oil production will still be a 1/3 of what it was before the revolution at year’s end. He says that’s very optimistic.
Hobson: All right, well what about the impact, Mitchell, for Libya’s neighbors?
Hartman: Well you know, the open armed conflict, there’s widespread destruction — there was disruption of trade routes and guest workers — it’s all had a heavy toll. Egypt had 2 million people working in Libya. A lot of them went home; it made Egypt’s unemployment problems even worse. Tourism suffered from the war too.
Magda Kandil of the Egyptian Center for Economic Studies thinks things now will improve.
Magda Kandil: We hope that this would provide further avenues for Egypt to capitalize on its proximity to Libya, which is welcome news at a time when the economy remains very weak.
And the U.S. also has to hope Egypt’s economy will improve, because they’re a major ally and aid recipient.
Hobson: Marketplace’s Mitchell Hartman. Thanks, Mitchell.
Hartman: You’re welcome.