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Libya’s economy facing big challenges

Marketplace Contributor May 28, 2012

Libya’s economy facing big challenges

Marketplace Contributor May 28, 2012

Tess Vigeland: Egypt confirmed today it will have a runoff to elect its president in June. Last week’s elections didn’t produce a candidate with more than 50 percent of the vote. Libya was also scheduled its first elections since the revolution there.
Today, the head of the National Transition Council said the vote would be delayed. No date has been set, but the news could further spook investors. The country’s economy remains shaky because of continuing political violence. And investors are reluctant to make new commitments without political stability.

Reese Erlich reports from Tripoli and Benghazi.

Reese Erlich: A grocer puts money into a cash drawer at this hole-in-the wall market in central Tripoli. Ahmed Ali says business was disastrous for Libyans last year during the anti-Gaddafi uprising.

Grocer: During the fighting there was practically no business at all. We opened only a few hours a day. There were a lot of shortages, so prices skyrocketed. It’s 100 percent better now because people have money to spend.

There are signs of economic recovery. Oil production has nearly returned to pre-war levels. But the political instability here can’t be underestimated. More than 60 armed militias exercise significant political power. Some have degenerated into criminal gangs.

In Libya’s second city, Benghazi, several hundred demonstrators gather to demand that the militias be broken up. Protester Nour Nadia Mohammad says the government needs to act urgently.

Nour Nadia Mohammad: We want the government to collect the weapons and eliminate the militias. The government should provide security through the police and army.

The government in Tripoli needs no reminder that militias are a serious problem. Earlier this month angry militiamen fought a two-hour gun battle outside the prime minister’s office demanding bonus payments for the time they spent fighting Gaddafi.

Economy Minister Ahmed Alkoshli says those fighters don’t represent the feelings of most of the people who took up arms against the old dictator.

Ahmed Alkoshli: They had legitimate demands, but it was not the right way to do it. People who made the revolution didn’t do it to earn a bonus. Most refused the bonus. They returned to their jobs. For the rest of them, there is a mechanism to study who deserves to get the payment.

Alkoshli admits the ongoing violence is a problem for both foreign and local investors. So is the uncertain political situation. He says the transitional government is trying its best.

Alkoshli: We want to privatize some of Gaddafi’s state-owned companies, but it will take time. We are establishing laws and stabilizing things for the next government to take action.

But demonstrators here in Benghazi are growing increasingly impatient. But protester Abdul Wahab expects no quick fix.

Abdul Wahab: This disorganization and chaos will have to carry on for some years before we establish a firm nation, a nation with laws, a constitution that everybody adheres to. But I’m relying on the factor of time.

But if it takes too much time, Libya’s image with foreign investors may be damaged for years to come.

In Benghazi, Libya, I’m Reese Erlich for Marketplace.

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