Libya becomes a model

Until only a couple of years ago, Libya was a pariah state, a country scorned. Libya was designated a state sponsor of terrorism in 1979 and for over 25 years has suffered sanctions which threatened to isolate it.

The restriction on aircraft flying to and from Libya not only grounded Libyan Arab Airways but it also made it very difficult for Libyans to venture abroad. Their gateways to the outside world were left open through the hastily constructed road from Tripoli to the Tunisian border and through the daily ship crossings between Malta and Libya. The ring-fencing of its oil sector led to a deterioration of the efficiency for oil extraction and processing.

At a time when many countries were taking a holier-than-thou attitude and refusing contact with Libya, Malta maintained an active and prudent relationship which allowed both countries to cement closer ties not just at the political level but also at the popular level.

Back to the mainstream

The situation has now changed dramatically.

US Secretary of State Condoleezza Rice announced that Washington has decided to raise America's diplomatic profile from a liaison office to a full embassy in Tripoli, thus renewing full diplomatic relations with Libya. Moreover, Libya was being removed from the State Department's list of state sponsors of terrorism.

After the UN lifted its sanctions against Libya, this was the final step to welcome Libya back into mainstream politics. Now everyone's eyes are opening and many are seeing what has been obvious for so many years. Libya is a land of opportunity for the Libyans and for all those who are willing to venture there. Libya is actively trying to put its act together and upgrade its institutions, policies, processes and practices to be more user-friendly and to operate efficiently in an open market economy.

I am sure that in the very near future, we are going to see Libya's economy move forward by leaps and bounds, as its petroleum industry expands, with more concessions being awarded to international companies, as its petro-chemical industry is renovated and extended with fresh overseas investment and technology transfer, as its infrastructure is rebuilt, as investment start pouring into the great tourist potential and as service providers move in to support this growth through IT, education and health services.

A model

On the international front, Libya is now being hailed as a model, a victory for diplomacy. "It's virtually impossible for diplomacy to work without diplomatic contact," said Edward Walker, president of the Middle East Institute and a former US assistant secretary of state for Near East affairs, adding that "You don't walk away from talking to people." And Ambassador David Welch declared: "Libya serves as an important model as we push for changes in policy by other countries such as Iran and North Korea."

Gateway to Africa

The fact is that Libya has the capacity and resources to exert a lot of influence in Africa. It also has the will to do so. Its leader, Colonel Gaddafi, had launched the idea of an African Union and to my knowledge Libya is the only country which is doing the right thing in Africa - investing in the various activities that would generate economic activity in that region. The previous European colonisers who exploited the mineral and other resources of the African continent are not doing a fraction as much.

In all the huffing and puffing about illegal migration, the rhetoric, the meetings, the attempts to accommodate the problem, I feel that Libya is doing what must be done - create wealth in Africa to remove the need for these people to move out. The real and ultimate solution for illegal emigration is to wipe out poverty in Africa by investing in Africa and by developing those economies.

The Malta connection

On Malta's part, we must be very careful not to destroy what has been so painstakingly built over the past 30 years. Libya can be a major factor in the economic revival of Malta and we must nurture our relationship now that the ballgame has changed.

We have to make sure that our connection with Libya remains flexible and open. We must reinvigorate our dialogue with Libya on all issues and we cannot continue to apply extreme regulations with regards to the issue of visas to Libyans which are not even applied by the Schengen countries. We have to negotiate hard with the bureaucrats in Brussels to make them understand our position as a border country and our interest as a service provider to this exploding economy.

Interest hike

Drinking my coffee on Friday morning I nearly choked while reading about the increase in the interest rate dictated by the Central Bank. Is this the time for such a measure?

Anyone who is working in our economy knows about the dwindling purchasing power of the population as their budget needed to be redrawn to account for payments for services and commodities such as water and electricity. It is (hopefully) understood that the rise in inflation is not being pushed through rampant demand but through these adjustments forced upon us by the international oil price.

So why make it more difficult to Government and to the people by increasing costs to business and to so many home owners with mortgages. Wage earners who pay mortgages are only going to find that with the increases in the monthly payments they have to make to the bank their purchasing power has dwindled even more.

And do the banks need this extra profit?

If the Central Bank is worried about the outflow of money from Malta, it should not be looking at the interest rates but at the high hassle cost forced upon investors in Malta by Jurassic regulations and which is forcing them to send their money to places where they can make it work.

I hope that when the Public Accounts Committee in Parliament talks to the Central Bank governor about monetary policy, its members ask some pertinent questions.

jd@dbms.com.mt