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Government's unpredictability makes building Libyan economy, tourism tricky

Sudarsan Raghavan  Apr 15, 2010

LEPTIS MAGNA, LIBYA - Only a handful of tourists wandered through the unspoiled ruins of this ancient Roman city edging the azure waters of the Mediterranean. It was high season, when buses should have been disgorging hundreds of affluent visitors from Europe and beyond. But among the arches and fountains, there was mostly silence.

Tour guide Saleh Krima explained why.

"The Leader has called for a jihad against Switzerland," he said on a recent day. "Now, no one wants to come here."

The Leader is Moammar Gaddafi, who has ruled this nation with an iron fist for more than 40 years. His tit-for-tat fight with Swiss authorities followed his son Hannibal's brief arrest in Geneva in 2008 for allegedly beating members of his staff. The charges were dropped, but the feud has continued -- a stark example of the Libyan government's unpredictability.

Since Libya's diplomatic isolation ended more than six years ago, the country has tried hard to attract foreign investors and promote tourism in an effort to diversify its oil-dependent economy. But an older mind-set -- steeped in bureaucracy, old-style socialism and antagonism toward the West -- is stifling its aspirations to become a North African version of Dubai, the Middle East's economic hub.

A Swiss businessman has been jailed in Tripoli, the Libyan capital, on immigration violation charges, an action widely seen as retaliation for the arrest of Gaddafi's son. Switzerland, in turn, has barred Libyan officials. In February, Gaddafi banned visas for citizens from 20 European countries in an order that was not lifted until late last month. His call for jihad, or holy war, against Switzerland came after a Swiss referendum prohibited the construction of new minarets. Since then, Libyan officials have said that Gaddafi meant an economic boycott and not an armed struggle.

Last month, Libya imposed a trade and economic embargo on Switzerland that stopped flights and halted oil exports. Libya has also withdrawn billions from Swiss banks.

Ordinary Libyans have loyally applauded Gaddafi's actions. But they have also felt the brunt of the diplomatic fallout.

Travel agent Abdalla Adem has seen his business shrink by 60 percent. His main clients are Italian, Spanish, German, Belgian and French tourists.

"Switzerland was wrong to treat the son of a head of state in this manner, and it was they who first barred the Libyans," Adem said. "They wanted to create a problem."

"We want Switzerland to compensate us," he added.

Libya's unpredictability extends to its efforts to change. A promised transition from a state-run economy to one in which private companies play a prominent role has been slow. In one well-publicized case, the government forcibly bought out a Canadian oil company for less than it was worth, after the company announced a big find.

Libya's old guard of politicians, internal security officials and tribal leaders is resisting political and social reforms proposed by Gaddafi's liberal-minded son, Saif al-Islam. Reforms "are moving, but not very fast," the younger Gaddafi conceded.

Switzerland is not the only Western nation to feel the Leader's wrath in recent weeks. Although relations with the United States have improved, prickliness persists. Libyan officials were furious about their country's being added to a U.S. security watch list after the attempted bombing of a U.S. airliner over Detroit on Christmas Day. And when a State Department spokesman joked last month about Gaddafi's call for jihad against Switzerland, the Leader warned U.S. oil executives in Tripoli that the comments could harm their business interests. The State Department spokesman apologized.

Billions in U.S. private-investment dollars promised in exchange for Libya dismantling its program to develop weapons of mass destruction have not materialized, deepening the frustration of officials here. U.S. oil companies have flocked to the North African country, but many other firms have held off, fearing the capricious business environment.

"There's a lot of reluctance on the investment side. The situation is not stable. There have been problems. They've seen issues with different companies," said Gene A. Cretz, the U.S. ambassador in Tripoli.

Cretz added, though, that Libya could prove a draw for American investors, citing the government's plans to hand out $130 billion in contracts over three years to build up the country's infrastructure.

The potential is clearly visible at Leptis Magna. Although it is a U.N. World Heritage Site, less than two hours' drive from the capital, there are no luxury hotels in the vicinity. A few stalls sell postcards and other tourist items, but Libya has yet to make the most of its long Mediterranean coastline the way neighboring Tunisia and Egypt have theirs.

Krima, the tour guide, led his small group through the impressive ruins, stopping now and then to proudly recount their history. Past sculpted heads of Medusa and carvings of centaurs and Hercules, he led the way inside the Hadrianic Baths, reputedly among the best-preserved Roman bathhouses in the world. The tour ended at a stunning amphitheater overlooking the sea.

"We need to tell the world of our heritage, to bring tourists here, to make money," Krima said. "The government does not have the experience to do this."

"Perhaps in the next generation," he added wistfully.

Government's unpredictability makes building Libyan economy, tourism tricky
Ruins of ancient Roman city Leptis Magna, Libya / Image via


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