Local Economies in Turmoil (International Political Economy Series)

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Hveem, H. Ed , Nordhaug, K. Available Formats: eBook Hardcover Softcover. Stein, H.

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Book Authors Journal Authors. International Political Economy Series. The global political economy is in flux as a series of cumulative crises impacts its organization and governance. The IPE series has tracked its development in both analysis and structure over the last three decades. It has always had a concentration on the global South. Now the South increasingly challenges the North as the centre of development, also reflected in a growing number of submissions and publications on indebted Eurozone economies in Southern Europe. An indispensable resource for scholars and researchers, the series examines a variety of capitalisms and connections by focusing on emerging economies, companies and sectors, debates and policies.

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Many people live in pervasive insecurity under militia rule and amid continual conflict. They have suffered failures of electricity, water, and telecommunications, and a general absence of functional governance. Steep inflation in the cost of some basic goods and scarcity in others have meant many Libyans are unable to look after themselves or their families with the dignity and security they deserve. All the while, networks of elites control access to public goods, smugglers contrive to raise prices for desperate buyers, and local militias conspire to lock the Libyan citizenry out of the economic opportunities, public services, and security that it rightly expects.

The route out of this countrywide mess is not straightforward, but there is a way through. Policies and programmes geared towards achieving stabilisation — turning a failed state into a stable state capable of self-governance — have correctly, if belatedly, moved to the centre of international efforts in Libya. At the heart of this approach is the understanding that an environment of prolonged instability can eventually itself become a driver of further conflict and state collapse. Once emergency situations improve, the three main components of stabilisation are to: ensure the delivery of public services; move the economy onto an even keel; and provide security to the population at large.

The worsening political, security, and economic context in Libya has indeed led international actors to put in place measures aiming to stabilise the country. The European Union and its member states have driven this, concerned as they are at the burgeoning problems so close to their own shores. However, in this they have lacked a strong local partner: the ineffectiveness of the Government of National Accord GNA set up in has proved a heavy drag on stabilisation efforts.

This has meant that any gains are vulnerable to renewed strife. And the only partial successes made here have played into widespread popular disengagement from national politics. On top of this, the lucrative nature of the status quo for the current elite is a powerful incentive for its members to stall attempts at change.

This paper will show that the international community should double down on three core areas in order to restore stability to Libya. Changing how the economy works will be difficult because of the way in which the new Libyan elite exploits existing socioeconomic structures for its own personal gain. Second, current efforts must expand to encompass more effective partners than the GNA, such as municipalities and state-owned companies.

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These will not only outlive the GNA but are also more relevant to and engaged with their constituencies. Numerous local authorities have already rightly won praise for improving their local economic situation and bringing the forces of law and order under civilian control. The international community should look to these bright spots and seek to understand how they can encourage local government across Libya to follow these examples.

European countries and aid agencies should allocate their funding to support such efforts and spread best practice. Finally, international players should carry out a concerted exercise in high-level strategising in order to improve the effectiveness of these efforts across the piece. Together they need to be sure that the parts at least equal the whole, if not exceed it. It is possible to halt and reverse the vicious cycle of destabilisation in which Libya finds itself. Indeed, in future, it will be possible to turn this into a virtuous one, locking in gains made through the ongoing process of stabilisation.

The difficult matter of improving and maintaining security — the third vital component — largely lies beyond the scope of this paper.

Local Economies in Turmoil (International Political Economy Series)

But ensuring that Libyans have a safe environment to live in will become more feasible if players in Libya address the economy component, thereby using future gains as a platform for even deeper stabilisation policies. Eventually this more constructive cycle will not only more effectively and durably stabilise Libya, it will also create the foundations for a future, Libyan-owned state-building process.

The political structure bequeathed by Colonel Gaddafi was one which lacked decision-making structures and legal foundation but which centralised oil revenue and its distribution. This naturally represented a seductive prize and made zero-sum conflict after the revolution a virtual inevitability. Political power in Libya is invested unaccountably in whomever controls this centralised fund of money and the means to distribute it. The formation of the General National Congress GNC in was an attempt to force the groups of the revolution into an inclusive decision-making mechanism to sit atop this inherited structure.

These factions can be crudely delineated into: hardcore revolutionaries self-defined along geographic or social lines , who believed their role in the revolution gave them the right to political power; those persecuted by the regime, including some Islamist groups like the Muslim Brotherhood, who pursued revenge against all those associated with the previous regime; other Islamist groups, who wanted religion to play a larger political role; and a cadre of technocrats and professionals, who previously failed to reform the Gaddafi regime and saw an opportunity to build the Libya they had long envisaged.

Through the GNC, ministerial and other institutional appointments were wholly politicised as each faction tried to maximise its number of ministries, and thereby the share of state funds, under their control. Amid this political collapse, a trigger for the increase in hostilities was the movement of Khalifa Haftar, who rallied a small group of former army officers near Benghazi to fight back against the plague of assassinations, attributed to those Islamists seeking revenge against the system which had persecuted them, which had paralysed the city.

An already precarious situation deteriorated further in November of that year when the Tripoli-based Supreme Court ruled that the newly elected House of Representatives was an illegal legislature. This led the central bank to refuse to finance it. Libya had become burdened with a split in the institutions that were supposed to be governing it. Conflict spread across the country in reflection of this split.


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The aim of this agreement was to prevent the destructive cycle set off by the civil war from becoming unstoppable. A consensus government was to assume authority nationwide and start reconstructing the Libyan state while allowing the House of Representatives to complete the transition to constitutionalism. It is true that Libya is something of a patchwork of localities and regions with strong political identities that reasserted themselves in the post-Gaddafi era.

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This may always have made it hard to establish an effective central government with reach right across the country. Nevertheless, even a government still imbued with the patronage culture of the previous regime may still have provided a vehicle of sorts through which to resolve the crisis. But, even after the international community decided to get more closely involved trying to stabilise Libya, it found the GNA a poor partner for achieving this. Despite assuming power in Tripoli in March , the GNA never won the approval of the House of Representatives, which to this day maintains its own government and set of institutions.

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Amending the LPA in a manner that satisfies all parties involved has proved impossible. This marks a new direction for the internationally led political process, which aims to achieve what the LPA did not. Despite its establishment two and a half years ago, the GNA has comprehensively failed to generate local support, proactively attempt to govern, or implement policies it has not been provided with or coerced into by international players or local power-holders like militias.


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Moreover, it is worryingly beholden to the militias of Tripoli, which have inserted their own people into the government at a sub-ministerial level.