The obstacles to improved economic governance are entrenched. They include vested interests, public suspicion of officialdom, and uncertainty about whether incremental or systemic reform is likely to work best.
The need for reform of the Libyan state has been a consensus opinion among experts for over 25 years. Yet given widespread agreement that economic drivers of conflict cannot be addressed without structural change, why have so few reforms taken place? In reality, efforts to improve economic governance and mitigate conflict face many obstacles – including a lack of incentives, limited public support for a smaller state, and a lack of agreement over how reforms could be implemented.
Of these factors, the absence of incentives for current officials and their international partners is perhaps the most obvious impediment to reform. As noted, Libya’s highly centralized government system, in which the state has a monopoly over the distribution of oil and gas revenues, offers members of the elites and their networks access to vast resources. Those in control of this system have a natural interest in maintaining the status quo, especially as economic governance discussions are often reduced to questions of ‘power-sharing’ – in effect, how to divide state wealth among conflicting parties.
Consequently, Libyan elites contesting power largely sideline difficult issues relating to structural reform, offering only superficial rhetoric on decentralization and development. Their primary concern remains control over existing institutional structures and resources rather than creating a fairer or more forward-looking system. This sustains zero-sum calculations, whereby obtaining or remaining in office offers a means to control access to financial or physical resources. It makes incumbent office-holders reluctant to support reforms that could dilute their power (thereby undermining any reform commitments they may have made in order to obtain office in the first place). These disincentives are often replicated at the international level, as external states – rather than helping Libya to tackle its structural governance problems – often focus on protecting and developing their own political and/or commercial interests through engagement with Libyan elites.
Just as problematic for reform prospects is a lack of vocal support from the very group that should in theory stand to benefit – the public. While public opinion on these issues is difficult to gauge, and technocratic governance reforms are hardly a common topic of everyday conversation, dissatisfaction with the economy and failing public services is easy to discern. Beyond this, there seems to be broad support for administrative decentralization, while many Libyans recognize their over-reliance on an ineffective state. Nonetheless, the cultural emphasis on the state is strong and there appears to be a lack of trust that reforms to the state system – such as the removal of costly subsidies for fuel, electricity, medicines and foodstuffs – would benefit the public.
The perspectives and concerns of ordinary citizens are insufficiently included in this debate. Economic reform discussions have remained largely confined to experts, and attempted governance changes have generally been limited to dialogue among ruling elites. One notable exception was a socio-economic dialogue led by the UN Economic and Social Commission for Western Asia (ESCWA) between 2018 and 2021. This provided a platform for a diverse and inclusive range of Libyan stakeholders to formulate a long-term vision for Libya’s sustainable development. The initiative’s findings were published in a 2021 report, outlining a common vision centred on prosperity, justice and strong state institutions. Other efforts, such as those by Libyan Peace Makers, a dialogue programme that brings together Libyans from across the country and with different perspectives to inform international mediation efforts, have put forward visions for an equitable distribution of resources as part of a wider political process. Libyan-led discussions on these issues have grown in recent years, but much remains to be done to foster societal pressure for the inclusion of economic reforms in the political process.
Even among those who already advocate and work to facilitate reforms, there is a lack of consensus over the pathways that should be pursued and the optimal sequencing of steps.
Even among those who already advocate and work to facilitate reforms, there is a lack of consensus over the pathways that should be pursued and the optimal sequencing of steps. Some advocate incremental reforms with international support, while others argue that Libya’s governance system is fundamentally flawed and requires immediate root-and-branch restructuring. One Libyan expert sees economic reform as part of a wider renegotiation of the social contract, a process that will necessarily entail downsizing the state and decentralizing power. Another group suggests that a decentralization law could provide the foundation for lasting peace. However, the questions remain: how can sweeping reforms be delivered in a structured and effective manner, and what are the risks of such efforts making an already bad situation worse?
