Gerard Verron http://g.verron.free.fr
The lessons of the Arab spring: what we learned from it and where is this leading us to? Preamble The following notes are a continuation of the memorandum issued in June, following a two weeks stay in Benghazi (http://g.verron.free.fr/Libya/Evaluation-Benghazi-20110605.html). th
On my return to Benghazi, since last September 13 , this time for a more permanent period, I found a more mature economic situation. This memo gathers the opinion which I extracted from the present situation.
The teachings of Mohamed Bouazizi The confiscation of the weighing scales from Mohamed Bouazizi’s fruit stand, led him to the decision to burn himself on fire as a vanguard act of heroism. His fellow citizens realized at once that the fundamental values of human-respect and entrepreneurship had been broken as well as the limits of human dignity. His act ignited a firestorm that spread over Tunisia and the Middle East. Suddenly millions of fellows said “We have one dream: freedom”. They rose spontaneously to blow out their jails and their corrupted walls. Millions of men and women gathered against these mafia regimes built on oppression and arbitrary lack of law. They joined to get rid of these governments that were keeping them weak to deprive them from the possibilities of hope and opportunity. The firestorm ignited by Mohamed Bouazizi is still burning, but already the economic lessons of his act are emerging and they are deeply influencing the current situation in Libya.
The freedom movement in Libya In Libya, the ignition of the uprising received a harsh echo. After the first acts of violence of the former regime against the rising population, a whole new generation of ‘Shabbabs’ - decided to stand at any cost and to head towards a new world where freedom will be protected and enforced by rules of law. They started a real revolution. Thousands of Libyan youths gave their life for this revolution to succeed. A deep sense of martyrdom and devotion for others has developed. The Libyan families are the chore of the nation, and almost every family has had to pay this price at the cost of the life of one or several of his members. Obtaining this freedom and spreading it in the whole Libya is taking a long period of time and is being paid a high price. Fortunately, this period of time is being efficiently used by the population to develop its understanding and its links with the other communities of the country. Each community realizes that things cannot be obtained alone and immediately and that common decisions are the result of a long evolution and elaboration process. This process is creating the pillars of a strong new Society which will develop on the values and the example given by their martyrs. Politics and economics are extremely intricate and tied together. The most democratic countries are the most prosperous ones. The act of Mohamed Bouazizi was both economic and political. The subsequent revolutions are ignited and driven by a mix of political and economic frustrations. The present memo intends at focusing mainly on the economic lessons of the uprising in Libya and how they may echo in the development of the Country.
The current echo of the movement in Libya It is not yet time to implement the economic values of the revolution because the country is not totally liberated. The transition council will not consider the conflict over until Gaddafi, who remains at large, is captured, killed or confirmed to be out of the country. At present time, large financial influx in the Libyan economy could be devastating as they would divert the country from his main goal, and help finance remnant former regime forces.
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Yet, some public rehabilitation works and small private reconstruction works have started in some liberated cities. Of course, those entrepreneurs who lent their equipment to the revolutionaries since the start of the revolution are the first ones to benefit from the first orders. Although the current period seems chaotic and somewhat frustrating, Libyans are coping with it, and their communities help them find ways to convey what they think about important decision. The conflict in Libya bears little resemblance to earlier events in Tunisia and Egypt. Perhaps one of the most pronounced differences is the scale of the challenge to establish a new economic and political system. Unlike Tunisia or Egypt, Libya will start a fresh – tabula rasa– leaving far behind the previous misguidances of the Green Book. One of the most serious challenges is how to repair the rifts that Gaddafi created within Libya's society. Yet the common themes objectives, characteristics and trends that form the specificity of the Libyan nation are gradually emerging. Various forces of influence are gathering to express these themes. These forces are very disparate as they include former members of the regime, returned Libyan exiles, religious leaders and many groups of young idealists. Yet, the different echoes and terms used by these forces to address these themes are reflecting, by their moderation, a deep sense of wiseness. They show that these forces of influence have already understood the necessity to elaborate a consensus process on all the major directions and strategies of the movement during the transition period. The new Libya, with its vast natural resources, its crossroad geographical position, its educated elite and its rare chance to start again from scratch, has the opportunity to define a brand new kind of nation. There is a real opportunity for Libya to become a nation truly different from all others. Many reasons are there to justify a cautious optimism, with humility and circumspection: -
Rather than focus on what got right, it is more relevant to focus on what got wrong and the reasons for it. Rather than establishing plans based on accrued knowledge, the attention is instead on questioning and deepening the analysis on the growing emerging aspects.
The present memo intends at collecting some ideas of the economic aspects of these issues, gathering the main assets and pitfalls to be watched and proposing areas to be monitored closely.
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The assets of the Libyan society Resilience, boldness and entrepreneurship Thousands of people have left their job and their families to break the old borders and head towards an unknown future. This generation has what it takes to embark towards new ventures with no fear, to become the bold entrepreneurs, investors and business men who will spread their values not only inside Libya, but soon beyond its borders.
Strong family and community values with respect to the elder generation Libyan society has long been deprived of its own history by the former regime. Thousands of Libyans had to flee their Country has they were at risk of being killed at once, only for not showing signs of proactive support to the rogue regime. Those elder people who have lived under the old regime can now talk openly of the era before the Gaddafi revolution. It will take time for the Country to reconcile himself with its past. But the young generation is respectful of the advises issued by the ”shurras” of elderly persons. Libya is enjoying a rich past with large archeological places that remained loosely protected and insufficiently maintained by the former regime, including vast archeological areas that have not yet been explored: The new regime will be keen to promote these treasures and use them as a means of communication of its openness to the outside world.
A mature sense of organization and discipline At the start of the uprising, shebbabs were enthusiastic, loosely managed and disorganized. Then organization started and the fighters started to organize. Now the freedom fighters operate under strict lines of command and respect of orders of a skilled regular army. Before the revolution, car drivers were often dangerous and aggressive. This behavior was the reflect of their mental oppression. Now, more respect for others and more self-discipline are the reflect of a mature society at peace with itself. Pride and dignity are fundamental values of the Libyan culture. These values will be reflected in its development. Libya is a moderate country which will not allow the revolution to be hijacked by any extremism: those radical clerics who started to express words beyond the revolutionary values have been swiftly recalled by the ‘shebbab’ generation.
Fulfillment of personal aspirations The previous regime had the reputation to stifle individual ambition through repeated state intervention across the economy. In reverse, the new nation will be keen to listen to his citizens and to nurture their individual aspirations. This will not be straightforward. As Libya emerges from today’s fight for survival, the natural tendency of many remaining representatives will likely be for the state to again step in and they will still try to drive the economy and the development of the private sectors through state decisions. It will take time for the new Libya to set clear limitations of state involvement so as to provide the space and opportunity to enable individual commercial instincts to thrive. But once again, we can expect a close follow up and quick reaction from the ‘shebbabs’ in case of repetition of past errances. The new generation seems driven by a clear economic vision, with the desire of a supporting institutional infrastructure and the enacting of public policy to enhance Libya’s domestic business environment.
Optimistic signs for democracy Fortunately for the Libyan revolution:
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The President of the Transition Council is a lawyer whose own personal authority is a guaranty and a safeguard of the separation between the future legislative branch and the executive branches of government. The revolution was raised for this value, and this will be printed in golden terms in the future constitution. The future independent judiciary branch will be backed by an already vibrant and critical media. Since the start of the uprising, a free media has filled the vacuum left by the former state propaganda media and it has rapidly developed. New media outlets have blossomed. Local television and radio channels have sprung up in the larger cities of Benghazi and Misrata. Dozens of newspapers have appeared across the country. The revolution is also the success of these medias, and they will defend themselves harshly against any future government intrusion in their freedom of expression and development.
These balance forces are essential. “We had a dream: freedom” are now words that are being turned into deeds. For a country with no democratic institutions or civil society, the path to representative, responsive government will take time to implement. But there are several reasons to be cautiously optimistic: -
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Libya is a relatively homogenous society in terms of ethnicity, language and religion, and this will ease the transition to a more democratic form of government. Regionalism is still present, but significant levels of national identity have developed. The importance of tribalism has also declined. The tribes remain a significant part of life in Libya, but the divide-and-rule tactics employed by the former regime accorded them an importance that does not reflect contemporary reality. The spontaneous formation of popular committees that are managing local government functions in liberated areas is a reason for optimism. In fact, in the new Libya there are no rules. The country is running on ad-hoc decisions most often made by committees in individual towns and neighborhoods. These local government functions must now be coordinated, aggregated and instituted at the state level. The present debate develops as to how much federalism should be implemented and at which level. The success of the uprising has taught to all communities that they cannot make it alone, but that they must show moderation do so together. Signs and recent declarations show that the main trend of Islamist forces are keen to take their part and not being left aside of the political party debate. For them, “the revolution belongs to all Libyans, secular or not “. These words are encouraging signs that the non-radical path of Islamist transformations coming from neighboring Egypt is also spreading in Libya.
A vibrant micro economy and a desire to work The weight of the young generation and its entrepreneurship spirit are stunning. The former regime did not encourage the people to be economically active. Instead it did all its best to pay them to stay idle. The new generation wants to have real jobs, and they want to be in control of all the aspects of the economy. Practically the voice to the young generation is gradually developing as a main stream, embracing the new technologies which have given birth to the Arab Spring; harnessing the web to broadcast NTC meetings, publishing ministerial budget forecasts online. Perhaps are they even going to follow Iceland’s example and develop forums to contribute in elaborating constitution or law texts online. Libya has indeed lots of potentialities and reserves for surprises.
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The pitfalls “Wasta wa halakat”: the right connection and/or the right relation? Libya current business system is heavily based on a system called "wasta," or connections, where you are almost unable to do the most basic business act without having the right connections. "Wasta" filters its way through all facets of Libyan life. If you don't have the right "wasta," you can just forget it. This system had been turned into a kind of government by the Gaddafi regime who deliberately placed all his supporters at all the sensitive positions in both the public and private organizations. This has created a hate for this word. The word itself has been one of the reasons of the revolution as Libyans were more than fed up by these Gaddafi thugs and goons who had stolen the whole wealth of the nation for their own profit. These former beneficiaries of the regime are here, they are still in charge, and old habits are hard to break. Many will probably hold firm on their position because they have the right “wasta”. They are keen to remain in the game and they are deeply entrenched in all aspects of economic life. Cronyism will continue to have a direct effect on Libya's future. In the long term, under the pressure of a new generation, “wasta” influence might evolve into a more sophisticated system of “Halakat” (relations), but this will be a long process. This “wasta” and “halakat” system is an inherent part of the business culture in Libya. The Libyan population has a long tradition of caravan traders who have always made their income through intermediation. This activity forms the basis of the business of most intermediate professions that operate around public services and authorities. It is doubtful that this influence will end soon and the Companies will have to continue to deal with it. However, there is a common accepted understanding that those who abused of their position in the previous regime cannot continue at their position in the new regime; only those former ‘wasta’ beneficiaries who will be able to justify their position by their professional skill and their efficiency will be able to maintain their position in the coming period. Foreign companies that wish to develop in Libya will probably need to evaluate and assess carefully the “wasta” and “halakat” links and ties of their partners before committing themselves with them. The government claims that the current contracts of international Companies will be honored. But these Companies will have many difficulties to start new large Contracts unless they will change completely their relation links. For these Companies, all signs are there that they will enter a period of uncertainty and reevaluation where dispositions will have to be taken to ensure that their former ‘wasta’ influences will be replaced by new ones.
Foreign companies approach After the Iraqi war, the American occupation forces took the wrong decision to remove from the system all the Wafd party members: this decision destroyed the Iraki economy. The new Libyan administration will not repeat that mistake, but they will scrutinize and watch carefully the act of all those who got their Contracts from “wasta” with the former regime. This will probably create havocs and complications during the entering into force of the contracts to come. Instead, there is much room for new Companies with no links with the previous regime. Also here, and due to the cost of the revolution, a new tabula rasa is expected to occur. A debate is already growing as to the prerequisite required to register foreign companies: should these prerequisite be increased or somewhat released? Indeed, foreign companies with specialized expertise that can be shared in terms of knowledge based transfer will be welcome to bring back country's business and investment. For those new foreign companies’ Statements of Qualifications (SoQ) will be welcome. The main first development fields will be the reconstruction and rehabilitation of the following sectors: Infrastructure, Utilities, Oil & Gas, Electric grid & renewable energies, sea water desalination, transportation with urban & sub-urban rails, airports, new buildings, seaport terminals projects. Various forms of Front End Engineering and Design projects, Operation & Maintenance projects, Design & Build projects, OMM, EPSCC, EPIC, DBOOT/BOO/BOT and turn key projects will be planned and launched for these works. Consulting firms with experience of international tender handling will be welcome. Various questions on
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preparation of request for qualifications, pre-qualification process, request for proposals (RFP), etc… will become soon common subjects of discussions on Libyan blogs. The above terms are meant once again to filtrate qualified specialized international Contractors: French firms are strongly invited to adhere to these procedures as most of the educated elite in Libya has received an Anglo Saxon education. The development of large international Contract had become a form of instituted corruption to evade funds out of Libya. There was this ICOM Consulting firm that was in place to favor the large international firms. Many serious real professional Libyan firms refused to have direct contracts with Governmental bodies to avoid having to pay bribes. Now these firms will change their positions and will accept such direct contracts as they will not fear to sue the Government representatives for any breach of law. We can expect in the times to come a more direct and open implication of Libyan Companies in government Contracts. In parallel we can expect a reduction of the share of large international Contracts directly awarded to foreign firms. Foreign Companies have therefore to be prepared for deep immersion into the Libyan context if they want to succeed in their endeavors.
The great white elephants The Libyan economy has inherited an inordinate imbalance of oppressive power where erratic changes in policy and edicts were issued at the behest of one individual or one family without any of the institutional decision making process, controls and balances that are prevalent in democracies all over the world. Large companies were constituted, whose activities where essentially depending from state orders and Contracts. Those companies whose management abused of their “wasta” links with the old regime will suffer as they are giants with feets of clay. Probably, opportunities will be there for international Companies to become partners of those Companies capable to maintain and develop.
Decision making process Beyond tribal, local and religious differences, the current situation is now filled by a sharp polarization between two main camps:
The first camp is made up largely of early defectors of the former regime who had jumped from the ship as it began to sink. This camp enjoys the support of the international community and it is still deriving its power and influence from the backing of western nations.
The second camp is composed of local political and military leaders who have played a decisive role in the liberation of the various Libyan cities from Gaddafi's brigades, including the capital. The thousands of fighters and activists they command are now convened within local military councils, such as the Tripoli council, which was founded following the liberation of the capital and which recently elected as its head Abdulkarim Bel Haj.
The question is how these camps will share and split their influence. There is a debate about the vision for forming the government: what are the most important portfolios? What will be the limits of actions of the portfolios until the end of the transition period? This struggle for power control is also reflected in the management of Companies. The uprising has put in evidence the weaknesses of the former period. Time is not into policy making but into day to day struggle of technical decisions to make. The technicians will probably hold the upper hand during the reconstruction and rehabilitation period.
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What we can do Libyans opened the door towards their own future by themselves: They have a dream… and they will not let this dream being stolen by others. They really want to be in control and in charge of all the aspects of the economic activities and they will not accept any more thousands of foreign executives and foreign staff holding key positions that can be held by Libyans.
Another view at Libyans and between Libyans Remember these last years in Europe: we were all suspicious of Libyans living in the diaspora, at a point where most of them were ostracized as they were associated with the horrible image projected by the Gaddafi regime. Most of them were almost living in hiding, with the fear of all others. Now those Libyans of the diaspora are enjoying a revolution in our eyes towards them: for the first time, they can express their openness, their prideness, and they see this in our immediate reaction of smiling people who praise their accomplishment. This is already a revolution, as we are all what others see from us! Inside Libya, communities start to talk to each other again with no fear: in the old times, the regime was smart at creating hate or tensions between cities: Benghazi citizens were almost ostracized in Tripoli. Now they pride themselves for their mutual accomplishment, and there is already a revolution in the way the people talk to each other. These eyes are also reflected to those citizens of the foreign countries who participated actively in the support of the uprising: I see every day around me clear open faces looking me with a genuine open smile of happiness.
Wait, keep a low profile and get ready to answer upon first order Let us be patient, those who have the skills and the knowhow will be called. As mentioned above, time is not yet ripe to start business, this time will come, but no need to rush. Also, as explained above, a lot of scrutiny is maintained on those who are coming presently in Libya, in particular to avoid the resuming of former links through local partners. Best behavior, in these conditions, for that ones who are present in Libya, is to keep a low profile and avoid meetings with representatives that had prominent positions during the former regime.
Coaching changes The new state will have to promote deep changes in the public and private organizations to bypass the old “wasta” apparatchiks, and replace them by a new generation of managers. In the short-term, during the first stages of the reconstruction, as the country will face the pressure of quick decision-making and rehabilitation process, these balances will not always be easy to preserve. However, once established, any erosion could very rapidly undermine the long-term integrity of the new regime. The population knows that and changes will have to be rapidly made to promote new fresh management teams. The new regime will be keen to depart from the authoritarian style of the former regime. It will have to act smoothly and diplomatically. We will probably consequently observe a long period of “deconstruction” of the former monopolies to leave room for the development of new emerging organizations Coaching and propelling organizations toward their desired results is a rare skill that requires humility, strong relational and analytical background and understanding of the drivers of the persons in charge. The ability to translate these characters into strategies requires large international experience and deep knowledge of the intricacies of the society. Those experts that have such experience and skills will be welcome in Libya and they will find here the opportunity to put their expertise at work. In practical terms, contributing to this atmosphere will require delicate advising skills in both setting out precise and clear delineation of institutional authorities, and fostering a political culture in which the preservation of these balances will be pillar values.
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What can be expected during the transition period The current political transition and rehabilitation period will enable Libyans to channel their differences into politics and create a more democratic, open society, and a more efficient economy turned towards services offered to the population. This will take several months. But the first steps are clear. From the outset of the revolution, these have been the core demands of the rebel rank-and-file The NTC has embraced these goals and worked to keep them at the forefront of policy deliberations.
Interim government and national convention Appointees of the interim government will be nominated has soon as the whole Libya will be liberated. Actually, already since several months, a shadow interim government has prepared himself to take in charge this activity. The planning preparation of the transition period made during the previous month is gradually unfolding. The appointees of the interim government are being carefully selected to represent the broad base of the various groups, regions, and forces that build the Libyan nation. They know that gone are the days when ministers did act like arrogant pricks and steal the money of the nation. They know that new Libya ministers will be here to serve people. Areas and cities damaged will have priority in reconstruction and rehabilitation works. How they need to see that the responsibility held to them has been rightfully awarded. A national convention will soon be convened to enable tribal, regional and political representatives to devise a road map towards the transformation of the transitional authority. It will also agree to a process for drafting a constitution and establishing a timetable for elections -- presumably not sooner than a year from now. The convention would not be the end of a process, but rather the beginning of an era of consultation and communication.
Create short term jobs In the short-term, money has to be spread among the population to create consumer activities: public wages will be increased by 120% at end September. Labor-intensive public projects are also being launched. Such projects are carefully selected to avoid job creation that could undermine medium and long-term private sector employment or that would develop an even more bloated public sector. Public labor intensive projects are legions: reconstruction of burned and looted public buildings… Services programs for young people are also scaled up: Large financial incentives and much better salaries are being offered to those new university graduates that accept to involve themselves in development projects in remote communities. Quick wins will also include early signals to the private sector to show commitment to entrepreneurs, small business, and investors. Transformative signals will be also given be in communicating, promoting and supporting initiatives that will cut red tape, speed up licensing approvals, reform business laws, and ease up regulators’ rigidities. All this is meant to show a complete change in the public economy where the central government will delegate much more initiatives to the citizens, to the communities and to the public sector so as to promote the much demanded entrepreneurship spirit.
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Long term development In the long term, jobs creation will be the natural consequence of a more sound economic system integrated into the global economy. For this Libya will naturally open its doors to import know-how, technologies, production and logistics systems, whether through foreign investment, licensing, or other business ties. New circumstances and a completely new political system will naturally take place and reduce the present barriers of loose regional integration, which has lagged Libya far behind other parts of the world despite its apparent richness. The aspiration of the Libyan people to be in Control of its development will remain a main stream for many years to come. Therefore most main Contracts will be passed with Libyan firms associated or in partnership with foreign firms. This will be a main departure from the present situation. Education will need to match these requirements. This will create a huge demand for teachers, professors, lecturers willing to embrace these changes. Also, markets for seminars, international conferences are rapidly going to emerge. The long term development of skilled executive and managers is a process were all the international Companies established in Libya have interest to invest immediately: A rush is expected to employ and promote young Libyan executives with personal development plans to train them abroad so that that will immerse and acquire international business values. For international firms, direct Contracts with the Libyan government will be probably extremely limited as the Libyan Entrepreneurs will be carefully watching that preferences will be given to local resources. Consequently, even large firms will have to find ways to associate themselves with local Companies or form partnerships where Libyan stake holders will keep the majority.
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