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After decades of isolation, Libya tests capitalism

While many have rushed to new megastores, others worry that the country is moving from stifling socialism to wild capitalism

By Imed Lamloum  /  AFP , TRIPOLI

Customers are pictured in a hypermarket in Tripoli on Sept. 29. Libyans are shaking off years of deprivation caused by iron-fisted socialist rule, international isolation and sanctions to savor the joys of their new market economy.

PHOTO: AP

Libyans are shaking off decades of deprivation resulting from iron-fisted socialist rule, international isolation and sanctions to savor the joys of their new market economy.

Gone are the days of having to queue outside gloomy state shops to buy subsidized consumer goods in Libya, which is an OPEC member and Africa’s No. 2 oil producer with reserves estimated to total 42 billion barrels.

Thanks to high oil prices, a promise by flamboyant leader Muammar Qaddafi to give the people a share of the country’s multibillion oil revenues and the government’s economic reforms drive, Libyans have embraced consumerism.

Designer boutiques dot the posh Gargaresh avenue of Tripoli, where Libyans can shop for the latest fashions as well as stop in a US-style fast-food eatery for a late-night slice of pizza.

Amid traffic jams, young Libyan men slip behind the wheel of their four-wheel drive cars or sporty BMW models and cruise the streets until the early hours, music blasting from their car stereos.

“We have suffered enough, especially during the [UN-imposed] embargo,” from 1992 until 2003, said Ahmad, a 35-year-old banker, who declined to give his surname.

“It is time we catch up on those lost years,” he said.

Private investors have tapped into the mood of the country of nearly 6 million inhabitants — which imports 90 percent of its consumer goods — by transforming a dismal state-run market into Tripoli’s first superstore.

The four-story modern temple of consumerism opened last month, drawing a flow of eager customers who pushed and shoved their way into the megastore.

“Finally we can shop like everyone else,” a 40-year-old woman said.

The investors, including a charity run by Qaddafi’s daughter, Aisha, poured US$7 million into the project.

The scheme reflects a decision by the government to shake off Libya’s staunch socialist economy and embrace reforms and globalization since mending its ties with the West.

The turning point came when Qaddafi publicly abandoned the quest for weapons of mass destruction at the end of 2003.

Libya has since 2000 been working to dismantle the central economy adopted in the 1970s and replace it with a market economy, by encouraging privatization to create more jobs and phase out subsidies burdening the economy.

At the same time the government has hiked the salaries of civil servants by 50 percent to bolster purchasing power.

Three years ago credit cards appeared in Libya and banks are offering easy credit terms with preferential rates to private investors.

The result has been a surge in restaurants, shops and apartments.

And on the streets of Tripoli even the omnipresent portraits of Qaddafi have given way to placards advertising a variety of goods and projects.

During a ceremony to mark the 39th anniversary of his overthrow of the Western-backed monarchy early last month, Qaddafi pledged anew a plan to hand out to the people US$37 billion in non-essential government spending.

“Libyans should all be ready to receive a share of the oil revenues starting from the beginning of next year,” Qaddafi said, after promising to scrap most government ministries and hand their budgets directly to the people.

But this over-injection of cash and an increase in demand have sent food prices sky-rocketing.

Inflation rose from 1.4 percent in 2006 to reach 6.2 percent last year, while it hit a record of nearly 12 percent for the first seven month of this year, the central bank said.

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