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Sun, Aug 29, 2010 - Page 12 News List

Libya taps its oil wealth in a bid to be the new Dubai


On the outskirts of Benghazi, Libya’s second-largest city, row after row of sand-colored concrete apartment blocks and villas are sprouting from the desert. Hundreds of kilometers away, construction cranes dot the Mediterranean skyline of the capital, Tripoli.

The multibillion-dollar construction frenzy taking place is the latest and most visible sign of Libya’s drive for growth. It’s a push that largely ignored the global financial meltdown that left other oil-rich Arab nations stumbling over the last couple of years and reflects how Libya is tapping its oil wealth to reshape a country isolated for years by sanctions and international disdain.

Libya is “really trying to become, for lack of a better term, a new Dubai,” said Carlos Caceres, a representative of the Los Angeles-based engineering giant AECOM working in Benghazi.

AECOM is overseeing a US$80 billion project to build 160,000 housing units throughout the country, about a quarter of which will be in Benghazi, and refurbishing sewage and paving roads.

Overall, however, Libya plans to spend US$500 billion over the next decade on a host of projects.

New universities are being planned, Tripoli’s shabby airport is being overhauled, new Toyota and Honda sedans abound in the streets and trendy cafes dot street corners.

The IMF forecasts Libya’s economy will grow by 5.4 percent this year, while the UN said foreign direct investment into the country quadrupled from US$1 billion in 2005 to US$4.1 billion in 2008.

“It’s absolutely the boom country at the moment,” said Richard Barber, a British supervisor with HanmiParsons, a South Korea-based construction management company. “So many engineers from Dubai and the rest of the Mideast [Middle East] are coming here now and finding work, including me.”

The country’s surge sits in stark contrast to the Libya of just over decade ago, when it was struggling under international and US sanctions linked to Libyan leader Muammar Qaddafi’s support for terrorism and the country’s weapons of mass destruction program.

Qaddafi’s decision to renounce terrorism, hand over the two suspects wanted for the 1988 airline bombing over Lockerbie, Scotland, and pay compensation to the families of the 270 people killed in the attack paved the way for Libya’s re-entry into the international community. The US restored relations and reopened its embassy, US and European oil firms have flocked to the country, home to Africa’s largest proven oil reserves.

In addition, the government is pushing to revamp the business climate and a rapidly growing private sector has actively sprung up, reflecting a system that analysts say is surprisingly capitalistic in a socialist nation.

The projects under way are as much a product of that contradiction as they are a reflection of Libya’s challenges.

Unemployment, according to the CIA, is pegged at about 30 percent and Libya’s youth — who comprise the majority of the population — struggle to find affordable housing. It’s a prerequisite here, like elsewhere in the Arab world, for marriage.

The banking sector is being reformed. Italy’s UniCredit was recently awarded the first international licence. A second licence has been offered, though it remains unclear when, or if, it will be awarded.

More work needs to be done, however, said Tarek Alwan, the managing director of SOC Libya, a London-based company that advises firms looking to do business in Libya.

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