Is Libya about to get the Serbia treatment?

There is a popular argument comparing the current situation concerning Libya with the Iraq War as a way of criticizing the ridiculous amount of enthusiasm for intervention. The point theses critics wish to make is that back in 2002 and early 2003, Iraq looked like it would be an easy battle and, as we know now, it lasted longer and cost more lives and resources than many ever expected it would. However, I believe there is an even greater lesson to be learned from the 1999 US/NATO intervention in Serbia and Kosovo.

Neil Clark, “The spoils of another war,” Guardian (21 Sep. 2004):

The trigger for the US-led bombing of Yugoslavia in 1999 was, according to the standard western version of history, the failure of the Serbian delegation to sign up to the Rambouillet peace agreement. But that holds little more water than the tale that has Iraq responsible for last year’s invasion by not cooperating with weapons inspectors.

The secret annexe B of the Rambouillet accord – which provided for the military occupation of the whole of Yugoslavia – was, as the Foreign Office minister Lord Gilbert later conceded to the defence select committee, deliberately inserted to provoke rejection by Belgrade.

But equally revealing about the west’s wider motives is chapter four, which dealt exclusively with the Kosovan economy. Article I (1) called for a “free-market economy”, and article II (1) for privatisation of all government-owned assets. At the time, the rump Yugoslavia – then not a member of the IMF, the World Bank, the WTO or European Bank for Reconstruction and Development – was the last economy in central-southern Europe to be uncolonised by western capital. “Socially owned enterprises”, the form of worker self-management pioneered under Tito, still predominated. Yugoslavia had publicly owned petroleum, mining, car and tobacco industries, and 75% of industry was state or socially owned. In 1997, a privatisation law had stipulated that in sell-offs, at least 60% of shares had to be allocated to a company’s workers.

The high priests of neo-liberalism were not happy. At the Davos summit early in 1999, Tony Blair berated Belgrade, not for its handling of Kosovo, but for its failure to embark on a programme of “economic reform” – new-world-order speak for selling state assets and running the economy in the interests of multinationals.

In the 1999 Nato bombing campaign, it was state-owned companies – rather than military sites – that were specifically targeted by the world’s richest nations. Nato only destroyed 14 tanks, but 372 industrial facilities were hit – including the Zastava car plant at Kragujevac, leaving hundreds of thousands jobless. Not one foreign or privately owned factory was bombed.

Now, consider this chapter on Libya from the US State Department’s Investment Climate Statement released in Mar. 2010:

With the imposition of Law 443 of 2006, local ownership is essentially enforced for most foreign entities seeking to do business in Libya, as well as many established before the law came into effect. While this law boosts the percentage of foreign ownership when compared with previous regulations, it requires that at least 35% of non-Libyan businesses be controlled by Libyan individuals or companies. This law has made competent Libyan partners in all sectors a highly valuable commodity for foreign investors, providing ample fuel for rent-seeking behavior in many sectors of the economy.
Offsets are often a part of large foreign investment deals, particularly in the energy sector. “Corporate responsibility” and local staff training programs are common requirements for successful concession bids, and training programs in particular are generally essential to win bids on most Libyan government contracts. These programs can range from the training of a handful of local staff up to multi-year programs exceeding US $50 million for large energy companies. Also, some foreign firms have moved beyond these measures to bankroll much larger development projects. For example, following the October 2007 10-year extension of its holdings in Libya, Italian energy firm ENI Spa announced that it had signed an MOU with the Qadhafi Development Foundation to provide US $150 million for the building of hospitals and schools, and for the preservation of historical sites. Offsets of this type are very likely to remain a part of the business landscape for the foreseeable future.
While the term “Corporate Social Responsibility” is not well-known in Libya, the general concept of companies helping local charities and members of the community in need does exist. For example, one state-owned enterprise provides office space to an organization that assists children in need of cancer treatment. Many foreign companies have programs with communities and officials to address needs in healthcare, road safety, and education. While most firms follow generally accepted CSR principles, the extent to which they follow the OECD Guidelines for Multinational Enterprises is unknown. Firms who pursue CSR are viewed favorably by the general public and by officials. As noted above, elements of “Corporate Social Responsibility” and local staff training programs are common requirements for successful bids in the energy and construction sectors.
Private enterprises are allowed to compete with public enterprises under the same terms and conditions with respect to access to markets, credit, and other business operations. However, since approximately 80 percent of the economy consists of public sector entities, most large companies are government-owned and therefore, are the only companies that have the required capital to form joint ventures with foreign partners. SOEs are active in all sectors in Libya and especially in the Energy, Telecommunications, and Construction sectors.
The government directly intervenes in the hiring practices of foreign companies operating in Libya. For example, a 2006 decree ordered that all foreign oil companies must hire a Libyan national Deputy County Manager and Finance Manager. In August 2009, the government decreed that all foreign branch companies must hire Libyan general managers, but the government has inconsistently applied the rule. The National Oil Corporation also regularly assigns both qualified and unqualified Libyan workers to foreign energy companies.

So, we have the Libyan government being criticized by the US for extracting certain concessions from foreign investors. The US may be appreciative of Libya’s forays into neo-liberalism, but make no mistake, those pesky conditions imposed on foreign capital are things that the US wishes it could do away with.

In the final paragraph we learn that:

Libya has announced vast new development projects, including plans that it would spend 150 billion dinars ($123.4 billion) on public works over the next five years. The Libyan government has embarked on an ambitious plan to upgrade its infrastructure, and construction is underway to build new roads, airports, railroads, and housing.

$125 billion over five years is a lot of money for any country to be spending on infrastructure. It implies two things:

  1. There is major potential for money to be made from public works contracts; and
  2. the Libyan regime must be predicting significant future oil revenues in order to afford all of this.

Now, much like Serbia, Libya has a geographic region that consists of people with good reason to feel abandoned and persecuted by their national government. At the same time, the possibility of meddling by covert elements cannot be discounted. The Kosovo Albanians most certainly had legitimate grievances against the Serbian rulers of their territory, but that does not change the fact that their cause was exploited by the US and NATO to chip away at the Yugoslav republic as Western actors have done since the early 1990s.

Milosevic, it should be remembered, was a crooked opportunist who exploited ethnic nationalism among Serbs for the sake of his own ruling circle. The West probably would not have minded this if his regime was not an obstacle to economic liberalization. Indeed, it backed other mafia-esque ethnic-chauvinist factions against the Serbs. While Gaddafi has generally been successful in improving the standard of living of the general population through the use of oil revenues, he still has a tendency toward cronyism and patronage these days that cannot be justified by any anti-imperialist doctrine. His underdevelopment of the eastern region of Libya is particularly inexcusable. Nevertheless, there remain many questions about the sudden desire on the part of the “international community” to militarily intervene in Libya on behalf of the opposition there while either ignoring or aiding the repressive activities by other Arab states (the morbid synthesis of these two stances is neatly showcased in the US agreement for a Saudi invasion of Bahrain to prop up the Sunni oligarchy there in exchange for a declaration by the Arab League calling for Western intevention against Libya).

There is one major difference of course: Libya has a lot of oil, while the former Yugoslavia’s natural wealth was comparatively negligible. While it is doubtful the US would press for full privatization of Libya’s oil wealth considering it abandoned a similar measure while planning the privatization of Iraq’s state-owned assets, US interests would be served well enough by having the oil revenues flowing into friendlier hands. If nothing else, destabilizing the country with the highest life expectancy in Africa might be enough for elite policy makers. After all, it sets a good example for other third world countries and we all know what a threat those can be, right?


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