Gaddafi death could add momentum to Arab Spring
By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Muammar Gaddafi’s death adds welcome momentum to the Arab revolution, allowing Africa’s biggest holder of oil reserves to begin moving towards democracy, like Tunisia and Egypt. If the country’s interim rulers can stick to their plan to hold elections within eight months, it might even take less time to get there than either of Libya’s revolutionary peers.
Gaddafi’s death is a political milestone more than an economic one. It has been more than one month since the United Nations officially recognised the National Transitional Council. Sanctions have been eased. Libya has resumed oil production and exports. The industry’s bulls are predicting Libya could be pumping 1 million barrels per day by early next year -– more than half its pre-unrest levels.
Tribal differences exist, and Libya needs to find unity between its east and west. But Libya’s combination of vast oil reserves, existing wealth of about $140 billion, and the lack of existing but often compromised civil institutions gives it a cleaner slate than Tunisia or Egypt. It can more easily build a new model for its economy and politics -– with everything on the table, from a republic to a constitutional monarchy.
For investors, the potential is huge. Crude production could reach 3 million barrels of oil per day by 2015, with $30 billion of investment, according to recent comments by France’s trade commission Ubifrance. Iraq is on track to produce that amount this year and its GDP growth will reach double digits between at least 2011 and 2013, according to forecasts by the International Monetary Fund.
But there are risks too. For example, there’s no guarantee that the NTC’s hints that it will honor existing oil contracts welcome news for the likes of Italy’s Eni, Spain’s Repsol, and Total of France –- will survive the election. Libya will also need to pioneer a transparent structure for its sovereign wealth fund. Crucially, the end of Gaddafi will ratchet up the pressure on other dictators currently under siege, including Syria’s Bashar al-Assad. Libya may not be the last member to join the club.