Columbia International Affairs Online: Working Papers

CIAO DATE: 10/2011

Libya's year zero: Finding opportunity as a country rebuilds

September 2011

Economist Intelligence Unit


Libya’s rebels have pushed the regime of Muammar Qadhafi out of power, and are poised to take complete control of the country. This in itself is a monumental achievement, but it marks only the start of what is likely to be a long and fraught process of rehabilitation. The new leadership must rebuild a state that for decades was run on the whims of an authoritarian leader, determined both to monopolise and to hold on to power. There are few institutions that work, and even fewer that work to the benefit of the general population, so the challenge amounts to little short of building a functioning state from scratch. Views on what form that state should take are as diverse as the regional, ideological and sectarian interests making up its would-be architects, and these stake holders must be persuaded to support the process—or at least not to obstruct it—before it can even begin. Libya is strategically placed, adequately supplied with talent and well endowed with natural resources. If the state-building exercise is successful, it can quickly become a stable and thriving economy, offering a range of opportunities to business investors both at home and abroad. But the challenges are numerous and substantial, and a post-Qadhafi dividend is not guaranteed. This report spells out those challenges, and the business opportunities that would be the reward of success. The first section of the report looks at the political outlook. The Economist Intelligence Unit identifies three scenarios, and attaches probabilities to each.