LONDON | Cheering the crude end that military dictator Muammar Gaddafi met on Wednesday, Libyans in the British capital gathered late in the evening outside the Libyan Embassy near Knightsbridge: they are not the only ones closely watching their freed country.
The shots that made history in Misrata will soon open the race among European and US companies to land in Libya and begin doing business, too. Or to renew existing deals. Oil is the word.
Activist organisation Global Witness believes oil represents no less than 95% of all Libyan exports and 80% of total government income, so the way the oil economy and foreign investment will be managed by the National Transitional Committee (NTC) can set the basis in which the future democratic regime will fund its people’s demands.
A few recommendations are in order, then:
“Public disclosure of how Libya manages its oil sector and disclosure of all revenues associated with it.
“The terms of existing oil contracts should also be disclosed and details of agreements made by the NTC with governments and companies involving sovereign funds or the exchange of cash, crude oil or ‘IOUs’ secured against frozen assets should be made public and open.
“All funds should be released through a transparent mechanism such as a strengthened Temporary Finance Mechanism.
“No new oil concessions should be brokered until an elected government is in place.
For all the necessary precautions, without external capital and industrial collaboration, the prospects of a buoyant Libyan economy could suffer delays whose social and political consequences no one wants. Quoting a Barclays Capital note to investors, Reuters points out at the fact that
“There is no parliament, no constitution, and virtually no civil society organizations, and the Libyan military is riddled with tribal and regional divisions. Hence, the potential for a security and political vacuum in Libya continues to be elevated, in our view.”
Charmian Gooch, director of Global Witness, thinks this is exactly why
“it is completely absurd that banks like HSBC and Goldman Sachs can hide behind customer confidentiality in a case like this. These are state accounts, so the customer is effectively the Libyan people and these banks are withholding vital information.”
Up until their demise, the Gaddafi family has had a significant personal control over the state funds invested in the Libyan Investment Authority or LIA. Global Witness reminds European and US financial institutions which have worked in the past for the Libyan authorities that according to the Prosecutor of the International Criminal Court, Gaddafi made no distinction between his personal assets and the resources of the country.
“HSBC holds $292.69 million across ten accounts and Goldman Sachs has $43 million in three accounts. The funds are in U.S. dollars, British pounds, Swiss Francs, Euros and Canadian dollars.
“A much larger portion of the LIA’s deposits – $19 billion – are held in Libyan and Middle Eastern banks, including the Central Bank of Libya, the Arab Banking Corporation and the British Arab Commercial Bank.
“Almost $4 billion of the LIA’s funds are held in structured products with banks, hedge funds and private firms such as Societe Generale ($1 billion), JP Morgan ($171 million) and OCH-ZIFF ($329 million).
“The LIA owns billions of dollars of shares in household name companies such as General Electric, Repsol, BP, Vivendi and Deutsche Telekom.” [Global Witness data is available here]
New political scenarios in the Middle East and Africa sure are great economic opportunities an exhausted Europe and declining US could do with. They deserve the same effort in transparency we strive to achieve for ourselves as well, knowing it is the engine of our better quality of life.
Brendan O’Donnell, Senior Oil Campaigner at Global Witness says:
“By drawing a line under Gaddafi-era corruption and the mismanagement of public wealth, the NTC could champion resource justice in the transitional constitution and set a great precedent for Libya’s future.”
No nation should find itself alone in doing so.