International Trade

A House Divided: A Revisiting the Arab Spring in Libya

After the hope and excitement for democracy in the Middle East in 2011, the only successful transfer of power from autocracy to democracy is in Tunisia. Its next door neighbor Libya has not been so lucky. After the Arab Spring revolts and the death of Muammar Gaddafi, the rebel leadership in the National Transitional Council created the General National Congress (GNC) with a mandate to create a democratic constitution within one and one-half years. After months of gridlock and controversy, the GNC created a House of Representatives to continue their work. A splinter group of the GNC refused to disband and created the National Salvation Government (NSG). This forced the newly-formed House of Representatives to relocate to Tobruk and kicked off a civil war that has lasted until today.

This powder keg blew in 2014 when an exiled general, Khalifa Haftar returned to the country and assembled the Libyan National Army and allied with the House to orchestrate an attack on the Islamist NSG and militants associated with the 2012 U.S. Embassy attacks. This started a civil war lasting more than a year. Islamic State and its affiliate the Benghazi Shura Council took advantage of the chaos and carved out territory for itself and held that territory until the end of 2017.

The U.N. intervened in 2015 and convinced the Tobruk and the NSG/GNC forces to participate in talks that resulted in a new body, the Government of National Accord in Tripoli, which would make binding decisions for both parties and received international recognition. Haftar did not recognize the government and the House backed out of the deal.

With rich oil reserves, Libya could be one of the wealthiest countries on the North African coast. But with the uncertainty of these forces pulling at the seams of the country, it is extremely risky for investors to bet on Libya. However, there is a bright spot in the turmoil; in 2016, the Tobruk and Tripoli governments agreed to unify the National Oil Corporation, the state-run oil producer. However, with Libya’s GDP the lowest it has been since the early 2000s, there is still a long way to go. As long as the conflict continues, Libya will remain a risky investment.

The combined forces have excised the extremist threat of ISIL in the battle of Benghazi, but many questions remain. While Haftar has been aligned with the House forces, he remains powerfully independent. He has been described as Libya’s most potent warlord. While the democratically elected House of Representatives is in place, the unrecognized GNA and unchecked power of the military threaten to turn this spring into a cold winter.

In Depth: International Trade

International trade creates and supports millions of American jobs that offer higher than average wages and drive economic growth. As a testament to the strength of American entrepreneurship, the vast majority of U.S. exporters are not large corporations but small to medium-sized enterprises. Those that doubt the power of global…

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