Abstract
Libya’s perception of its external security has been profoundly affected
by world events over the past few
years. Qadhafi now considers that the
route to survival lies in positive engagement with the international
community, led by his Anglo-American allies. This acknowledgement has led to a
series of bold actions
on the part of Libya that have surprised the West
and led to a revival in relations. This comes after 15
years of the North
African country occupying a pariah status in European and American minds.
The decision in September 2003 to lift the UN embargo, following an agreement
to compensate
Lockerbie victims, has been noticed within the arms trade
and political arenas. The lifting of the US and
UK economic sanctions
followed this, and major deals were struck with western oil companies.
Recent
developments have seen European defence companies moving to
establish themselves in what could
emerge as a very lucrative Libyan
defence market.
Libya’s extensive array of military equipment was
mostly purchased from the Soviet Union and is in
desperate need of
modernisation. Despite efforts to develop a credible indigenous defence
industry after
Colonel Qadhafi assumed power in 1969, Libya’s
production capability remains negligible. There has
been no multinational
involvement in the defence industry in recent years. However, several arms
companies are currently undertaking preliminary feasibility studies into the
possibility of developing
relationships with the regime. Paramount among
these is the UK firm BAE Systems. This company
previously focused upon
civilian contracts, but, after the lifting of the arms embargo, the company is
in a
strong position to dominate the market. Overall, we remain optimistic
about the growth potential of
Libya’s defence industry. Defence
expenditure is forecast to rise to some US$730mn by 2010. Import
figures
will rise substantially over the coming years as Libya updates and replaces
its ageing Soviet
equipment – although this will depend on how the
country’s economy fares in the face of the global
financial crisis,
and on the extent to which oil prices recover.
Enthusiasm for foreign
investment in Libya has been dampened by Qadhafi' s hints about
nationalising
foreign oil company assets. The Libyan leader has been
inconsistent in his attitude toward foreign
investment and economic
policy. However, Libya is unlikely to suddenly seize assets.
Economic
growth is currently impaired by lower oil prices and OPEC-mandated production
cuts, but the
government appears determined to spend its way through the
global downturn, even at the cost of a huge
budget deficit. As with
neighbouring Algeria, Libya' s lack of economic diversification, while
detrimental
to its long-term health, will actually shield it from the
worst of the global crisis.
In 2008, Russian President Vladimir Putin
visited Libya for the first time. The Russian president signed
an
agreement on the writing-off of Libya' s US$4.6bn debt to Russia, in exchange
for the conclusion of
new deals, from which up to US$2bn goes to the quota
for military and technical co-operation. However,
the signing of the
package is being held back by the fact that the issue of repayment of the
Libyan state
debt has not been settled. In March 2009, the BBC announced
that Russia is fulfilling a contract for the
construction of Molniya-class
missile boats for the Libyan navy. Domestically, Qadhafi’s succession is
of
concern to Libya’s internal security. He has ruled Libya
single-handed for the past 40 years, with almost
no checks on his power.
As the leader grows older, there are increasing concerns over the future of
the
regime, given that all authority is currently invested in the
dictator. It is likely that power will pass to one
of his children,
although this process itself has the potential to cause instability.
This
quarter, we have introduced a significant new aspect to BMI' s Defence Reports,
which is the City
Terrorism Rating (CTR). This assesses the risk of a
terrorist attack. The CTR takes into account the
overall BMI Terrorism
Rating for the country in question. It also incorporates the ' prevalence'
of
terrorism, which recognises the frequency of attacks, and whether the
city is a target for terrorists. The
CTR also recognises the ' threat' of
terrorism in terms of the likely numbers of victims and the ability of
groups to launch sustained campaigns. In Libya, we assess the CTR for Tripoli
at 95, the highest (best) in
the North African region. Strong internal
security in the capital explains the ratings of 100 for prevalence
and
risk, while the state component is also the best in the region at 92.5.
| 
View Cart
