COLONEL GADDAFI’S promise to abandon the pursuit of nuclear, chemical and biological weapons has opened the door to a country that has been shunned by the outside world. Suddenly, after 35 years of socialism, revolutionary rhetoric and isolation, Libya is welcoming back the West.

Since Gaddafi’s pledge in December 2003, hundreds of oil executives, architects, lawyers and bankers from Europe and America have been flocking to Tripoli in the hope of contracts as Libya races to catch up for lost time. After a year when everything changed, Libya is poised for the breakthrough.

Many Libyans have difficulty comprehending the scope of Gaddafi’s volte-face. It is not just that their leader has scrapped development of all weapons of mass destruction; he has also abandoned Arab socialism, admitting that his vision of a paternalist state bringing wealth to every Libyan is unachievable and that state control of the economy has been a shambles, with corruption, bureaucracy and shortages the only result.

But the turnaround is real, and is being spearheaded by Shukri al-Ghanem, the Harvard-educated Prime Minister, who preaches privatisation, encourages foreign investment and wants to scrap bureaucratic controls. Libya is calling home its exiles, sending its students to the West and welcoming Europeans to its capital.

Tony Blair is not the only Western leader to have made his first visit to Tripoli in the past year. President Chirac of France, Chancellor Schröder of Germany and Paul Martin, the Canadian Prime Minister, have all come, accompanied by delegations of businessmen looking for investment. Silvio Berlusconi of Italy visited twice, and Italians, expelled when Gaddafi came to power in 1969, are returning in their hundreds to their former colony .

Small, clever, energetic and impatient, Ghanem has one of the toughest political jobs in the world. Appointed prime minister two years ago, it is his task to drag a country isolated by international sanctions for almost two decades into the modern world. Furthermore, with barely any experts or fellow ministers with overseas experience, he has to do so almost single-handed.

There is plenty to do. With vast and still underexplored oil resources and a population of only 5.6 million, Libyans should be as well off as the Arabs of the Gulf states. But sanctions, isolation and state controls have eroded living standards. For years huge sums were diverted to anti-Western insurgents. Oil production, at 1.4 million barrels a day, is far below the peak of 3.3 million in 1970. And until 2003, wages in the public sector had been essentially frozen since 1982.

The new policy encourages foreign investment, is opening up Libya to visitors and tourists and plans to privatise 360 state-owned enterprises, including cement, shoes and soft-drink factories and possibly part of the oil industry, over the next five years. But these plans have sparked domestic opposition. How will he convince his critics? Ghanem says: “The people are already converted and want things to get better. In any case, some of our state companies are on life-support machines and will die if we don’t save them.”

The next stage is to tackle corruption. “We have already equalised the exchange rate with the black market rate. We have also just abolished all import licences, as these were difficult to get and people paid millions in bribes to obtain them. We don’t need them so I scrapped them,” he adds.

Such talk is meant to reassure nervous foreign investors who are still wary of a country where political free- doms are not yet established, decision-making is opaque and bureaucracy and the lack of a clear legal framework deter investors.

Saif al-Islam Gaddafi, Gaddafi’s influential son, heads a foundation that has paid out billions of dollars in compensation for past state crimes. These payments have lifted official obstacles to better relations.

Libya is now invited to play a full role in the North African dialogue with the EU. Europe, and especially Italy, is seeking Tripoli’s co-operation in halting the stream of illegal immigrants from Africa using Libya as a jumping-off point.

Libya is disappointed that it has not yet been rewarded by the West for its changes. But the rewards will come when, as Ghanem hopes, oil production is doubled in the next five years and Western investment flows in. The race to open up the country has only just begun.

This Focus supplement has been produced by The Times in association with Pioneer News, an Impact Media company. Impact Media Global Ltd, 66 Chiltern Street, London W1U 4JT Tel: 020-7034 1300 Fax: 020-7935 5777 E-mail: j.gasser@impact-media-group.com Website: www.pioneer-news.com

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