Wednesday, 05 Dec 2012
Leptis Magna, Libya
Overseas Business Risk - Libya
Political and Economic
As a result of the 2011 revolution against Muammar Qadhafi’s Jamahiriya state, Libya is undergoing a process of political transition and economic reconstruction. On 7 July, Libya held its first democratic elections in over 40 years. The election, in which over 100 political parties registered has now formed a 200-strong General National Congress (GNC) which was officially inaugurated on 8 August. On the same night Muhammed al-Magariaf was elected as Chairman of the Congress and Juma A’tiga and Saleh al-Makhzoum as his deputies. The GNC are now due to elect a Prime Minister who will in turn nominate a Cabinet. The GNC also has responsibility for appointing a Committee to drafting of a new permanent constitution, which will be put to a public referendum at the end of 2012. Full legislative elections are then scheduled in April2013. Until that time Libya is governed under an interim constitution drawn up by the previous interim legislative body, the National Transitional Council (NTC).
Despite the conflict, Libya’s financial solvency has recovered quickly. The UN Sanctions Committee’s decision to remove sanctions on the Central Bank and its commercial arm at the end of last year significantly improved short term solvency. Libya is one of the most hydrocarbon-dependent economies in the Middle East and between 2003 and 2010 hydrocarbons represented on average over 90% of government revenue and over 95% of exports. Since the conflict, oil production levels have recovered quickly and most recently estimates cite production at 1.55 million barrels per day (mbpd), near the pre-revolution figure of 1.7 mbpd, meaning that there are sufficient funds to cover most Government expenditure as it currently stands
The economic legacy from Qadhafi includes a high rate of unemployment (estimated at 30% pre-conflict), an economy dominated by state ownership and restricted market entry for foreign firms. However, the World Bank and IMF are leading international efforts to support to economic recovery and realignment. The new Libyan authorities have repeatedly stated their desire to see foreign firms establish themselves in Libya.
Business and Human Rights
Gender: Libya is committed to preventing gender discrimination in the workplace under the International Covenant on Economic, Social and Cultural Rights, and the Convention of the Elimination of Discrimination Against Women. The NTC’s Constitutional Declaration states that all Libyans are equal before the law and are not discriminated against because of gender. Women generally have good access to education and work, particularly in the professions of medicine, law and teaching. However, women in Libya continue to face some challenges to secure employment and are under-represented in the work place.
Migrant workers: Libya has an estimated 1-1.5 million migrant workers. Most are employed in low-paid and low-skilled jobs in the service industries and manual labour sectors. Libya has ratified the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families. There is also a large number of illegal migrants working in Libya; many are employed without a contract and must work long hours to earn a living wage. There are reports that sub-Saharan migrant workers are often victims of apparently racially-motivated attacks.
Working conditions and occupational safety: Libyan labour law stipulates minimum wage, working hours, night shift regulations and dismissal procedures. However, there are some allegations of unsafe working environments and excessive forced overtime. Libya is committed to reducing corruption and is a signatory to the UN Convention Against Corruption. Libya is considering signing up to the Convention on the Rights of Persons with Disabilities.
LGBT persons: Homosexuality is considered a criminal offence in Libya, for which the minimum prison sentence is three years.
Rights of association (trades union): The Constitutional Declaration does not currently recognise trade union rights. Whilst there is no tradition of trades unions operating in Libya, there have been some instances of public sector workers pressing for increased rights since the fall of Qadhafi, through demonstrations and strikes.
Child labour: Libya has signed the Convention on the Rights of the Child and their labour law prohibits the employment of minors under 18. Whilst there are some reports of child labour, most children enjoy access to education and are not forced in to labour
The new Libyan Government has signalled its intent to ensure Libya adheres to all of the Conventions to which it is a signatory. However, the Government’s current capacity to implement international standards and protect human rights is still quite limited. Please read FCO’s Annual Human Rights report on Libya for more information.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
Corruption was rife under Qadhafi at every level, fuelled by an over-dependency on oil revenues, weak state institutions and a total absence of oversight mechanisms. The revolution was in part fuelled by the Libyan people’s revulsion against corruption and the fact that the nation’s substantial natural resources benefitted only a few, powerful people, with a complete lack of accountability to the public.
This legacy of corruption is deep-seated and will take time to change. However, the new Libyan authorities have been clear on the importance that they ascribe to openness, transparency and accountability in government, and their desire to draw a clear line under the mistakes of the past. The Transitional Government made some progress on this agenda e.g. through working with the IMF and World Bank to create the 2012 budget. However, we are yet to determine how the new Libyan authorities (once elected) will address this issue.
Protective Security Advice
Business disputes – a functioning legal and justice system. There is ongoing work to rebuild the Libyan justice system in the aftermath of the revolution. Although judges and prosecutors have largely returned to work, cases are being processed slowly and complicated cases (involving politically sensitive material relating to aspects of the former regime) are generally not being processed. Whilst law enforcement bodies are in place, their capacity remains weak and the state bodies (eg: police and army) are currently operating alongside revolutionary militia. The Libyan penal code itself is based on a European model and largely – with the exception of a number of contested articles introduced under Qadhafi – in line with international standards.
Scams - we have been made aware of a small number of commercial disputes in Libya involving international companies. However, we currently have no reason to believe that these form part of a larger trend.
IP rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, they you should consider registering your IP rights in your export markets.