Libya

The Italians supplanted the Ottoman Turks from the area around Tripoli in 1911 and did not relinquish their hold until 1943 when defeated in World War II. Libya then passed to UN administration and achieved independence in 1951. Following a 1969 military coup, Col. Muammar Abu Minyar al-QADHAFI began to espouse his own political system, the Third Universal Theory. The system is a combination of socialism and Islam derived in part from tribal practices and is supposed to be implemented by the Libyan people themselves in a unique form of "direct democracy."

QADHAFI has always seen himself as a revolutionary and visionary leader. He used oil funds during the 1970s and 1980s to promote his ideology outside Libya, supporting subversives and terrorists abroad to hasten the end of Marxism and capitalism. In addition, beginning in 1973, he engaged in military operations in northern Chad's Aozou Strip - to gain access to minerals and to use as a base of influence in Chadian politics - but was forced to retreat in 1987.

UN sanctions in 1992 isolated QADHAFI politically following the downing of Pan AM Flight 103 over Lockerbie, Scotland. Libyan support for terrorism appeared to have decreased after the imposition of sanctions. During the 1990s, QADHAFI also began to rebuild his relationships with Europe. UN sanctions were suspended in April 1999 and finally lifted in September 2003 after Libya resolved the Lockerbie case. In December 2003, Libya announced that it had agreed to reveal and end its programs to develop weapons of mass destruction, and QADHAFI has made significant strides in normalizing relations with western nations since then.

He has received various Western European leaders as well as many working-level and commercial delegations, and made his first trip to Western Europe in 15 years when he traveled to Brussels in April 2004. QADHAFI also resolved in 2004 some of the outstanding cases against his government for terrorist activities in the 1980s by compensating some families of victims of the Pan Am 103, French airliner UTA, and La Belle disco bombings. The US resumed full diplomatic relations with Libya in May 2006 and rescinded Libya's designation as a state sponsor of terrorism in June.

The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, about one-quarter of GDP, and 60% of public sector wages. Substantial revenues from the energy sector coupled with a small population give Libya one of the highest per capita GDPs in Africa, but little of this income flows down to the lower orders of society.

Libyan officials in the past four years have made progress on economic reforms as part of a broader campaign to reintegrate the country into the international fold. This effort picked up steam after UN sanctions were lifted in September 2003 and as Libya announced in December 2003 that it would abandon programs to build weapons of mass destruction.

Almost all US unilateral sanctions against Libya were removed in April 2004, helping Libya attract more foreign direct investment, mostly in the energy sector. Libyan oil and gas licensing rounds continue to draw high international interest; the National Oil Company set a goal of nearly doubling oil production to 3 billion bbl/day by 2010.

Libya faces a long road ahead in liberalizing the socialist-oriented economy, but initial steps - including applying for WTO membership, reducing some subsidies, and announcing plans for privatization - are laying the groundwork for a transition to a more market-based economy. The non-oil manufacturing and construction sectors, which account for more than 20% of GDP, have expanded from processing mostly agricultural products to include the production of petrochemicals, iron, steel, and aluminum.

Climatic conditions and poor soils severely limit agricultural output, and Libya imports about 75% of its food. Libya's primary agricultural water source remains the Great Manmade River Project, but significant resources are being invested in desalinization research to meet growing water demands.