On the 9th Anniversary Day of the February 17 Revolution in Libya, 218News sheds light on the institutional corruption in a country whose economy relies solely upon oil amid the ailing private sector’s performance.
A forum with the slogan “February: Economy and Corruption” was aired on 218News on Monday when the researcher in oil and gas Ramzi Al-Jadi, academic writer Mabrouk Derbash and economy journalist Ahmed Al-Senussi were guests to speak about the institutional corruption.
“Ghost of Corruption” in Libya
The forum defined corruption and its reasons in Libya and Al-Jadi said Libyan institutions had been deeply corrupted since 2011 because of full reliance on oil, describing the local economy in Libya as a cake that everyone wants to have a piece of.
Derbash explained that corruption talks bring him back 60 years ago before the independence when the UN appointed Benjamin Heavens to write a report about the traits of the Libyan economy. He wrote about the people’s living conditions, Libyans political and geographical positions, which he described as perfect, and the mechanisms of revenue variables.
Derbash said some political issues were followed by corruption in the monarchy systems, helping corruption to be deeply rooted in the public institutions and the oil sector after the discovery of oil as starting after 1969, a lot of natural resources had been unearthed.
Derbash added, that after the United Nations report prepared by “Heavens”, the state started to consider projects for development, citing Libyan economic reports in that period, which he said had matched citizens and economic strength to them in conjunction with the development of infrastructure and the establishment of projects, putting obstacles before the state in parallel with strategic economic plans.
Meanwhile, Al-Senussi, a media specialist in economic affairs, said that the state of corruption in the Libyan economy took place after state officials dominated the institutions, explaining that there were employees who considered public institutions to be theirs and did not exclude the private sector from being involved in corruption operations.
Al-Senussi pointed out that corruption operations were not formed only by the rentier state style, indicating that the biggest problem is that the public sector is competing with the private sector and has not had the opportunity to stand out and make a difference, explaining that the symptoms of corruption appeared in Libya before 2011, but the only difference in increasing the number of corruption operations that have become available to a greater number of parties with the sources of looting and theft, indicating the harm of the “custom of monopoly” practiced by public institutions in Libya, including telecommunications.
Al-Senussi explained that the private sector in Libya from the history of the monarchy until 1978 was fine before it was eliminated after that, noting that the Libyan state from 2011 gave advantages to foreign companies at the expense of projects granted to local investors.
Al-Senussi praised the Norwegian experience, which succeeded in creating diversified sources of income and investing oil funds and keeping them for any future expected crises, including the recession that Libya is currently suffering from.
Oil…Before and After February
In a question about the oil sector “before and after February”, the researcher in oil and gas affairs, Ramzi Al-Jadi, said that this comparison is based on two parts, the first of which is daily oil production, and the second about the budget received from the National Oil Corporation, indicating that oil sales are not all profits, but rather, the cost of production paid by the state in several forms according to commercial agreements with the producing companies.
Al-Jadi pointed to the production report, explaining that the price of a barrel of oil in 2009 was $72 against the budget of the National Oil Corporation, which at that time amounted to $ 2.69 billion, divided between the wages and management expenses, pointing out that the state’s revenues in the same year amounted to 33 billion dinars.
The researcher said that corruption 8 years ago was limited to 2% of the volume of workers in public institutions, but it witnessed a terrible increase in recent years due to the absence of deterrence and that corruption after February 2011 reached levels of the administrative base in institutions.
Al-Jadi touched on the growth of the employees of the National Oil Corporation, which numbered 65,000, considering it to be a very high number compared to Arab companies with strong influence and production in the world.
He criticized the institution’s failure to disclose the budgets of 2018-2019 in the context of lack of transparency, and called for disclosing it for cost operations.
In the meantime, journalist Ahmed Al-Senussi asked about the cost of producing a barrel of oil and asked the researcher in oil and gas affairs, Ramzi Al-Jadi, who said it amounted to 23.8 dollars per barrel.
However, Al-Senussi revealed another number, as he said that the head of the National Oil Corporation, Mustafa Sanalla, had told him that the average cost of producing a barrel of oil in Libya for the year 2017 amounted to $ 7.5 and the cost of production was only $ 5 in 2018.
Derbash shared his opinion on the cost of production, saying that there are many factors that control the issue of raising and lowering the cost of production, and he continued his speech by saying that the Libyan economy depends in 95% of the revenues on oil, calling for diversification in the Libyan economy and the exploitation of the tourism and health factor.
In a question about the possibility of a drop in the global oil price in the future, Al-Jadi said that Saudi Aramco showed its willingness in 2017 to reduce prices up to $ 25 in case there was a need for that.
In a comparison between Libyan and Saudi oil production, Ramzi said that Saudi production reaches 12 million barrels per day, while in Libya 1.2 million barrels are produced if conditions are stable.
Al-Jadi expressed regret over the passage of 42 years without turning, even at a slight rate, to diversify sources of income in Libya, indicating that the country exported 27 billion barrels between 1964 and 2010 and did not benefit from the huge financial revenues that returned to the public treasury correctly throughout this period, considering before 2011, state institutions had failed to implement a policy of transition from a rentier economy to a more diversified economy.
Al-Jadi drew attention to the success of the neighboring countries Sudan and Egypt in exploiting natural resources, especially the region that connects the three countries where the largest water reserves lie in the world, praising the Sudanese project, which succeeded in attracting foreign investments to establish a “good rain” project with a capital of $ 5 billion to export wheat.
Al-Jadi added that Egypt also benefited from the water reserve in establishing a forest of the “Bolunoya” tree, which is a strategic project for the wood industry, stressing that it will be able to export wood after 5 years, while Libya is still dependent on the oil resource for revenue, noting the role of public culture among Libyans that contributed to the increased dependence on oil without making use of other natural resources.
Al-Senussi described the prevailing belief that Libya is a country rich is “wrong” and estimated the value of the oil revenues collected since its discovery by 900 billion dollars at a time when the market value of the company Amazon alone rose to 1.4 trillion dollars.
At the end of the conversation, and within the discussion about oil, Al-Jadi called for lifting fuel subsidies because of their negatives on the Libyan economy, which was emphasized by Al-Senussi, who said that the subsidies policy is wrong and useless.
Central Bank of Libya: Kingdom of Economic Corruption and Dictatorship
The discussion touched upon the work of the central bank and its policies through which oil imports are managed, where the writer Derbash said that the bank plays a role other than its role in this stage and works outside the scope of the tasks entrusted to it in relation to monetary policy, but exceeded it and began practicing economic and financial policy considering that the bank practices corruption financially and economically, and the governor Sadiq Al-Kabir, takes on his shoulders things “not related to the tasks assigned to the CBL”.
Derbash pointed out that the Central Bank of Libya and its governor, Sidiq Al-Kabir, marginalized the role of the supervisory bodies, including the Audit Bureau.
He added that the Libyan economy did not improve even after the launch of the economic reforms project, including the imposition of fees on foreign exchange sales.
He expressed his dissatisfaction with Law No. 1 of 2013 on canceling interest on banking transactions, stressing that the matter was made under pressure from Dar Al Ifta (Fatwa House) and it did not reflect positively on the work of the banking sector.
Darbash said that the distribution of allocations for heads of families is a social, not economic, step and contributed to the creation of corruption after its aim was to solve part of the liquidity crisis that the CBL neglected and did not put real solutions for properly, but rather chose to feed the black market with the allocations of heads of households directly.
Derbash explained that the problem of cash liquidity lies in the lack of confidence of citizens in the banking sector due to the inherent deficiencies in the mechanism of its work, including Law 1/2013 on canceling interest on banking transactions, noting that the General National Congress elected in 2012 contributed to legislating the law, which is one of the reasons of the crisis.
On the discussion of “February economy and corruption”, the researcher in oil and gas affairs, Ramzi Al-Jadi, commented on the work of the central bank, saying that the bank was able to cover part of the budget deficit through the fee imposed on foreign exchange sales in an attempt to fill any expected deficit.
Al-Jadi indicated that the bank adopted the policy of applying the fee to foreign exchange sales, through which it was able to provide a large part of the salaries of public sectors, but considered that poor management in the Central Bank of Libya is a form of corruption.
Al-Jadi stressed the necessity for the Central Bank of Libya’s management to comply with the regulatory bodies, including the Audit Bureau, and to take into account the reports issued by it.
On the issue of allocations for household heads, the researcher in oil and gas affairs, Ramzi Al-Jadi, said that benefit should be taken from offering this advantage to citizens that give them the right to buy $ 500 per person at the official price and cancel the subsidy permanently, and to take a decision that the $ 500 grant is a substitute for support, saying this step aims to boost the economy, stabilize the dinar price, and end smuggling.
Al-Senussi indicated that the division in the Board of Directors of the Central Bank of Libya contributed to the deterioration of the Libyan economy. He also considered that the decision of the Presidential Council to impose a fee on the exchange rate is “illegal”.
“The bank’s management is responsible for this because the administration did not hold a meeting to approve the exchange rate adjustment.” He said.
Al-Senussi touched on the issue of letters of credit, as he accused the central bank of giving precedence to certain people before the month of Ramadan, in reference to the activity of the food market movement with a value of “$ 600 million”, noting that there are some credits that are still granted until the moment at a price of 1.40 dinars per dollar because of favoritism at a time when others buy the dollar at 3,600 dinars.
Al-Senussi said that these abuses created a great corruption, denouncing the policy of the Governor of the Central Bank of Libya, Siddiq Al-Kabir, that contributed to the aggravation of the cash liquidity crisis in the banking sector and made the Libyan people work all in the black market because of the allocations of heads of families.
He stressed that the policy of Siddiq Al-Kabir facilitated the smuggling of resources and basic materials from the Libyan market because of the price difference, including “iron – copper – foodstuffs,” praising the role of the UN mission in Libya, which had a role in pressure to adjust the exchange rate.
Al-Senussi said that the exchange rate adjustment contributed to solving the cash liquidity crisis and that printing the currency did not contribute to this as it did not put any solutions, explaining that the monetary mass in 2011 was about 48 billion dinars for 60 years, indicating that the mass reached 110 billion Dinars which he considered a dangerous indicator of economic life.
Libyan Investments Overseas…”Multiple Ploys”
Part of the discussion was about Libyan investments abroad, where the specialist in economic affairs, Ahmed Al-Senussi, opened the debate, saying that Dr. Mohsen Darija, the former chairman of the Libyan Investment Authority, in 2012 commissioned one of the 4 major institutions in the world to evaluate the Libyan investments and determine its value.
Al-Senussi said that a great mystery was hovering over investment estimates, reminding that the Libyan Investment Authority is a new body that was created in 2007.
He also stated that there are 17 billion dollars invested in the Central Bank of Libya, in addition to other amounts that are invested through 5 other institutions.
Al-Senussi pointed to the issue of declining foreign exchange reserves after losing a group of assets and issues in large amounts, saying that the Libyan citizen did not benefit from the work of the Libyan Investment Authority.
He said that the financial, investment and economic institutions in Libya suffer from the issue of duplication of people with leadership qualities, among them the governor of the Central Bank of Libya, Al-Kabir, who receives 700 thousand dollars in exchange for his membership in the bank “ABC” in its branches “Bahrain and London” in which Libya has about 56%, in addition to the Minister of Foreign Affairs in the Government of National Accord Al-Taher Sayala, describing him as the “king of memberships”.
Derbash commented on the Libyan investments abroad, stressing the existence of corruption and manipulation of Libyan assets abroad even with the implementation of the United Nations resolution on freezing them, including the exploitation by some countries of items and gaps that contributed to the loss of part of the Libyans money.
Darbash pointed out that the estimates of Libyan investments abroad are inaccurate, explaining that they range between 180-160 billion dollars. He also warned of attempts to sell some Libyan real estate on the continent of Africa in the absence of strong supervision of these investments.
He said that the value of Libyan investments abroad can only be evaluated after the unfreezing of them, which he considered difficult due to the current political situation in Libya.
Al-Jadi said that the Libyan Investment Authority’s real value was absent on the Libyan street. Al-Jadi added that the transitional council contributed to the corruption operations because of its mismanagement of the issue of assets, pointing to the presence of favoritism in the issue of employing those in leadership positions.
Al-Jadi discussed the issue of selling the share of “Mathron” to “Total” company at the beginning of this year, describing the matter as “illegal”, expressing surprise that the Libyan Investment Authority did not consider benefiting from this matter.
