As Khaled looked out over the now quiet, olive-tree covered hills of Zintan, he recalled the fighting and destruction that rocked this area just a few short months ago. Zintan is a town of 40,000 people tucked into the Nafusa Mountains of northwest Libya. Six thousand Zintanis joined the armed opposition to oust dictator Moammar Gadhafi, forming one of the country’s most formidable militias.
During the eight-month conflict, Zintan’s able-bodied boys and men joined the fighting, its businesses shut down, and electricity and water stopped flowing. Like in the rest of Libya, the economy came to a standstill. In less than one year, the country’s Gross Domestic Product (GDP) contracted by a staggering .
For Khaled, who runs the local media center, nursing the economy of his town and his country back to health is among the most critical challenges facing the country’s transitional government.
The focus thus far has been on restoring oil production to pre-war levels. Libya’s oil minister said the country is now producing 1.6 million barrels per day (b/d) of crude oil, just short of the b/d the country was producing before the revolution.
Getting the oil sector up and running should indeed be a primary focus, as hydrocarbons have long dominated the Libyan economy; before the war, oil accounted for over 70 percent of GDP, 95 percent of exports, and nearly 90 percent of government revenue, as by the International Monetary Fund.
Moreover, Libya supplies two percent of global output. That its particular brand of “sweet” crude, exported mainly to Europe but also to Asia and the United States, cannot be easily replaced makes it some of the most sought-after oil on international markets.
But some argue Libya’s economic recovery must go beyond restoring the pre-war status quo.
As Michael L. Ross, Professor of Political Science at UCLA, argues in his book , countries “blessed” with abundant natural resources - particularly oil - also carry a heavy burden. He notes that an over-dependence on the oil sector correlates with a decline in the competitiveness of non-oil sectors, makes the economy vulnerable to swings in international commodity prices, and fosters nondemocratic governments. Indisputably, seemingly endless oil revenues helped keep Gadhafi in power for 42 years.
Moreover, little oil wealth trickled down to ordinary Libyans.
“One of the largest oil pipelines in Libya passed through here,” said Khaled, pointing to two long, white streaks running down the mountainside near his hometown, signaling the pipelines buried below. “But we didn’t benefit at all.”
The pipeline carries oil from the Awbari oilfield in the south to the al-Zawiya refinery in the north, near Tripoli. Opposition fighters in June 2011 in order to deprive Gadhafi of resources, a move that rebels say was critical to their victory. For Khaled, it was also an important symbolic act, in which regular people reclaimed a pipeline that quite literally bypassed them, funneling Libya’s most precious natural resource north for the benefit of the ruling elite.
Consequently, Libya’s post-conflict growth strategy must include a more equitable distribution of oil wealth, but as the IMF , it must also involve a reorientation of the economy away from dependence on hydrocarbons.
Olives have been an important facet of the economy in the Nafusa Mountain area for thousands of years. The Romans, whose ruins dot the landscape of Zintan, produced olive oil here and exported it to Rome. Olives are also a source of pride for Khaled, who showed me ancient olive presses and explained how to determine the age of an olive tree by counting the number of rings in its trunk. “Land isn’t just for making a living off of,” he said. “The land is our past, present, and future. Our grandfathers liberated the land, protected it.”
However, olives were among the agricultural commodities whose production declined with the 1958 discovery of oil, explains a by the MEDFROL project, which analyzes the agricultural sectors of Mediterranean countries. Before 1958, agriculture was the country’s main source of revenue, making up about 30 percent of GDP. With the increase of oil production and exports in the 1960s, the size of the agriculture sector declined rapidly, comprising less than 5 percent of total GDP by 2005.
Now, local business owners and farmers are calling for reforms that would re-focus attention on the agricultural sector.