Libya has the largest proven oil reserves in Africa with 42 billion barrels of oil and over 1.3 trillion cubic meters of natural gas. Libya was listed ninth in the world in oil reserves in the last few years. In 2010, Libya was Europe’s largest oil supplier. Libya has massive reserves and the country has a lot of unexplored areas. Western oil companies are desperate to get the rights to oil explorations in Libya. Libya’s oil is in high demand because it is light sweet crude oil. This type of oil is very desirable because it is clean, low in sulfur and easy to refine and burn.
With all of this valuable oil, why is Libya behind most countries in economic growth?
There are several reasons for Libya’s lack of growth. First, Libya has a ruling family that has been in power for over 40 years. They have tightened the grip on the country’s natural resources. Second, the ruling family has confiscated the oil wealth, closed off education and oppressed its people.
Third, the money from the Libyan Sovereignty Fund (the country’s oil fund), which has more than $100 billion USD in investments, is used by the ruling family for personal interest. Fourth, the United States imposed economic sanctions on Libya between 1982 and 2004 which hampered economic growth.
Fifth, the country’s natural resources are mismanaged and there is no accountability or transparency of the government. Lastly, the money that comes from oil production goes towards buying ammunition and weapons to support the regime.
The recent political unrest is due to corruption, a lack of transparency and more importantly, a lack of accountability in the use of Libya’s natural resources. The country has enormous wealth and huge potential. In order for the country to grow and prosper, Libya’s natural resources have to be well managed and wisely used. Unless the current practices stop, corruption will continue to breed political unrest.
Hani Yaafouri, a Lebanon native, is a 2010 graduate of the Master of Resources Law Studies Program at the University of Denver Sturm College of Law