Libya's efforts to build economy, tourism snagged by its own capriciousness

By Sudarsan Raghavan
Washington Post Foreign Service
Wednesday, April 14, 2010

LEPTIS MAGNA, LIBYA - Only a handful of tourists wandered through the unspoiled ruins of this ancient Roman city edging the azure waters of the Mediterranean. It was high season, when buses should have been disgorging hundreds of affluent visitors from Europe and beyond. But among the arches and fountains, there was mostly silence.

Tour guide Saleh Krima explained why.

"The Leader has called for a jihad against Switzerland," he said on a recent day. "Now, no one wants to come here."

The Leader is Moammar Gaddafi, who has ruled this nation with an iron fist for more than 40 years. His tit-for-tat fight with Swiss authorities followed his son Hannibal's brief arrest in Geneva in 2008 for allegedly beating members of his staff. The charges were dropped, but the feud has continued -- a stark example of the Libyan government's unpredictability.

Since Libya's diplomatic isolation ended more than six years ago, the country has tried hard to attract foreign investors and promote tourism in an effort to diversify its oil-dependent economy. But an older mind-set -- steeped in bureaucracy, old-style socialism and antagonism toward the West -- is stifling its aspirations to become a North African version of Dubai, the Middle East's economic hub.

A Swiss businessman has been jailed in Tripoli, the Libyan capital, on immigration violation charges, an action widely seen as retaliation for the arrest of Gaddafi's son. Switzerland, in turn, has barred Libyan officials. In February, Gaddafi banned visas for citizens from 20 European countries in an order that was not lifted until late last month. His call for jihad, or holy war, against Switzerland came after a Swiss referendum prohibited the construction of new minarets. Since then, Libyan officials have said that Gaddafi meant an economic boycott and not an armed struggle.

Last month, Libya imposed a trade and economic embargo on Switzerland that stopped flights and halted oil exports. Libya has also withdrawn billions from Swiss banks.

Ordinary Libyans have loyally applauded Gaddafi's actions. But they have also felt the brunt of the diplomatic fallout.

Travel agent Abdalla Adem has seen his business shrink by 60 percent. His main clients are Italian, Spanish, German, Belgian and French tourists.

"Switzerland was wrong to treat the son of a head of state in this manner, and it was they who first barred the Libyans," Adem said. "They wanted to create a problem."

"We want Switzerland to compensate us," he added.

Libya's unpredictability extends to its efforts to change. A promised transition from a state-run economy to one in which private companies play a prominent role has been slow. In one well-publicized case, the government forcibly bought out a Canadian oil company for less than it was worth, after the company announced a big find.

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