Amal Bourhrous
PART (II)
Putting renewables at the centre of post-conflict economic reconstruction
Reducing dependence on hydrocarbons demands placing a diversification process at the heart of economic reconstruction, thus moving away from the rentier state model towards a more sustainable political economy. Such a call for diversification in Libya is not new.
It existed even before the 2011 revolution, but the need has been accentuated by the struggle for and the strategic use of oil resources in the civil war. While other Middle East and North Africa (MENA) oil producers, particularly Gulf states, have elaborated national Visions and initiated diversification processes to reduce their dependence on hydrocarbons and lay the foundations for post-oil economies, Libya has lagged behind, and the conflict has certainly not helped.
Nonetheless, although the impact of the conflict makes the initial conditions for diversification very different in Libya than in Gulf states, Libya has enormous potential to build a new economy while achieving energy sustainability as part of its post-conflict economic reconstruction.
This requires making the transition to renewables a priority of post-conflict economic reconstruction. In particular, the country is well positioned to generate solar energy, given the nature of the climate and the year-long availability of large amounts of sunlight. Several studies have underlined the promising possibilities of harnessing solar energy in Libya, some predicting that the country could generate even more energy from the sun than from oil.
The experience of Morocco as the region’s leader in the production of clean solar energy demonstrates how significant these possibilities are. In Libya, some steps in the direction of renewable energy have already been taken on a smaller scale, but its deployment remains limited and needs to become more assertive.
The gradual transition to clean energy would not only increase the country’s ability to meet its rising electricity demands, but also open possibilities for becoming a clean energy exporter. By reducing its dependence on oil, Libya can create a more diversified and sustainable political economy, adapt to the challenges of the climate crisis, and contribute to global efforts towards decarbonisation.
Towards a digital transition in Libya
Achieving a more diversified political economy in Libya is inseparable from the need to build a modern knowledge-based economy that values human capital and harnesses the potential of new technologies and connectivity.
This can also contribute to easy and equitable service delivery, which is crucial in a post-conflict setting. Another important component of economic diversification in Libya is thus to lay the groundwork for a knowledge- based economy and reap the benefits of the digital revolution and technological advances.
The COVID-19 pandemic has considerably accelerated the digital transformation throughout the world, as individuals, businesses and governments turned to virtual platforms to continue to operate despite public health restrictions. These digitalisation processes are taking hold and they are already changing financial systems, governance, services, energy, agriculture, etc.
The transition to a knowledge-based economy through digitalisation and technological innovation presents an opportunity for building Libya’s post-conflict economy in line with global trends. However, in a post-conflict context, the transition to a knowledge-based economy through digitalisation tools may have negative effects in the short run if conditions for human security and development are missing.
It does not immediately address the population’s urgent needs, such as public service delivery and employment opportunities, and thus risks aggravating grievances and inequalities.
Conversely, when the right conditions are in place, an approach to post-conflict economic reconstruction that incorporates the transition to a knowledge-based economy can alleviate the long-term impact of the conflict while simultaneously preventing the country from falling behind in the global digital transformation.
Concretely, the digital transition can substantially redefine and help improve performance in many sectors, from business, commerce, the banking system and the energy sector to education, governance, and public service provision.
Projects on the digitalisation of the banking system, for example, have recently been discussed by the CBL (“CBL launches projects concerned with digital transformation”, 2021), and this is an initiative that needs to be pursued and developed further. When adequate regulations and oversight are enforced, digitalisation projects such as these can also increase traceability of funds and transparency and facilitate equal and inclusive access for citizens.
Some efforts have already previously been made to adopt digitalisation-related reforms, but the eruption of the conflict in 2014 hindered their implementations. Libya’s post-conflict economic reconstruction should pick up these efforts by increasing connectivity and developing the country’s digital infrastructure.
Conclusion and recommendations
Rebuilding Libya’s economy on new and sustainable grounds entails confronting multiple layers of risks and challenges.
First, there are risks and uncertainties related to whether Libya will succeed in turning the page of a decade of conflict and reunify and consolidate its institutions.
Next, there are risks associated with the process of post-conflict economic reconstruction per se and the multi-dimensional challenges it brings.
Finally, there are risks and challenges proper to the implementation of the green and digital agendas. All these risks are compounded by the deep fragility resulting from years of conflict and institutional fragmentation.
Furthermore, both post-conflict economic reconstruction and the green and digital transitions are fraught with risks of widening inequalities. However, if these risks are properly managed and mitigated, there are real benefits for Libya to focus on the green and digital agendas in its post-conflict economic reconstruction.
Not least of these benefits is that the green and digital agendas will be, from the outset, fully integrated into economic and development policy rather than being an afterthought.
This process is not easy, and multiple challenges exist in the short term.
In the long term, however, the strategic choice of diversification, the shift towards renewable energy, together with the use of digital solutions to build and consolidate a knowledge-based economy, can deliver a more sustainable economic model, built on solid grounds.
The digital and green agendas are, nonetheless, first and foremost political projects. Policies therefore need to be debated and adapted to reflect a concern about people, their rights and welfare, and a concern about social justice, equity and inclusiveness.
It is also important to recognise the need for plans to emerge from the Libyan context itself, as top-down imposed approaches are not likely to succeed.
The following recommendations, though not exhaustive, sketch out a framework for post-conflict economic reconstruction along green and digital lines. They are of relevance to Libyan policy-makers and to international actors interested in supporting Libya in its post-conflict transition.
To Libyan policy-makers
- Libyan policy-makers need to complete the reunification of economic institutions as a prerequisite for reconstruction.
- Dismantling war economies is a key priority. This hinges on creating alternative employment opportunities and fostering an economic environment conducive to growth and equitable public service delivery.
- Mechanisms and strict measures to deter corruption and increase accountability should be established and enforced.
- Libya should capitalise on the advantage given by hydrocarbon revenues to phase out its fossil fuel dependence and invest in renewable energy in the medium term. Reconstruction should include projects to build the infrastructure for renewables, including solar power plants.
- The banking sector needs to be further developed. Digital solutions are key to facilitate access to financial services for individuals and businesses.
- To build a knowledge economy, Libyan policy-makers need to develop the digital infrastructure and integrate information and communication technology (ICT) in education and training.
- Encourage investment in projects connecting service provision and climate adaptation through green loans.
- The green and digital agendas need to be inclusive and centred on the people and their needs. Libyan policy-makers need to develop an adequate social policy to provide social protection and reduce inequalities.
To international actors
- Help Libya restructure its oil industry to generate revenue in the short term. At the same time, international actors should invest in and help finance projects focused on sustainable clean energy.
- Refrain from supporting corrupt actors and find ways to pursue their strategic interests without entrenching corrupt actors and networks.
- Use leverage to insist on enforcing accountability mechanisms to avoid the pitfalls of post-conflict reconstruction.
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Amal Bourhrous Researcher at the Stockholm International Peace Research Institute (SIPRI).
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