Country Report Libya November 2009

Economic policy: Shokri Ghanem is reinstated as chairman of NOC

At the end of October, Shokri Ghanem, who only a month earlier had resigned from his post as chairman of the National Oil Corporation (NOC), was unexpectedly reinstated in his former position. His departure from his post came as a surprise and no reason has been given publicly. Similarly, his reinstatement was just as surprising and came without a clear explanation.

It appears that Saif al-Islam, in his new role as general co-ordinator of the Popular Social Command, was instrumental in getting Mr Ghanem reinstated. Saif Qadhafi and Mr Ghanem are supporters of each other and the primary reformists within the senior echelons of the Libyan regime. Mr Ghanem's resignation, which most probably resulted from differences between him and more conservative elements in the hierarchy-most notably Baghdadi al-Mahmudi, the prime minister-principally over the sale of Verenex, a Canadian company, which was disrupted by the NOC (July 2009, Economic policy), and which raised deep concerns among the international oil companies operating in Libya that the government was adopting a more hardline approach towards their operations. Foreign oil companies view Mr Ghanem as a pragmatist, who understands the need to create an environment conducive to doing business. The announcement that Mr Ghanem was to be reinstated was made following a meeting at NOC headquarters that included Saif al-Islam, Mr Ghanem and Mr Mahmudi. It appears that Saif al-Islam now exercises enough power within Libya to get Mr Ghanem reinstated in an attempt to rectify the negative signals that were being sent to international investors. It is also possible, given his new role, that he was able to pull rank on Mr Mahmudi. The episode appears to be part of an ongoing tussle between reformists and conservatives within the Libyan regime, which is becoming increasingly prominent and is having a growing impact on the uncertainty of the public policy environment.

Adding to this uncertainty is the creation of the new Supreme Council for Energy Affairs, which will be chaired by Mr Mahmudi, indicating that he has not been totally sidelined. It is likely that the new body will be more active and influential than the former Supreme Council for Oil and Gas Affairs, which was largely ineffectual and left the running of the hydrocarbons sector predominantly in the hands of Mr Ghanem at the NOC. Mutassim Qadhafi, a younger son of Colonel Qadhafi and head of the National Security Council, has also been reserved a seat on the board of the new energy council. Unlike his brother, Mutassim Qadhafi is thought to be more of a conservative and is taking an increasingly predominant role within state affairs, challenging Saif Qadhafi as a leading contender to succeed his father.

© 2009 The Economist lntelligence Unit Ltd. All rights reserved
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