NATIONAL INTELLIGENCE SURVEY 49; LIBYA; THE ECONOMY

• Document Type: CREST
• Collection: NIS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP01-00707R000200080012-4
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 25
• Document Creation Date: October 25, 2016
• Sequence Number: 12
• Content Type: REPORTS

4.e
i t
l
a, 3
t
A
4
CONFIDENTIAL
49 /GS /E
Liby z
February 19;
NATIONA
CONFIDENTIAL
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

i
l
y:
r,.
NATIONAL INTELLIGENCE SURVEY PUBLICATIONS
The basic unit of the NIS is the General Survey, which is now
published in a bound -by- chapter format so that topics of greater per-
ishability can be updated on an individual basis. These chapters Country
Profile, The Society, Government and Politics, The Economy, Military Geog-
raphy, Transportation and Telecommunications, Armed Forces, Science, and
Intelligence and Security, provide the primary NIS coverage. Some chapters,
particularly Science -Ind Intelligence and Security, that are not pertinent to
all countries, are rroduced selectively. For small countries requiring only
minimal NIS treatment, the General Survey coverage may be hound into
one volume.
Supplementing the General Survey is the MIS Basic Intelligence Fact
book, a ready reference publication that semiannually updates key sta-
tistical data found in the Survey. An unclassified edition of the factbook
omits some details on the econorr.;,, the defense forces, and the intelligence
and security organizations.
Although detaile J sections on many topics were part of the NIS
?rogrom, production of these sections has been phased out. Those pre-
viously produced will continue to be available as long as the major
portion of the study is considered valid.
A quarterly listing of all active NIS units is published in the Inventory
of Available NIS Publications, which is also bound into the concurrent
classified Factbook. The Inventory lists all NIS units by area name and
number and includes classification and date of issue; it this facilitates the
ordering of NIS units as well as their filing, cataloging, and utilization.
Initial dissemination, additional copies of NIS units, or separate
chapters of the General Surveys can be obtained directly or through
liaison channels from the Central Intelligence Agency.
The General Survey is prepared for the NIS by the Central Intelligence
Agency and the Defense Intelligence Agency under the general direction
of the NIS Committee. It is coordinated, edited, published, and dissemi-
nated by the Central Intelligence Agency.
WARNING
This document contains informa)ion affecting she national de )nst, of thi United States, within the
meaning of title 18, sections 793 and 794 of the US code, as amended. Its transmission or revelation
of its contents to or receipt by an unauthorized person is prohibited by low.
CLASSIFIED BY 019641. EXEMPT FROM GENERAL DECLASSIFI-
CATION SCHEDULE OF E. O. 1163? PXEMPTION CATEGORIES
SB (1), (2), (3). DECLASSIFIED ON' )N APPROVAL OF THE
DIRECTOR OF CENTRAL INTELLIGEN
I
i
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

1
1
PC
WARNING
The NIS is National Intelligence and may not be re-
leased or shown to representatives of any foreign govern-
ment or international body except by specific authorization
of the Director of Central Intelligence in accordance with
the provisions of National Security Council Intelligence Di-
rective No. 1.
0
For NIS containing unclassified material, however, the
portions so marked may be made available for official pur-
poses to foreign nationals and nongovernment personnel
provided no attribution is made to National Intelligence or
the National Intelligence Survey.
Subsections and graphics are individually classified
according to content. Classification /control designa-
tions are:
(U /OU) Unclassified /For Official Use Only
(C) Confidential
(S) Secret
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

f
Page
2. Fuels and power
7
a. Petroleum
7
(1) Production
7
(2) Marketing and distribution
7
(3) Petroleum policy
9
b. Natural gas
10
c. Solid fuels
11
d. Electric power
11
3. Metals and minerals
12
4. Manufacturing and construction
12
a. Manufacturing
12
b. Construction
13
Page
C. Economic policy and development
13
1 Pc;icy
13
2. Development
14
3. Manpower
14
4. State finance
15
5. Banking
16
6. Domestic trade
17
D. International economic relations 17
FIGURES
X
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP0l- 00707R000200080012 -4
Page
Page
Fig. 1
Economic indicators (chart)
1
Fig. 8
Value of manufacturing output
Fig. 2
Estimated land use, 1972 chart)
3
table)
13
Fig. 3
Economic activity (map)
4
Fig. 9
;conomic development spending
(table
14
Fig. 4
Expansion of an oasis photo)
5
Fig. 10
Labor force table)
15
Fig. 5
Agricultural production table)
5
Fig. 11
State budget table)
15
Fig. 6
Crude oil production, by producing
Fig. 12
Evolution of state commercial banks
companies (table)
8
Fig. 13
(table)
Balance of payments table)
6
18
Fig. 7
Gas liquefaction plant photo)
11
Fig. 14
Direction of trade chart)
19
X
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP0l- 00707R000200080012 -4

Sri 0 n1 If@I! ff B
AWL
1
The Economy
A. Economic appraisal (C)
In little more than a decade, Libya has been
propelled from a backward desert country dependent
on primitive agriculture and Western foreign aid to an
oil -rich country with impressive potential for
development. During this short period of time, Libva
has moved dramatically from a state of chronic deficit
to recurrent surplus and from a position of an
international borrower to one of an international
lender. As of mid -1973, Libya's accumulated financial
reserves totaled $3 billion, an amount sufficient to
maintain present consumption and investment levels
for well over a year.
Until the discover- of commercially exploitable oil
in 1957, Libya's ec -nomic prospects were bleak.
Subsequently, however, the country has experienced
the most rapid growth of gross domestic product
(GDP) of any Middle East or North African country.
As can be seen in Figure 1, the sharp increase. in GDP
generated by oil output far exceeds the increase in
consumer prices and payments made abroad as profits
in the oil companies.
The spectacular rise in national product, from an
extremely small base, has slowed down since the
Revolutionary Command Council (RCC) came to
power in September 1969. The kev to the slowdown is
the government's concern about oil reserves. Libya's
proved reserves will last only 20 to 30 years at present
rates of exploitation, and the government has
instituted a series of controls over production. A
second major factor affecting oil output, and hence
GDP, is the RCC's erratic attitude toward the
nationalization of foreign -owned oil properties, which
has discouraged investment and exploration for new
fields. Nonetheless, because international oil prices
continue to soar, even a declining level of output
could .insure finances for the steadily increasing
imports of consumer goods, machinery and
equipment, and arms.
Unlike King Idris who was fearful of his more
radical Egyptian neighbor and miserly b nature, Col.
Mu`ammar al -Qad hafi has marshalled Libyan wealth
to change the course of Arab affairs. Almost overnight
Libya has become a major procurer of arms for the
Arab cause and a potential source of financial support
for any enemy of Israel. During the last several years,
Libya has spent well over $1 billion to underwrite
Arab goals. Even with its $3- billion nest egg,
Qadhafi's government cannot continue to meet its
growing commitments if oil output is interrupted for a
prolonged period. Finally, Libya's accumulated
wealth and current income would be readily expended
FIGURE 1. Economic indicators (C)
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

by the profligate Egyptians if the proposed Egyptian
Libyan merger is consummated.
Lagging growth in the traditional sectors of the
economy has effectively excluded most Libyans from
the benefits of the oil boom. The heavily capitalized
petroleum sector can, at most, employ only about 5%
of the labor force. Nonetheless, the lure of the oil
boom has inspired many rural families to abandon the
h- certainty of a low income in the country for the hope
of affluence in the city. These untrained and illiterate
farmers rarely find steady employment in the oil sector
or in the relatively sophisticated new commercial and
construction enterprises. Meanwhile, deterioration of
abandoned farms makes reth n to the countryside
unlikely.
Under the RCC, benefits of Libya's great wealth
have been distributed less unevenly. During the Idris
monarchy, oil revenues gravitated primarily to an
urban elite that included those few Libyans with tribal
connections to the monarchy and members of the
predominantly foreign business community. The RCC
has equalized income levels somewhat by abolishing
graft, dispossessing the wealthy elite, and increasing
development spending in rural areas. The RCC does
not favor the establishment of a welfare state, as in
Kuwait but rather relies on the ultimate integration of
the traditional and modern sectors to distribute oil
wealth more evenly. Efforts to assimilate the unskilled
and illiterate local labor force into the modern
economy have thus far borne little fiuit.
The economy, like everything else in Libya, is
dominated by the mereuria! Colonel Qadhafi, who is
prepared to sacrifice economic considerations to the
goals of pan- Arabism and Muslim fundamentalism.
Libyan society is not, however, a monolithic reflection
of Qadhafi's wis;tes, as he faces a diversity of other
interests �the international oil companies, the heavily
Egyptian- manned bureaucracy, his colleagues on the
RCC, his fellow Arab leaders, tribal leaders within
Libya, and a phlegmatic population. The result, thus
far, has been erratic progress and .i eclectic economic
order.
B. Structure of the economy
Oil clearly dominates the Libyan economy. In 1972,
perhaps 60� %0 of GDP originated in the oil sector, and
crude petroleum constituted more than 90% of
exports. In addition to the vast oil resources, Libya is
beginning to exploi` enormous reser
Associated natural gas, which in the pas t
at the well head, now is being piped
2
ves of gas.
was burned
to Marsa al
Ruraygah,t where a large liquefied natural gas plant is
located. Shipments beginning in 1971 have placed
Libya, along with neighboring Algeria, in the still
exclusive ranks of liquefied natural gas exporters.
(U /OU)
The government's efforts to develop other sectors of
the e.:onomy have been hampered by shortages of
natural resources and human skills. Only the
construction industry has flourished, on the basis of oil
company expenditures and government disbursements
of oil revenues. The construction sector accounted for
perhaps 8% of GDP in 1972. (U /OU)
Agricultural output has stagnated for years. Libya
was once a rich agricultural land, contributing to the
granaries of ancient Greece, Carthage, and Rome, but
today it must import 60% of its food. War and waste
have diminished agricultural resources and left only
two arable areas around Tripoli and Banghazi.
(U /OU)
Even though most Libyans are engaged in
agriculture, less than 10% of GDP originates in that
sector. indeed, for GDP purposes, the economy might
be viewed as a subsistence agricultural economy,
where per capita income is, say. $40, on top of which is
piled a massive oil sector, whose aggregate output is
valued at 10 to 20 times the vaiue of agricultural
output. Complicating the picture is the fact that oil
prices contain a huge element of taxes, royalties, and
fees; i.e., only a fraction of oil prices represents
productive economic activity. In sum, agriculture is
the vital sector to the livelihood of mosi Libyans, but
its importance is obscured by the prominence of the oil
sector and its highly publicized dollar flows. (C)
With the production of oil limited, agriculture
could begin to advance relatively in importance to the
rest of the Libyan economy. The discovery of large
quantities of underground water, the migration. of the
more skilled Egyptian peasants to Libya, and the
forming of mechanized state farming corporations by
the RCC, appear to have checked declining
agricultural output. In the future, as such
development efforts multiply, the greatest expansion
in output could be in agriculture. (U /OU)
In addition to the oil, construction, and agricultural
sectors, Libya has a minute manufacturing sector and
a large government service sector, which embraces
defense, public administration, finance, education,
health internation trade, and public utilities.
(U /OU)
'For diacritics on place names, see the list of names on the apron
of the Smomary Map in the Country Profile chapter, the map itself,
and the map in this text.
C
'.�.s
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

I. Agriculture, fisheries, and forestry (U /OU)
a. Agriculture
Libya is poorly endowed with agricultural resources.
Only about 7% of the total land area is suitable for
agriculture (Figure 2). Crops are grown on onh_' about
2% of the total land area, primarily on the coastal
plain (Figure 3). Even in these areas soils are alkaline,
calcareous, generally low in organic content, deficient
in nitrogen, and lacking in other necessary elements.
Nonetheless, agriculture was the principal economic
activity in Libya as recently as `Nvo decades ago. Even
today farming and herding provide employment for
about 50% of the labor force and subsistence for most
of the rural population.
With the exception of the underground waters at Al
Kufrah, Libyan agriculture depends mainly on erratic
rainfall since there are no permanently flowing rivers
in Libya and few irrigation projects. Even along the
relatively moist coast, crops are imperiled by shifts of
prevailing sea winds which spray salt water inland and
by the dry winds, or ghibli,�which sweep in from the
desert. Because of these conditions agriculture
provides a highly unreliable source of income and
acute deprivation prevails in rural areas.
Progress in Libyan agriculture has been hampered
by outmoded land tenure patterns which remain
firmly entrenched. In areas where an independent
peasantry has arisen, subdivision of land among heirs
has reduced holdings to an uneconomic size. Where
triba. tenure prevails, holdings also frequently are
small. In addition, tenure in the tribes is insecure
because individuals are subject to summary separation
from the land by the tribal chief. Most large single
holdings are the property of disinterested absentee
landlords and are operated by tenants. Like other
small farmers, the tenant or sharecropper has no
surplus income to invest and has little or no recourse to
credit facilities.
Over the years ignorance and persistent underin-
vestment have perpetuated primitive production
techniques on most Libyan farms, especially the
smaller ones. Wooden plows still serve in many areas;
men and beasts continue to provide much of the
energy required. Because little use is made of basic soil
conservation techniques, soil fertility is depleted year
after year. Insect damage con`inucs to be a recurrent
blight on crops, reheating the cultivators inability to
purchase, unwillingness to use, or ignorance of
insecticides.
(1) Rural development� During its last y ears the
Idris regime made some half hearted efforts to
revitalize the Libyan rural sector. An agricultural
extension program was initiated by the Ministry of
Agriculture, modeled after the U.S. system and
dependent at the outset on U.S. trained individuals.
Improved seeds, better fruit culture, and the use of
commercial fertilizer were introduced successfully on a
small scale. Like many other institutions in Libya,
however, the extension service lacked an adequate
number of skilled technicians. The Idris government
also set up the National Agricultural Settlement
Authority (NASA) for the primary purpose of reducing
migration to the cities. This organization undertook
the settlemelit of nomadic herdsmen and other
landless people and the development and distribution
of state -owned lands. By 1969 NASA had recon-
ditioned and settled about 2,000 farms in Cvren:aica
and had brought about settlements on a smaller scale
in Tripolitania. Since January 1970, however, when
NASA was placed under the Ministry of Agriculture, it
has accomplished very little.
The ',lost important and successful government
institution supporting agriculture is the Agricultural
Bank of Libya, organized in 1957 to provide financing
for farmers and cooperatives. The bank purchases
much of the agricultural machinery, feed, fertilizers,
and seeds used by farmers and cooperatives, selling to
the users at much less than cost �often half the
original price. The bank also offers short medium
and long -term loans, interest free, to farmers for
3
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

1 I Ai�r5tah gangh9tT Al Wd Tobruk
FIGURE 3. Economic activity (U /OU)
equipment purchases and for land improvement. For a
time the bank maintained price supports for
commodities, such as wheat, barley, olive oil, peanuts,
and almonds, at levels substantially above world
market prices. The RCC continues to operate the bank
but some of its functions, notably commodity price
support, have been transferred to the National Supply
Organization, which was created in 1971.
Development efforts of the new revolutionary
government appear to be concentrated on creating a
new, modern agricultural sector alongside the
deteriorating traditional rur order. Emphasis is
placed on establishing modern farming centers, aimed
in part at reducing migration to the cities. The
reclamation of Iand by irrigation figures importantly
I
in the plans (Figure 4). 'Chis approach probably was
inspired by Egyptian agricultural technicians, who are
heavily involved in Libyan planning and who tire
committed to reclaiming land as an agricultural
expansion technique.
In developing the reclaimed land, the government is
introducing highly mechanized techniques and /or
imported labor, mainly from Tunisia or Egypt. These
same measures have been used to resume production
on lands confiscated from foreigners and from
members of the former regime. Undertitilized tribal
lands, which the government is buying, also will be
developed in this manner.
The main agricultural project of the RCC, as of the
Idris government, is the development of Al Kufrah
0
P
C
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4
in the plans (Figure 4). 'Chis approach probably was
inspired by Egyptian agricultural technicians, who are
heavily involved in Libyan planning and who tire
committed to reclaiming land as an agricultural
expansion technique.
In developing the reclaimed land, the government is
introducing highly mechanized techniques and /or
imported labor, mainly from Tunisia or Egypt. These
same measures have been used to resume production
on lands confiscated from foreigners and from
members of the former regime. Undertitilized tribal
lands, which the government is buying, also will be
developed in this manner.
The main agricultural project of the RCC, as of the
Idris government, is the development of Al Kufrah
0
P
C
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

FIGURE 4. An oasir may be expanded by using diesel
water pumps. Field experiments with wheat, barley,
and clover irrigated by feeder pipes have pro -ed
successful. (U /OU)
rl
i
oases. Discovered in March 1968 by the Occidental
Petroleum Company, the subterranean lake near AI
Kufrah is estimated to be several hundred square miles
in area and at least 2,500 feet deep. In many places it
is only about 30 feet below ground level. Early
reports indicate that the find will enable Libya
eventually to irrigate about 50,000 acres.
Initial development of At Kufrah was financed by
the Occidental Petroleum Company, which, under the
Wris government, allocated 59'o of its gross oil profits
for Libyan agricultural development. The company's
program included development of commercial
farming and also of traditional farming. Irrigation was
being provided for small farm plots, and were
being trained in the use of fertilizers and seeds. In
addition, Occidental was involved in building a road
north from At Kufrah that would provide the only
surface transportation to a�ld from the oasis.
Altogether about $10 million had been spent oil At
Kufrah development by 1969; and the company
planned further expenditures totaling $42 million over
the next 5 years.
In the con(.assion agreement which became
effective in September 1970 the RCC removed At
Kufrah oases from Occidental control. A U.S. trained
agriculturist, formerly an Occidental employee, was
put in charge of the project. Subsequently, At Kufrah
Agricultural Company was set up as a subsidiary of
the Ministry of Agriculture to administer the project.
The RCC has concentrated considerable resources
on rapid development of the area of At Kufrah. 7'hc
decision to accelerate development was based on a
feasibility study conducted by a U.S. consulting firm,
Tipton and Calrnbach, which set to rest previous
doubts about the economic feasibility of agricultural
development in this remote oases region. By 1972 a
herd of 10,000 sheep had been established and more
than 2,C300 areas were under cultivation. On about
half of this area commercial production of grain and
alfalfa were achieved. Efforts are in progress to expand
the farmed area to about 25,000 acres over the next
several years. The lack of economical transportation to
coastal cities remains the chief impediment to rapid
progress, and the government is investigating a
number of alternative systems, including high speed
trains.
Outside At Kufrah oases, especially in At Jifarah
plain, At Jabal at Akhdar, Wadi as Sarir, and the
Fezzan region, numerous other irrigation and
reclamation projects have been initiated. These
smaller projects rely on either subterranean water
reserves, or impermanent rivers, which have been
dammed. Sewage water has been used experimentally
for irrigation, and nuclear desalination of sea water
has been considered .s it means providing moisture
for land. Work on these miscellaneous projects has
been dominated by Egyptian firms.
(2) Major crops �The most varied agricultural
production occurs near urban markets in the coastal
plain, where annual alnfall ranges from 4 to 20
inches. The coastal plain supports the production of
cereals, truck crops, grapes, olives, citrus fruit, and
dates. Cereals and tree crops are produced in the hilly
regi�m, just south of the coastal plain, which receives
all annual rainfall of about 10 to 20 inches. In the
sernidesert regions of northeast and northwest Libya.
cro,)ping is limited to shifting cereal culture where and
when rainfall is sufficient. Small amounts of fruit and
vegetables are grown around wells or in wadies. Most
of Libva south of the hills and the Gulf of Sidra is
desert. Production is confined to the oases where dates
and small quantities of cereals and vegetables are
grown for local consumption. Herding of sheep and
goats by tribesmen is widespread throughout
Libya, being most common around the oases.
Cereals remain Libya's most important crop (Figure
5), even though domestic production has provided a
FIGURE 5. Agricultural production, 1965 -1971
(U /OU)
(Thousand metric tons)
CROPS
1965 1966
1967
1968
1969
1970
1971
Wheat.
57 58
62
52
78
21
22
Barley.......
96 99
110
98
121
52
35
Citrus........
13 14
15
23
22
20
24
Peanuts......
11 12
13
13
10
11
12
Tomatoes....
75 86
101
123
129
136
139
Olives........
101 93
137
140
33
71
5
Dates........
56 56
55
57
55
49
na
na Data not available.
5
gis
ig
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

jt It t....1 BBL
(3) Livestock Animal husbandry it) Libya is
primitive. Most animals still are owned by nomadic or
se minomadic tribesmen who herd I] win in the
traditional manner. The number of livestock exceeds
range forage capacity and overgrazing is widespread.
The quality of the meat is poor and the number of
anitnals has remained constant over the years. Rising
population and wea,ia have led to increased imports
of animals, mostly for slaughter and consumption.
'fhe livestock population for 1971 is estimated at tilt,
following thousands of heads:
Sheep 2,506
Goats 1,300
Cows 110
Camels 130
The RCC lilts initiated a nurnber of small programs
to improve animal husbandry, including the import of
breeding stock and the improvement of fodder. The
greatest advances appear to be in d. :irying. At lead
one dairy cattle raising station lilts been established
with Scandinavian stock. and several large dairy
products plants have been purchased.
b. Fisheries
The contribution of the fishing industry to the
Libyan ectroongy is small. The government estim.atc�s
that the annual catch. mostly tuna and sardines, is
3,000 tons. Only about :iOU Libyans are engaged in
coastal fishing. They probably are outnumbered by
Greeks and other foreigners who are allowed to fish in
Libyan waters.
Thc� fishing fleet consists mainly of a fe\\ hundred
small boats operated by individual fishermen. The one
fishing corporati financed jointly by the state and
by private interests, has several !ng bolds and it doyen
or so conventional fishing vesx'.. The equipment and
techniques employed by the corporation are primitive
by WOStc�ng standards.
The ulwan Government has sought 'I'putisiao aid in
deveiolling fishing. The twr governments agreed in
December 1972 to form it joint company fur exploiting
marine resources in adjacent waters, but the future of
the company is uncertain for econotnic as well its
political reasons. Experts doubt that sufficient
wsotuc s exist to support ltny considerable expansion
of the industry.
c. Forestry
Although Libya was endowed with an abundance
of forests in Roman tinges, deforestation over the
centuries has left the country almost barren except for
scrubby hush. Less than I S of total land area is
forested, and no forest industry of consequence exists
in Libya. In the recent past Libya produce and
exported esparto grass (alfa), which is it source of
cellulose growing in Tripolitania. Between !965 and
1967, however, exports dwindled away because
produc�crs found more remunerative alternative
employment.
Initial attempts at reforestation have failed because
of salinity and shifting sand in the more moist coastal
area which might otherwise accommodate young
trees. In collaboration with oil companies, the Idris
regime endeavored to anchor sand dunes by spraying
them with a petroleurn compound. The benefits were
small, the cost enormous. The RCC has conducted
reforestation mainly as an adjunct of irrigation and
reclamation programs in the interior. The ne\y
government also has taken steps to protect existing
stands and to encourage afforestation (natural
regrowth). One of the most important measures has
been to litnit the number of goats and the extent of
a
s
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4
declining share of total C0 11SUtllptlOn ditrtrlg the past
decade. Rapid urbanization has cut the farm labor
force and has brought about it change in preference
from the traditional cereal food, barley, to wheat.
Production of nearly all other foodstuffs also has
failed to keep pace with consumption. Olives are the
major crop after cereals. but at least US84 million
worth of olive oil must be imported each year. The
olive output, subject to considerab fluctuation.
registered a sharp decline in 1971 in line %ith lbe crop
ir
year cycle and adverse weather condition. Tomatoes
r
and potatoes are the most important vegetables.
Tomato production has been stimulated by the
development of processing and canning facilities. Yet
the domestic mark( has expanded so rapidly (hat
Libyans rely on imports of tomato puree to meet tilt
bulk of their requirements.
The area devoted to citrus has been expanded
slowly by sporadic planting of trees, mostly on nc%\Iy
reclaimed land. Production scents to have kept pace
with consumption. Domestic production of dates, an
essential clement of the Libyan diet, also is adequate
at 40,000 metric tons annually. Peanuts are one of
Libya's few agricultural export commodities.
Tobacco is Lilwa's only industrial crop of illy
importance. Its production and marketing is
controlled by the State "Tobacco Monopoly, which
registers tobacco grocers, regulates production,
processes domestic tobacco, and controls imports and
exports. Unlike almost all other agricultural
commodities, tobacco output increased steadily
during 196.1 -68. Data are not available for subsequent
years.
(3) Livestock Animal husbandry it) Libya is
primitive. Most animals still are owned by nomadic or
se minomadic tribesmen who herd I] win in the
traditional manner. The number of livestock exceeds
range forage capacity and overgrazing is widespread.
The quality of the meat is poor and the number of
anitnals has remained constant over the years. Rising
population and wea,ia have led to increased imports
of animals, mostly for slaughter and consumption.
'fhe livestock population for 1971 is estimated at tilt,
following thousands of heads:
Sheep 2,506
Goats 1,300
Cows 110
Camels 130
The RCC lilts initiated a nurnber of small programs
to improve animal husbandry, including the import of
breeding stock and the improvement of fodder. The
greatest advances appear to be in d. :irying. At lead
one dairy cattle raising station lilts been established
with Scandinavian stock. and several large dairy
products plants have been purchased.
b. Fisheries
The contribution of the fishing industry to the
Libyan ectroongy is small. The government estim.atc�s
that the annual catch. mostly tuna and sardines, is
3,000 tons. Only about :iOU Libyans are engaged in
coastal fishing. They probably are outnumbered by
Greeks and other foreigners who are allowed to fish in
Libyan waters.
Thc� fishing fleet consists mainly of a fe\\ hundred
small boats operated by individual fishermen. The one
fishing corporati financed jointly by the state and
by private interests, has several !ng bolds and it doyen
or so conventional fishing vesx'.. The equipment and
techniques employed by the corporation are primitive
by WOStc�ng standards.
The ulwan Government has sought 'I'putisiao aid in
deveiolling fishing. The twr governments agreed in
December 1972 to form it joint company fur exploiting
marine resources in adjacent waters, but the future of
the company is uncertain for econotnic as well its
political reasons. Experts doubt that sufficient
wsotuc s exist to support ltny considerable expansion
of the industry.
c. Forestry
Although Libya was endowed with an abundance
of forests in Roman tinges, deforestation over the
centuries has left the country almost barren except for
scrubby hush. Less than I S of total land area is
forested, and no forest industry of consequence exists
in Libya. In the recent past Libya produce and
exported esparto grass (alfa), which is it source of
cellulose growing in Tripolitania. Between !965 and
1967, however, exports dwindled away because
produc�crs found more remunerative alternative
employment.
Initial attempts at reforestation have failed because
of salinity and shifting sand in the more moist coastal
area which might otherwise accommodate young
trees. In collaboration with oil companies, the Idris
regime endeavored to anchor sand dunes by spraying
them with a petroleurn compound. The benefits were
small, the cost enormous. The RCC has conducted
reforestation mainly as an adjunct of irrigation and
reclamation programs in the interior. The ne\y
government also has taken steps to protect existing
stands and to encourage afforestation (natural
regrowth). One of the most important measures has
been to litnit the number of goats and the extent of
a
s
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

their grazing areas. Throughout the Middle East, goat
herding has been one of the chief enemies of
afforestation.
2. Fuels and power (C)
a. Petroleum
Less than a decade after oil was first produced,
Libva ranked fifth among non Communist petroleum
producers. Since 1969, when the RCC carne to power,
the government has played a leading role among
crude oil exporting countries, especially in production
and pricing policies.
(1) Production �The first indication of the presence
of hydrocarbons in Libya was the discovery of gas in
1914 in Tripoli. In 1937, at Al Mallahah (near
Tripoli), traces of petroleum were discovered. On the
basis of these indicators, Italy, the colonial rower
administering Libya at the time, made plans for
further exploration, but World War 11 prevented
implementation. After the war, Standard Oil of New
Jersey (now Exxon) initiated explorations in Libva,
followed by other U.S., French, Dutch, and British
companies. The first petroleum discovery of
commercial value ,vas made by Jersey Standard in
19$7 in the Sirte Basin. Production began ;a 1961.
By 1964, Libya surpassed Algeria in oil production
and became Africa's leading producer of crude
petroleum. In 1967, Libya passed Kuwait in crude
petroleum production, despite it month -long
closedown after the Arab Israeli conflict. By the end of
1969, only the United States, Venezuela, Iran, and
Saudi Arabia outranked Libva in non Communist
world petroleum production. The high quality of
Libyan crude was partly responsible for extraor-
dinarily rapid development of Libya's production.
The high gravity and low sulfur content of typical
Libyan crude are especially desirable characteristics in
developed Western European nations. After June
1967, the convenient location and comparative
security of Libya as a source of crude were even more
important factors in the surge in output. Closure of the
Suez Canal accentuated the cost advantage of the oil,
and in 1968 ot.ttput rose Wig, By the end of 1969, eight
operating companies were producing an average of 3.3
million barrels per day (b.p.d.) from about 900 active
wells.
1'he petroleum boom was deliberately halted by the
RCC in 1970 for conservation reasons. For some
months after the fall of Idris, output had continued to
soar, reaching 3.7 million b.p.d. in the sprint; of 1970
(Figure 6). The RCC feared, with considerable
justification, that production at this rate would
damage producing fields and /or exhaust reserves
before alternative sources of revenues and export
earnings could be developed.' Accordingly, severe
cutbacks were imposed on all major producers.
Other factors have contributed to the subsequent
decline in petroleum output. In some of the. older
fields, notably those originally discovered by Jersey
Standard, the maintenance of output levels became
increasingly difficult. Continual government inter-
ference added to the decline. In 1972, output averaged
2.2 million b.p.d., one -third less than the 1970 peak.
Until 1973 Libyan crude oil production was
dominated by U.S. concessionaires who control at
least 90% of total output. Of the three top producers.
Exxon and Occidental are totally U.S. owned, and
U.S. interests control more than 80% of Oasis Oil Co.
1roduction of crude is centered in the north central
region near the Gulf of Sidra (Figure 3, above). Oil
also has been found in western Libya, but so far the
quantity is not sufficient to war the construction
of a pipeline and an export terminal. All western wells
are shut in, pending discovery of additional fields.
(2) Marketing and distribution �Most of Libya's
petroleum output is exported. Accordingly, the
volume of crude exports has paralleled crude oil
production. Libyan crude is consumed mainly in
Western Europe, wito Italy, West Germany, rind the
United Kingdom the principal markets. During the
first few years after the closure of the Suez Canal,
almost one fourth of all oil refined in Europe came
from Libya. Reduced Libyan output and increased oil
deliveries by supertanker from the Persian Gulf had
cut Libya's share of the European market to 14% by
1972.
Lib }a's two small refineries, as of early 1973,
produced less than half the refi:.ed petroleum products
consumed domestically, the remainder being
imported. A 2,400 b.p.d. refinery is operated by the
Oasis Oil Company for its own use, and a 9,000 b.p.d.
plant at Marsa al Burayqah is operated by Exxon
Sirte. Since the start of operations in 1967, the Marsa
al Buraygal refinery has been able to supply less than
half of the approximately 20,000 b.p.d. of products
con.umed annually in Libya. The balance is supplied
through the refining of Libyan crude by Societe
Industriale Catanese (SINCAT) in Italv. This
situation will be reversed in 1974 when the stale oil
Libyan proved oil reserves at the cod of 1972 stood !it SO billion
barrels, which would at best guarantee output at S million h.p.& for
Iess than 20 years.
10
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

i
gin.
tC
YY 4 f I
N
I O M O O h eM cc
N
h
N
er
I
p h i
I M h N er
r
N
I
D
N O 00
W n� u
n
M
y
r
N
h
_o
o
l
a o w o ono c0
N
M
o
o
n cl w N ohm o o
N
-Ir c
M
C
a
C
N h i Q O [J M .-i y
O
h
'r
t
I 0 O O o0 vJ
N O
O
O
C
I
M t0
.�r
I s<
W
as
I Y
I q
v
O O o" O co p b b 0 0 0 0 O O a:
fY O O O b h O fTt
Ci O
I
rob d d d rob v�
c a
I
'G d C ..o ti
'c
U)
go
I
1 0
I
d cs o
O
Y
W s p
I
O
be wz
I
y
d w
G
o
G g
S
I
cd
d z
o m s
c
V
d O cE oa y m 7
a
G a
w
S 1
0
o3 .a
Q
w
a
'101
Y E c
o
d
o
U1 0
d O o
y
V
p
d ci
w a w L7
O
aa, c c N
E o a+ v
ti
LU
O d w y C
C7 x c
U
c E c
F
z. G
r w
8
u
rI
i
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

vpn:ctX:.e+tvr'�fi 9a2" mrc7' -r :..r1r. r-+ x i
J
company's new refinery at Az Zewihah comes on
stream. Designed by Egyptian technicians and
constructed by Snam Progetti of Italy, the new
refinery will have a 40 x)0 b.p.d. capacity. The
Beirut -based British firm, Mothercat, was expected to
complete an associated lube oil plant by 1974. These
two installations will make Libya independent of
imports of most refined products and will permit some
product exports as well.
Internal marketing of refined products, once the
domain of foreign oil companies, now is a state
monopoly. Following the Algerian model, the RCC
nationalized the four principal distributing com-
panies, owned by El -Sell, Shell, Esso Standard, and
Petrol Libya, in July 1970, less than a year after
assuming power. By the end of 1971 the nationalized
facilities had been merged into a single company, the
Burayqah Company for Marketing Oil.
The internal transportation system for crude oil has
changed little in recent years. All crude is transported
by pipeline from the interior of Libya to company
operated oil exporting and processing terminals on the
Mediterranean. Before production controls were
imposed by the RCC about 1,900 miles of pipeline
had been installed. Since 1970 much of this capacity
has been underutilized, and little incentive has existed
for expansion or improvement.
The first pipeline in Libya was completed by Exxon
in October 1961, linking its Zaltan field to the
terminal on the Gulf of Sidra at Marsa al Buraygah, a
distance of 105 miles. It has a capacity of 800000
b.p.d. The second major pipeline, a 680,0(x)- b.p.d.
facility, was installed by Oasis to link its Dahra field to
the As Sidr terminal. The Ra's al Untif pipeline, built
in 1964 by Mobil /Gelsenberg and Amoseas, spans the
north central producing region and has a capacity of
500,000 b.p.d. The Tobruk system connects the Sarir
field of BP /Hunt with the port of Marsa al Llarigah
near 'Tobruk and has a capacity of 630,000 b.p.d.
Occidental has constructed a line that connects its
Intisar fields with the port of Qaryat az Zuwaytinah. It
had an initial capacity of 400,0(x) b.p.d., which has
been raised to 1.5 million b.p.d. In 1969 Oasis
completed a second pipeline from Zagqut oilfield to its
As Sidr terminal with a capacity of 200,000 b.p.d.
(3) Petroleum policy �Since coming to power, the
RCC has radically altered the course of Libyan
petroleum policy. The 1955 petroleum law, the basic
document governing petroleum production under
King Idris, was designed specifically to maximize
foreign investment and the rate of exploitation of
petroleum deposits. The RCC has reversed these goals,
turning away from the forei ;n concession as a means
of financing exploration costs and seeking to conserve
existing crude oil reserves. Two goals, however, have
been shared by th, divergent regimes: the
establishment of a state oil company and an increase
in Libya's share of oil export earnings.
Minor modifications of the 1955 petroleum law
were made by the Idris regime in 1961 mainly to give
Libyan concessionaires a price advantage in the
European market. A more drastic change was made in
1965 -66, when the entire pricing and taxation
procedure was revamped to conform with guidelines
of the newly formed Organization of Petroleum
Exporting Countries (OPEC). This amendment
provided that royalties be computed at 12.5% of
posted prices and he treated as an expense in the
calculation of income tax obligations rather than as an
advance payment against the government's share of
profits, as had formerly been the case. Marketing
expenses were to be limited to US$0.005 per barrel,
and the government's share in the profits was to be
calculated at posted prices, less an allowance. By
January 1966 all the oil concessionaires had accepted
these amendments.
The only other important innovation under the Idris
regime was the creation in the spring of 1968 of the
Libyan General Petroleum Corporation (LIPETCO�
later reconstituted by the RCC as the Libyan National
Oil Company, or LINOCO). Ostensibly created to
plan and implement national oil policy, LIPETCO
served as an instrument for government participation
in the operation of new concessions.
Immediately after its creation LIPETCO concluded
its first joint concession agreement with the French
state -owned Enterprise de Recherche et d'Activites
Petrolieres (ERAP) and its affiliate Societe Nationale
des Petroles d'Aquitaine (SNPA). The financial terms
under this agreement were more favorable to Libya
than those in earlier concession agreements and were
expected to set the pattern for future accords. The
French company was to bear all exploration costs,
whether or not oil was found, and it agreed to spend a
total of $22.5 million during the next 10 -yeai period.
Libya was to take it 25% share of all production up to
10 million tons per year, and a 50% share when
production reaches 27.5 million tons annually.' Taxes
were to be paid in accordance with existing
regulations, but the French agreed to increase royalty
payments up to 15% as production rose. 'rhe French
also agreed to prepare feasibility studies for the
eventual creation of a Libyan petrochemical industry
and to create a petroleum institute for training Libyan
personnel.
"The basic elements of the agreement were adopted from earlier
agreements concluded hy'1'unisia and Egypt with ENI and several
U.S. firms.
Z
k r
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

fy
,i
i
The RCC duplicated many of the features of this
agreement in an arrangement negotiated with the
Italian state oil company, Ente Nazionale Idrocarburi
(ENI), in 1972. Unlike ERAP, ENI had a prior
concession agreement, but was not allowed to take oil
until the 50/50 participation contract was signed.
Moreover, the ENI arrangement is viewed by both
parties as a joint venture rather than as a modification
of the conventional concession agreement. LINOCO's
share of eventual output could he sizable� possibly
more than 100,000 b.p.d.
Despite these arrangements with other state firms,
LINOCO remained a minor producer for several
years. Until December 1972, LINOCO's producing
assets consisted of a single small field relinquished by
Phillips petroleum. In December 1972 British
Petroleur^'s share of the BP /Bunker Hunt concession
was nationalized in a purely political gesture. (Libya
held the United Kingdom -sponsible for Iran's
occupation of several Persian Gulf islands and acted in
retaliation.) Then in June the U.S. -owned Bunker
Hunt was nationalized. Thus far L,INOCO has been
unable to operate the BP field at much more than half
of former output levels.
Between September 1970 and April 1972, the RCC
has succeeded in sharply increasing revenues from
foreign -owned oil companies. Through agreements
concluded during this period, it obtained major
concessions from oil companies and established itself
as a formidable bargaining force.. The first round of
negotiations was conducted at a time of tanker
shortages and sharply rising demand for oil in Western
Europe. The RCC threatened to cut off Libyan
exports and ordered selective production cutbacks,
using as its primary target Occidental Petroleum,
which had most of its producing assets in Libya.
Occidental's output was reduced by 50% and further
reductions were threatened. Unable to obtain either
oil or financial support from other oil companies,
Occidental acceded to most of the Libyan demands.
Other companies soon followed suit. The second
agreement was negotiated in the context of broader
OPEC discussions in which Libya represented
countries supplying oil directly to the Mediterranean.
The two agreements increased the posted price from
$2.210 to $3.447 a barrel and raised the tax rate from
50% to 55 Government revenues were raised overall
by about $.90 a barrel.
Late in 1971 the Libyan Government attempted to
exact a sizable further adjustment in posted prices to
compensate for the de facto August 1971 devaluation
of the U.S. dollar, the currency in which oil prices are
denominated and which is generally exchanged in
Libya to pay oil company taxes. Libya ,aus forced,
however, to accept the terms that had been negotiated
jointly by other OPEC members �an 8.49% increase
in the posted price
Libya, in 1973, was again seeking to establish a
negotiating precedent �this time in the struggle for
increased government participation in oil company
operations. Persian Gulf oil producers had negotiated
an agreement in 1973 which ceded, at an agreed price,
25% of oil company operations to the host government
and provided for gradual acquisition of another 26%
by 1982. The Libyan Government refused to concur in
this arrangement, demanding immediate 50/50
participation from oil companies operating in Libya.
During the ensuing months the dem.a. rose for a 51
share for Libya. By mid -1973 the issue had not been
settled, but a burgeoning seller's market for oil made it
clear for the first time that Libya could wrest control
away from the companies without seriously endan-
gering its income flow from oil.
b. Natural gas
Natural gas constitutes one of Libya's largest and
most underutilized resources. Reserves amount to
about 20 trillion cubic feet, most of it in deposits with
crude oil. Until recently most gas released in crude oil
production has been flared at the well head.
Libya's first attempt to use natural gas dates back to
1966 when Exxon'hegan construction of the world's
largest natural gas liquefaction plait at Marsa A
Buraygah (Figure 7). In addition to the liquefaction
plant representing about $85 'pillion of Exxon's $350
million investment in natural gas �the project
encompassed gas compression plants at the Ar
Raqubah and Zoltan fields, new harbor facilities at the
Marsa al Buraygah terminal, construction of four
35,000 -ton methane tankers to he operated by Exxon,
and a sulfur extraction plant with all annual capacity
of 45,000 long tons.
The Marsa al Buraygah plant was completed on
schedule at the end of 1968. It took 4 year., for
production to approach the rated capacity of 380
million cubic feet per day. Before the plant was
completed, E mon concluded a 15 -year contract to
supply 110 million cubic feet per clay of gas to the
Spanish firm Gas Natural S.A., a subsidiary of
Catalana de Gas, and a 20 -year contract to export 235
million cubic feet per clay to Italy's SNAM, un
affiliate of ENI. Initial experimental shipments to
Spain were scheduled to begin in January 1969, but
two serious explosions at the plant in January and June
delayed shipments for months. Subsequently, the
Libyan Government forbade Exxon to begin shipment
4
i
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

(1
I
until the sales contracts were renegotiated at higher
prices. By the time the first shipment left for Spair, in
April 1971, Exxon was encountering supply problerns.
Reduced oil output as a result of the conservation
policy had automatically reduced associated gas
output in Exxon's field, forcing the coulpany to buy
bras from other oil producers.
L,ibva's second major gas project was the Occidental
Petroleum Company's reinjection and gas liquids
extraction system, cnrnPleled in January 1972. This
system was designed to reinject about 450 million
cubic feet of gas per day into Occidental's Idris A and
D fields (rename(l Intisar since the 1969 coup) as it
conservation measure, increasing the amount of oil
recoverable by preserving the gas pressure. Most of the
gas comes from the A field. The first section of the
three unit reinjection systell, began operating early in
1970. Before being reinjected, the raw gas is prucessiIl
in a gas liquids recovery plant, extracting propane,
butane, and naPhlha at a rate of about 65,000 b.p.cl.
These products are transporied as litluefied petroleum
gas and na phtha through it 1.10 mile, 20 inch pip
and exported frern facilities at Az Zuwaytinah "1'11e
principal customer is Japan.
Plants similar to the Occidental facility r,tax,
become more common in Lil>ya now that the
government is preparing to forbid flaring of gas. 'Three
srnaller units already exist in other fields and othors
lincloubledly will be constricted. Plans for construc-
tion of petrochemical facilities using gas also are under
consideration. One problem that must he resolved is
the government's attitude about future levels of oil
output, as most of the gas reserves are associated with
petroleum reserves.
e. solid fu
In sharp contrast to reserves of crude petroleum and
natural gas, Libyan supplies of solid fuels are
negligible. Moreover, demand for traditional solid
fuels is decreasing rapidly as consumers shift to
petroleum products.
Libya produces no coal and must import all of its
small and declining needs. Unexploited outcrops of
lignite are known to exist, but none have been mined
because of the poor quality and the absence of
established markets.
Although fuelwood, gathered for househoid use
frorn the sparse forested areas, is still i t major source of
solid fuels, its consumption too has been declining.
Libya produces small gtlantilies of charcoal by
primitive methods for local use. Its only other solid
file] is animal dung, used in moderate arlounts by
nollacls and senlinorrtads.
d. Electric poser
Electric generating capacit even though small, is
more than adequate for national needs. Estimated
installed capacity at the end of 1972 was about
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4
FwVKr_ i, vas riquetaction complex at Marsa al Burayqah (U /OU)

5
f
r1:
A:
A 111
280,000 kilowatts (kw.). Production during 1972
amounted to only 640 million kilowatt -hours (kw.-
hr.), or slightly less than a third of the production
capacity. Production per capita was 310 kw. -hr. Most
electric power is produced and consumed in Tripoli
and Banghazi. All electric power is produced by
thermal units, there being no hydroelectric potential
in the country.
Major electric power facilities are owned and
operated by the government's Public Electricity
Organization (PEO). The facilities include three
formerly independent corporations: the Electricity
Corporation for Western Provinces (Tripolitania and
Fezzan), the Electricity Corporation for the Eastern
Provinces (Cyrenaica), and iiie Electricity Corporation
of Libya. Exxon and Oasis oil companies have built
and continue to operate large private powerplants to
service company requirements. Other businesses
maintain small powerplants, particularly in Tripoli. In
addition, an undetermined number of small diesel
generating units are operated by individuals in
Tripolitania. Altogether over 300 public and private
powerplants operate in Libya.
Generating and transmitting facilities are concen-
trated in Tripoli and Banghazi; scattered facilities
exist in towns along the Mediterranean Coast, in
isolated interior towns, and at oil company
installations. The majority of Libyan powerplants
have a capacity of less than 100 kw. The bulk of the
generating capacity is concentrated in a few large
plants. Until 1971 the largest units in the system
included the 32,000 -kw. Marconi plant in Tripoli, the
9,000 -kw. plant at Banghazi, and the 25,000 -kw. gas
turbine plant at Marsa al Burayqah that supplies
power for the Exxon pumping operations. These
facilities are now dwarfed by the expanded 130,000
kw. Al Firnaj plant, opened in September 1971.
There are no large transmission and distribution
networks in the country. In the Tripoli area, the public
supply is distributed on a system of 6, 10, and 30
kilovolt (kv.) lines. in the Banghazi area. the system is
6.6 and 11 kv. lines. A few smaller towns an(i villages
have rudimentary distribution systems in their
immediate areas, with up to 6 kv. lines. Consumer
current is 1 and 3 phase, 50 cycles, at 127 /220 volts for
public use, and 230 /400 volts for industrial use.
Projects scheduled for completion by 1976 will
substantially increase Libya's generating capacity.
The Banghazi thermal plant is to be expanded by
60,000 kw. In the Tripoli acea the government plans to
complete between 1973 and 1975 three new plants
with a combined capacity of about 400,000 kw.
Several small diesel powerplants are to be constructed
along the Mediterranean coast and in a few isolated
towns. The distribution systems also are to be
expanded to connect all coastal cities, from Misratah
to Al 'Ugaylah and from Banghazi to Darnall.
At the present time all power is generated by oil or
gas fueled powerplants. Libya and Egypt have agreed
to build a nuclear powerplant at a central location to
serve both countries. The plant will have a two -fold
purpose, to produce electricity and to desalinate sea
water. 1n its first phase, to be completed by 1979, the
project provides for a 400,000 kw. generating capacity.
The second phase is scheduled for completion in the
early 1980's.
3. Metals and minerals (C)
Except for hydrocarbons almost no minerals or
metal ore deposits have been discovered in Libya. As
in most desert regions, salt exists in abundance. Some
gypsum also has been mined. All other minerals and
metals are imported.
From time to time the Libyan Government has
sponsored extensive exploration in the Sahara to locate
mineral deposits. Recently a 3 -year, $8- million
contract was signed with a group of Western
geophysical firms for further exploration. However, to
judge from the results of past searches and of
unsuccessful efforts by Egypt in adjacent desert areas,
prospects are dim for a mining industry in Libya.
4. Manufacturing and construction (C)
a. Manufacturing
The RCC inherited a small but growing
mamifaeturing sector from the Idris regime. A variety
of factories were producing an increasing volume of
goods to meet the demands of urban consumers, many
of whose incomes were riding up on the oil boom. The
processing of food and tobacco and preparation of
beverages clearly were predominant (Figure 8). Most
of the new manufacturing units contracted for since
1969 have been food processing plants, reinforcing the
existing pattern.
The nonfood industries, particularly woodworking
and textiles, involve a considerable amount of
handicraft activity. Unlike other North African states,
however, the Libyans have not tried to encourage or to
preserve traditional handicrafts. The lure of cash
wages, the modernization and urbanization of tastes,
and the availability of cheap manufactured imports
have combined to erode the importance of
handicrafts.
The RCC: has grandiose plans for attaining self
sufficiency in manufactured goods, but plans for the
12
Y
S
1
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

r. d.5 �'24'1! ,t_^;r1.:: 1',e�.5. .'2n ^,.,et`. rr..r -_6'S '-;y .a:.. p,. qr nR L.:1..4 !n;._e. ric. ""SY"�. 9c. _1N.�tW ii`+.c :''i
i
FIGURE 8. Gross value of output in major manufacturing
establishments, 1970 (C)
(Thousands of U.S. dollars)*
Food 25,104
Beverages 6,609
Tobacco 28,025
Textiles 5,299
Wood cork, etc 1,830
Furniture and fixtures 1,477
Printing, etc 2,541
Chemicals 14,610
Nonmetallic mineral products 462
Metal products 5,557
Electrical machinery 337
Miscellaneous 2,152
Total 94,003
'Converted at the rate of ELI USt3.04.
rapid expansion of local consumer goods industries
almost certainly will be frustrated by labor shortages
and by a preference for higher quality imported goods.
The RCC also plans to create heavy industries and ap
export- oriented manufacturing sector. Several
organizations, including at least two foreign oil
companies, have been involved in planning a
petrochemicals industry ba -,ed on domestic petroleum
and natural gas. By mid -1973, however, nothing, had
been done beyond the planning stage.
b. Construction
Before the 1969 coup, construction was Libya's
second most important economic sector. Between 1965
and 1968 building activity increased at an average
annual rate of 21 During this period the
construction sector absorbed more than half of gross
investment and accounted for about 8% of GDP.
Both public ynd private expenditure contributed to
the pre -1969 construction boom. Under the Idris
government, more than two- thirds of state develop-
ment budgets were devoted to construction of roads,
schools, and housing projects. As urban incomes rose,
demand for private housing also increased. The
banking system, including the Industrial and Real
Estate Bank, made ^redit readily available for
construction projects.
Under the RCC government, construction activity
plummeted. An ;:::tial downturn in construction starts
probably reflected general apprehension on the part of
investors. The decline was accelerated when the RCC
suspended work on several large public construction
projects that had been initiated by the Idris regime.
Although most of these projects subsequently were
resumed, other RCC actions continued to depress
13
private construction activity. Chief among these was
the curtailment of output in the oil sector, which
formerly had provided close to half of all construction
demand. Another important factor was the ouster of
the Italian and other alien population and the
dispossession of the affluent Libyan groups who had
been responsible for most private housing starts.
Construction activity was partially revived after
1970. Increased government development expendi-
tures added greatly to demand. Housing starts
increased, largely because of governn nt efforts to
provide living accommodations for newly arrived
Egyptian technicians and advisers.
firms have always been heavily involved
in .he Libyan construction industry. Before the coup,
large Egyptian construction firms held sizable
contracts in public housing and in sanitary
engineering. At least one company, Osman Ahmed
Osman, was successful enough in Libya to justify the
fo� mation of a subsidiary, the Arab Construction
Company. Since the coup, Egyptian firms have
captured all ec.ustruction contracts in public housing,
about 20% of all sanitary engineering projects, and 8%
of all road and bridge construction. The share of
Egyptian firms in agricultural construction is thought
to be high also, although data are not available.
Cement is the only construction material produced
in appreciable quantities. Nonetheless, domestic
output (about 2 million tons in 1.970) has fallen well
below demand, even during the post -1969 recession.
Imports of cement make up the bulk of the total
supply, and shortages are experienced frequently.
Most other construction materials muat be imported.
C. Economic policy and development (C)
I. Policy
The basic economic strategy of the RCC has not
departed from that of the Idris regime, i.e., to use oil
revenues to develop nonoil sectors of the economy.
Both regimes have sought to integrate the backward
Libyan population more fully into the modern sector
of the economy. The two regimes have differed,
however, in the tactics employed, in the energy
devoted to the pursuit of goals, and in their views of
the role of consumption in the newly affluent
economy. The Idris regime allowed a high degree of
personal and public extravagance, whereas Qadhafi
has imposed an austere Muslim ethic. Welfare statism
is shunned, ostentation is discouraged, and corruption
has been purged from government operations.
"Libyanization" of the economic establishment was
achieved to some extent under the Idris regime.
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

r;
Beginning _'portly after oil was discovered, the
monarchy promulgate, a series of laws designed to
increase Libyan involvement in the modern sector. Oil
companies were required to train and employ an
increased percentage of Libyan workers. In 1963 a law
was passed requiring Libyanization of the foreign
dominated finarc;al community. These and other
laws, however, frequently could be circumvented by
well- placed bribes.
The RCC has pursued Libyanization with
xenophobic zeal. By the end of 1970 the RCC had
expelled the Italian community that dominated
commerce, had Libyanized 65% of the assets of
insurance companies, and bad ousted foreigners from
Libyan banking. These actions followed hard on the
issuance on 2 May 1970 of a general Libyanization
decree which is far more stringent than prelious
measures. The law stipulated that, outside the oil
sector, all partnerships and limited partnerships must
be Libyan owned and that foreign ownership of any
corporation must not exceed 49 In all corporations,
at least 75� %0 of the employees must be Libyan
nationals, who must receive at least 65% of the
payroll. Branches of foreign firms are no longer
permitted to operate in Libya except to provide
technical or engineering se vices to the oil industry.
The chief exception to these restrictions has been
Egypt, whi; h has been increasingly active in the
Libyan economy.
An increased degree of state ownership resulted
from the rapid Libyanization." The RCC did not
specifically espouse a socialist economic order, but it
has had little choice given the concentration of
available talent in the state bureaucracy and the
distrust of foreigners. Libyanization has meant
nationalization, in effect, with few assets subsequently
being transferred to private individuals. The chief
exceptions have been former Italian -owned agricul-
tural lands and shops; these properties are now
returning to the private sector, t;ianks largely to the
acquisitive instincts of resident Egyptians, Pales-
tinians, and some other Arabs, who are exempt from
restrictions on foreign ownership.
Shortages of private capital and entrepreneurs have
inspired the creation of a new state sector alongside
older nationalized properties. A number of public
corporations have been formed to participate in
agricultural development construction and main-
tenance of roads, civil engineering projects, and
general construction, presumably in competition with
foreign bidders. Most industrial projects now under
construction will he operated by the state. In addition,
highly mechanized state farms have been introduced
in agriculture.
14
PLAN,
PLAN,
4
1973 -75
(ACTUAL)
(PLANNED)
2. Development
Under the RCC, the approach to development has
been changed, and development outlays have nearly
doubled. Under the Idris regime, economic plans were
poorly conceived and haphazardly implemented.
During the First Five Year Development Plan (1963-
68), $1,078 million was allocated for state investment,
but only $880 million was spent. The bulk of this
amount was devoted to public works and other
infrastructure, creating underutilized public roads,
unnecessary public buildings, and understaffed public
schools. The Second Five Year Plan, scheduled to
begin in 1968 but not launched until April 1969, again
emphasized transportation, communications, and
public works. When the RCC seized power 5 months
later, little had been started under the Second Plan.
The RCC shifted state development spending to the
more immediately productive sectors, allocating
almost 30% of planned outlays through 1975 to
agriculture and industry, primarily in order to free
Libya from a total dependence on imports for essential
goods (Figure 9). Agricultural development also is
being pushed as a means of slowing rapid
urbanization and blunting its concomitant social and
economic problems. Another motive for rural spending
is to prove that Arabs as well as Israelis can "make the
desert bloom."
3. Manpower
An acute shortage of skilled and semiskilled
manpower has been the chief impediment to Libyan
FIGURE 9. Distribution of economic development
spending, the Idris regime and the RCC (C)
FIVE YEAR
THREE YEAR
PLAN,
PLAN,
1903 -68
1973 -75
(ACTUAL)
(PLANNED)
Total (million U.S. dollars)
880.5
3,541,0
Of which (percent):
Agriculture
17
1 4
Industry
5
15
Petroleum
Ncgl.
10
Electricity
Mcb!.
9
Transportation and commu-
nication
18
14
Education
9
9
Health
8
i
Labor and social welfare....
na
Ncgl.
Housir!r and utilities.
10
13
Public works
30
na
Other
8
1$
na Data not available.
*Converted at the rate of �L1 USS3,04
s
kilp
N
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

'z
i%
l'
economic development. Less than a generation ago
most Libyans were peasant farmers or nomadic
herdsmen. Urbanization has proceeded apace since
the oil boom began in the 1960's, but the majority of
the people still pursue traditional activities. Most of
those who have drifted to the cities are untrained.
The rate of participation in the labor force is not
high, and onl about 500,000 Libyans are believed to
be economically employed or seeking work. Despite
the general shortage of labor, unemployment is a
problem, largely because of lack of skills. It is
estimated at between 7% and 10% of the labor force.
Many of the remainder are underemployed, either in
unproductive agricultural activities or in menial urban
jobs.
Aliens constitute a sizable proportion of the skilled
labor force. Some alien labor is transient, imported for
a specific task by a foreign firm or contractor. Others,
such as the alien employees of foreign oil companies,
are semipermanent, remaining as residentF for long
periods but rarely settling permanently. A permanent
alien labor force can be found in many of the nonoil
sectors, particularly in commerce and !ae service
industries.
The composition of the alien labor force has
changed dramatically under RCC policies (Figure 10).
Before the coup, Italians constituted a large group of
resident aliens. The Italians have been replaced by
Egyptians and, to a much smaller extent, by Maltese,
Tunisian, and other nationalities. About 150,000
Egyptian professionals and laborers were employed in
Libya in mid -1973. They make up about one quarter
of the total labor force and a far higher percentage of
the employed urban pop;tlation.
The influx of Egyptians stems from a number of
factors. At the outset, large numbers were brought in
by-the RCC to staff the civil service and o supplement
Libyat; military and security forces. Additional
Egyptian laborers were imported by Egyptian firms
with contracts in Libya. An unknown number of
Egyptians have come on their own, taking advantage
of relaxed immigration regulations between the two
FIGURE 10. Estimated labor force (C)
1964 -65* 1972
Total 400,000 660,000
Libyans 382,000 500,000
Aliens 18,000 160,000
Egyptians 4,500 150,000
Italian 3,000 Negl.
Others 10,500 10,000
*Including data from both years.
rs. ,-Y'"i .''Safz bb's
countries to acquire properties abandoned by other
aliens and to fill jobs for which most Libyans are
unqualified.
4. State finance
The funds available to the RCC have been far
greater than those available to the monarchy. Total
taxes and royalties from oil companies have averaged
about $1.5 billion annually since 1969 as a result of
increased per barrel receipts. In addition, the RCC
inherited about $1 billion in accumulated reserves.
Ordinary revenues, mostly from duties, provided no
more than 15% of total state income in FY71 (Figure
11).
The RCC ostensibly is committed to state savings,
as an anti inflationary measure and as a hedge against
future contingencies. The law requires that at least
15% of oil revenues be set aside as reserves each year.
Of the rern�iinder, 70% must be earmarked for
development. Thus, only about 26% of oil revenue, in
addition to local revenues, is available for the
government operating budget.
Despite its reputation for austerity, the RCC has
increased state spending substantially. Development
expenditures have risen as a result of the emphasis on
state investment in agriculture and industry. Military
equipment purchases and Libyan foreign aid now
total about $500 million annually, but these
expenditures are covered only in part out of the annual
budget. This fact suggests a liberal interpretation of
the Libyan fiscal law requiring that budgeted reserves
he used only for "emergencies" and setting a 10%
limit on drawdowns in a single year. The overall
budget surplus has been rapidly diminishing as oil
'The Libyan fiscal vear extends from I April to 31 March of the
designated year.
FIGURE 11. Libyan state budget (C)
(Millions of U.S. dollars)
*This year represents the first budget that was entirely that
of the RCC. FY70 was it transitional year, and in FY69 King
Idris was in control.
*Planned.
*Estimate.
15
A
FY69
FY70
FY71*
FY72
FY73
Expenditures.
1,150
947
1,034
1,523
*1,820
Ordinary.....
725
604
590
fill
705
Development.
425
343
444
912
1,115
Revenues.......
1,088
1,357
1,676
1,922
*1,800
Oil
84�
1,W3
1,425
1,702
1,600
Other........
240
254
251
220
200
Balance
�62
+390
+642
4399
�20
*This year represents the first budget that was entirely that
of the RCC. FY70 was it transitional year, and in FY69 King
Idris was in control.
*Planned.
*Estimate.
15
A

revenues are restricted by declining output and as
expenditures are rapidly rising. Total financial
reserves, which amounted to $3 billion in mid -1973,
thus are not likely to grow under present RCC
spending policy.
be nationalized outright a year later. By December
1970 all foreign banks had been acquired by the state.
The state subsequently amalgamated all commer-
cial banking under five state controlled institutions
(Figure 12), four of which had been acquired
piecemeal by Libyanization and nationalization. The
fifth is the Unity (Wanda) Bank which was based on
the only private Libyan bank, the National Qafilah
Bank.
The Libyan Central Bank has evolved from the
National Bank of Libya, the principal banking entity
and the de facto central bank during the immediate
posteolonial period. In 1963, when designated a
central bank, it was empowered to set interest rates on
deposits and loans and to regulate directly the reserves
of commercial banks. As in most primitive, oil
producing countries, however, the monetary powers
proved illusory because the chief spenders and
borrowers, the oil companies and the central
government, operated outside the bank's purview.
Nonetheless, its nominal role was recognized by the
RCC in August 1971, when it was renamed the
Central Bank.
The Central Bank has played a considerable role in
commercial banking. Just before the coup, its
commercial department was handling the majority of
total commercial banking business. The RCC used this
commercial department as the basis for the all -state
FIGURE 12. Evolution of Libyan state commercial banks (U /OU)
BANK COMPOSED OF: ACQUIRED BY:
I rational Commercial Bank
j
5. Banldng
Masrah al- Urubah Bank (formerly the Jordanian
All commercial banking operations in Libya were
j Arab
Bank).
conducted by branches of foreign banks until the mid
i
1960's. "Libyanization" of the financial sector was
kE -2.
started in April 1963 when the Idris regime decreed
I Unity (Wanda) Bank
Bank of North Africa (formerly British Bank of
that all banks in Libya must have at least 50% Libyan
jownership.
Implementation of the decree was slow.
Commercial Bank (Libyan State and Charter
However, by mid -1969 the government had acquired
50% or 51 interest in the Libyan operations of all but
nationalization, December 1970.
four of the foreign banks �the Banco di Roma, the
i
Banco di Napoli, Barclays Bank (of the United
Libyanization, under Idris regime.
Kingdom), and the Beirut- based, Jordanian -owned
Arab Bank. The first all- Libyan bank was created in
i
August 1967.
Societe Africaine du Banque (French Societe
The RCC greatly accelerated the pace of
Libyanization. In November 1969, less than 2 months
Nationalization, December 1970.
after assuming power, the new government ordered
National Qafilah Bank (Al- Qafilah al -Ahli�
state acquisition of controlling shares in all remaining
foreign banks. Barclays Bank withdrew immediately,
leaving their assets to the state. Italian and U.S
Sahara Bank (Libyan State, Bank of Amerien
interests negotiated a partial transfer of assets, only to
be nationalized outright a year later. By December
1970 all foreign banks had been acquired by the state.
The state subsequently amalgamated all commer-
cial banking under five state controlled institutions
(Figure 12), four of which had been acquired
piecemeal by Libyanization and nationalization. The
fifth is the Unity (Wanda) Bank which was based on
the only private Libyan bank, the National Qafilah
Bank.
The Libyan Central Bank has evolved from the
National Bank of Libya, the principal banking entity
and the de facto central bank during the immediate
posteolonial period. In 1963, when designated a
central bank, it was empowered to set interest rates on
deposits and loans and to regulate directly the reserves
of commercial banks. As in most primitive, oil
producing countries, however, the monetary powers
proved illusory because the chief spenders and
borrowers, the oil companies and the central
government, operated outside the bank's purview.
Nonetheless, its nominal role was recognized by the
RCC in August 1971, when it was renamed the
Central Bank.
The Central Bank has played a considerable role in
commercial banking. Just before the coup, its
commercial department was handling the majority of
total commercial banking business. The RCC used this
commercial department as the basis for the all -state
FIGURE 12. Evolution of Libyan state commercial banks (U /OU)
BANK COMPOSED OF: ACQUIRED BY:
I rational Commercial Bank
Commercial Department, Bank of Libya......
Masrah al- Urubah Bank (formerly the Jordanian
Libyanization, November 1967.
j Arab
Bank).
Nationalization, December 1970.
Isiiglal Bank (formerly Italian Banco di Napoli)
Libyanization, November 1969.
Nationalization, September 1970.
I Unity (Wanda) Bank
Bank of North Africa (formerly British Bank of
Libyanization, under Idris regime.
Middle East and Morgan Guaranty Trust).
Nationalization, December 1970.
Commercial Bank (Libyan State and Charter
Established as joint venture under Idris;
and Eastern of United Kingdom).
nationalization, December 1970.
i
Arab Renaissance Bank (A1 -Nakda al- 'Arab�
Libyanization, under Idris regime.
formerly Egyptian Bank Misr).
Nationalization, December 1970.
Societe Africaine du Banque (French Societe
Libyanizatiotl, under Idris regime.
General du Banque).
Nationalization, December 1970.
t
National Qafilah Bank (Al- Qafilah al -Ahli�
Founded August 1969.
private Libyan).
Sahara Bank
Sahara Bank (Libyan State, Bank of Amerien
Set up as joint venture under Idris. National
and Bank of Sicily).
ization, December 1970 and September
1970.
Republic (Jumhuriyah) Bank
Barclays Bank
Libyanization and withdrawal by Barclays,
November 1969.
Natir.nal (Umma) Bank
Banco di Roma
Libyanization, November 1969.
Nationalization, September 1970.
4
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

a
I
N[. ".Y 4WD �^rr fi t�
National Commercial Bank, which the Central Bank
now manages along with the state interest in all other
commercial banks.
The Idris regime created two special banks: the
National Agricultural Bank and the Industrial Real
Estate Bank. The first was empowered to issue crop
year financing and other special loans to the local
farmers, whereas the latter was to provide investment
banking functions primarily for the fledgling nonoil
industrial sector. The RCC continues to operate both
banks, claiming that the volume of loans has increased
under their direction.
The most novel financial creation of the RCC is the
Libya.: External Bank. Capitalized by the Central
Bank, it was created to handle a variety of Libyan
external financial affairs, especially those with
Political overtones. It is authorized, for example, to
handle Libyan participation in such joint European
Arab banking consortia as the Banque France -Arabe
d'Investissements Internationaux (FRAB). It has also
been charged with establishing branches in developing
countries, principally in Africa where Libya has an aid
program and a growing political stake. The bank also
has been used to put together multilateral or interbank
loans for other states, thus freeing Libyan income and
reserves from this drain.
The Libyan currency unit is the dinar, known under
the monarchy as the pound. The value has changed
sevc,al times, primarily in response to fluctuations in
the value of the U.S. dollar. Formerly valued at $2.80,
the dinar was revalued upward to $3.04 in the fall of
1971. A second revaluation, in February 1973, raised
the value of the dinar to $3.38.
other foreign -held retail outlets caused a further
qualitative decline. The influx of Egyptians since 1970
has boosted demand for higher quality goods and
services, but the Egyptians are far less discriminating
than were their European predecessor. Moreover, the
conservative Muslim prescriptions of the RCC have
eliminated completely many categories of modern
services. Among the victimized establishments are
bars, cafes, and beauty parlors.
6. Domestic trade
The oil boom in Libya has widened the disparity
between urban and rural irade. In the urban areas,
rising incomes have created higher levels of demand
for an expanding variety of goods and services. This
thriving domestic market has enabled many
merchants, who traditionally carried a broad
assortment of goods, to seek greater economic
specialization in fewer lines. By contrast, trade in the
rural areas of Libya still retains much of its traditional
character. Outside Tripoli and Banghazi, shops are
small and nonspecialized, and barter trade still is
common.
The quality of retail services has deteriorated
sharply since the RCC came to power. Confiscation of
Italian properties and the ouster of the Italian
population eliminated the most experienced group
among the urban mercantile classes as well as the most
sophisticated customers. Subsequent Libyanization of
D. International economic relations (C)
Libyan external accounts have been in surplus for
most of the decade since the oil boom began. Gross
annual receipts from oil exportation in the 1960's rose
rapidly, reaching nearly $3 billion in 1971. A sizable
share of the receipts was transferred abroad as profits
to the oil companies. Nonetheless, net receipts greatly
exceeded Libya's capacity to absorb imported goods
and services, and unspent income, accumulated as
foreign exchange reserves, reached $3 billion in 1971.
During the first full year under the RCC, demand
for imported goods and services dropped as a result of
the dispossession of the more affluent classes, public
austerity, and a mild recession. By 1971 imports had
risen again in response to increased development
spending and greater outlays on arms and foreign aid.
Rising expenditures were more than offset by
burgeoning oil exports and by the 1970 oil accords,
which had increased the Libyan tax -take and reduced
company profits. Almost $900 million was added to
Libyan foreign exchange reserves in 1971 alone
(Figure 13).
Reserve accumulation slackened considerably in
1972 largely because of reduced oil production and
secondarily because of increased expenditures. Reserve
accumulations almost certainly will drop further in
1973 and eventually will cease unless expenditures are
curbed or oil output is boosted.
Libya has maintained a liberal import policy
because large export earnings can support large -scale
imports and because imports are necessar, in the
absence of domestic manufacturing capacity. The
Idris regime imposed more easily collected customs
duties instead of excise taxes for revenue purposes. The
RCC introduced discriminatory import duties in an
unsuccessful effort to divert trade away from the
Western industrial nations and toward other
developing countries, especially Arab suppliers. In
neither case, however, have duties or other restrictions
served as a barrier to imports.
The pattern of Libyan trade has remained stable
despite great swings in the volume of trade and in the
orientation of the government. On the export side,
17
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

0
FIGURE 13. Balance of payments (C)
(Millions of U.S. dollars)
1'.
1972
FIGURE 13. Balance of payments (C)
(Millions of U.S. dollars)
*Converted at year end rate of ELI USS2.80.
*Converted at year end rate of �L1= USS3.04.
*Mostly arms and aid.
preponderance of petroleum (more than 90% of
exports) is a continuing feature (Figure 14). As for
imports, a strong preference for European goods
especially Italian �has resisted government efforts to
"Arabize" the consumption habits of the population.
The principal change in Libya's international
economic relations has stemmed from Qadhafi's
fanatic pan- Arabism. The Idris regime maintained a
financially insular approach toward the outside world.
Among Arabs, only Husayn of Jordan was aided
willingly by Idris, who provided a $30- million annual
subsidy, plus additional ad hoc assistance, to him. A
IN
$59- million annual subsidy to Egypt was granted only
under duress in the wake of the June 1967 war.
Qadhafi, on the other hand, has committed Libya's
wealth to the general Arab cause. Outlays on aid and
arms, mostly in support of the confrontation with
Israel, were at least $500 million in 1971 and in 1972.
The proposed union with Egypt threatens to expand
Libya's financial obligations even further. Given
Egypt's rising import deeds and limited export
capabilities, financial integration of the two countries
would almost certainly result in a joint balance of
payments deficit.
I L I
r
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4
1972
1968*
1969*
1970*
1971
(ESTIMATED)
Trade balance
1,222
1,491
1,822
2,140
1,500
Exports
1,867
2,167
2,366
2,913
2,300
Imports
�645
�676
�544
�773
�800
Profits transferred abroad
�517
�456
�464
�4-10
�300
Other private transfers.............
�44
�44
�45
�47
�45
Net services
�322
�452
�368
�284
�300
Government transfers and unclassi-
fied expenditure
�117
�283
�373
�548
�550
Capital (net)
�67
+120
+172
+44
0
Change in reserves
+155
+376
+657
+865
+300
*Converted at year end rate of ELI USS2.80.
*Converted at year end rate of �L1= USS3.04.
*Mostly arms and aid.
preponderance of petroleum (more than 90% of
exports) is a continuing feature (Figure 14). As for
imports, a strong preference for European goods
especially Italian �has resisted government efforts to
"Arabize" the consumption habits of the population.
The principal change in Libya's international
economic relations has stemmed from Qadhafi's
fanatic pan- Arabism. The Idris regime maintained a
financially insular approach toward the outside world.
Among Arabs, only Husayn of Jordan was aided
willingly by Idris, who provided a $30- million annual
subsidy, plus additional ad hoc assistance, to him. A
IN
$59- million annual subsidy to Egypt was granted only
under duress in the wake of the June 1967 war.
Qadhafi, on the other hand, has committed Libya's
wealth to the general Arab cause. Outlays on aid and
arms, mostly in support of the confrontation with
Israel, were at least $500 million in 1971 and in 1972.
The proposed union with Egypt threatens to expand
Libya's financial obligations even further. Given
Egypt's rising import deeds and limited export
capabilities, financial integration of the two countries
would almost certainly result in a joint balance of
payments deficit.
I L I
r
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080012 -4

[7,7;
ZV
Ft
i
,C4 7 k f' �*1
-5A
d zf g,, r