Libya is getting the backing of Ukraine to build nuclear reactors. Mustafa Adam-Noble looks at the implications of an oil-rich country going nuclear and the possible impact on Libyan people.

A honeymoon is rapidly emerging between Libya and the Ukraine.

Viktor Yushchenko, the Ukrainian President, has declared his intention to help Libya develop its use of “peaceful” nuclear energy. According to Afrique En Ligne, an online African magazine, bilateral economic projects have been emphasised by Yushschenko. They include the granting of a Libyan contract to a Ukrainian oil and gas company in return for the use of Ukrainian agricultural land by Libya. The Ukraine has also offered to build roads and railways in the North African country and has recently supplied Libya with an Antonov AN-124-100, the world’s largest cargo plane.

Such a large scale of political and economic bartering and investment is bound to raise a few eyebrows.

On the one hand, the rush for oil by the Ukrainians makes sense: Moscow’s threat of turning off Russian-Ukranian pipelines is ever-present. Libya’s need for cheaper food amid rising food prices is a very real concern, and Gaddafi can’t seem to fix agriculture domestically. However, this eager international relationship is murky and far from straightforward.

Libya is awash with corruption amongst its officials and desperation within its population. Decades of crippling policies by Gaddafi, and subsequent trade sanctions, have left the country in tatters.

Libya was an active sponsor of terrorism until only recently when, in 2003, Gaddafi admitted to bombing a Pan American flight over Lockerbie in 1998, killing 270 people. The dictator also admitted to bombing the French UTA airliner over Niger in 1989 that killed all 170 civilians on board.

The declaration of his guilt prompted the immediate lifting of UN sanctions imposed on Libya in 1992; Libya promised compensation for the victim’s relatives ($2.7 billion in instalments for those on the Lockerbie flight) and everyone ran to Libya with open arms, embracing the now reformed rogue state.

Congratulating Libya by supplying it with nuclear technology and a gigantic cargo plane hardly seems wise.

The argument for nuclear energy in Libya may not seem to make economic sense. Its population is only 5 million, but it has the largest oil reserves in Africa. However, Alan McDonald, an official with the International Atomic Energy Agency, explains that nuclear energy could be a strategic economic move for oil-rich countries. He said, “they know their oil will only become more valuable as global demand increases […] It may be more cost-effective to sell oil to Americans driving SUVs than to burn it domestically.”

It is likely that Libya has an additional, political motive for developing nuclear technology.

Iran’s uranium enrichment programme has forced the region into nuclear proliferation (recently Kuwait, Jordan and Bahrain have also begun planning nuclear plants). According to the Washington Post, 40 developing countries have recently signalled plans to develop nuclear power, which can then lead to the completion of nuclear arsenals.

Algeria and Morocco are also planning the construction of nuclear reactors. This would paint a very different picture to the current nuclear African map, with only two reactors on the whole continent (both in South Africa).

According to Igor Kriponov, writing for Bulletin of the Atomic Scientists, “South Africa accounts for 60 percent of all of Africa's energy production. (Africa as a whole generates only 3.1 percent of the world's electricity)”.

Using nuclear energy could help increase both Libya’s and Africa’s electricity generation without immediately polluting the environment. What you do with containers of nuclear waste is another question.

Easing fears of a world armed to the teeth with nuclear weapons, Mohammed ElBaradei, director general of the IAEA, is quoted as saying in the Washington Post, “You don't really even need to have a nuclear weapon. It's enough to buy yourself an insurance policy by developing the capability, and then sit on it. Let's not kid ourselves: Ninety percent of it is insurance, a deterrence.”

Libya’s nuclear programme could thus satisfy both an economic and a political agenda. However, the possibility of an unstable tyrant like Gaddafi attaining nuclear weapons poses a serious threat. Additionally, the Ukraine’s dealings with Libya are unlikely to benefit the general Libyan economy.

Senior British businessmen now working in Libya warn that the agreements with the Ukraine are convoluted and are not based in direct foreign investment procedures. The bartered nature of the agreements decreases transparency and creates a scenario loaded with the potential for theft. Additionally, because there is now so much more money coming into a newly open Libya, corruption is getting worse. The country cannot cope well enough to bear the fruits of investment. There are no institutions or protocol, no free press, very few educated Libyans and an unreliable communications system.

Although Gaddafi has begun to allow the creation of financial institutions, with economic reform gradually building in the banking sector, development in other areas of the economy is simply not happening. Perhaps we must be patient as there are still some positive signs that internal change is possible.

In an address to Libya’s General People’s Committee, Gaddafi stated that the nationalised Libyan economy has been inefficient and wasteful of money. He emphatically said, “The traditional state is over”.

Not so fast.

It would be tempting to think that the bad times of a state-run, isolated Libya have come to an end. While Libya catches up, continued malpractice, corruption and poverty will have long term effects that would be difficult to reverse even if all sectors are eventually reformed and regulated.

Gilbert Achcar, Professor of Development Studies and International Relations at SOAS University in London, argues that the oil deal with the Ukraine suits the Libyans because it offers them better conditions than an agreement with, say, France or Italy. This may be true, but the benefit of working with the Ukrainians in the four very different fields of nuclear technology, oil, roads and railways must be questioned.

One senior businessman likened the Ukraine’s multi-project approach in Libya to an accountant that can provide further services as a lawyer, a writer and an acrobat. It is unlikely that each role can be done sufficiently well by one party.

These deals manifest a special relationship between Libya and the Ukraine based not on economic efficiency and competition but on favouritism.

Pitfalls also arise in the Libyan economy.

According to Eman Wahby in an article published in 2005 by the Carnegie Endowment to International Peace, “[Libya] is the top recipient of foreign investment in Africa.” But unemployment in 2008 is estimated at 30%, and has in fact increased from 25% in 2005.

This shows that the Libyan system does not benefit the masses and, coupled with Libya’s significant growth rate of 9% in 2008, demonstrates that wealth goes only to the few and the powerful.

Wahby mentions that the country had announced plans “to cut $5 billion worth of subsidies”. She adds: “For decades, the state has been subsidizing 93 percent of the value of basic commodities, notably fuel.”

It seems that Libya’s sprint towards reform will leave it out of breath as prices increase, squeezing the population beyond its means. Wahby explains that subsidy cuts in May 2005 increased fuel prices by 30 % and electricity prices by 100%, leading to price rises in other goods and services.

This is simply not sustainable.

In order to be successful, Libya’s development must be gradual, assessed and measured using foresight and rationality - characteristics Gaddafi has consistently lacked throughout his 39 years in power.

It is doubtful that the Libya-Ukraine relationship will be profitable for the Libyan population. Given Libya’s severe economic difficulties as a consequence of a totalitarian system, each decision Gaddafi makes must ultimately be questioned.

Even if Gaddafi does spend his country’s wealth on the things it most needs, it is unlikely that he will be able to improve the lives of the Libyan people.

*Mustafa Adam-Noble is a political commentator.

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