Libya is currently enjoying the benefits of a growing economy, refreshed political and economic ties, and a new direction that stems from the government’s gradual moves to step out of its role as a distributor of wealth in favour of more limited responsibilities as a regulator and social policymaker. Domestically, Libya has long enjoyed stability and a high level of political participation, though not through traditional representative democratic processes. Rather, the country’s political institutions take the form of consultative bodies at the local, regional and national levels. The government has acted to successfully avoid the troubles of its neighbours, many of which have been battling extremism and social unrest for decades, by encouraging open discourse about social issues and allowing religious freedoms. 2008 saw significant commitments of foreign direct investment (FDI) by Italy and Russia and the resumption of political and economic ties with the US. According to the US Department of Commerce, Libya is now among its fastest-growing markets for US exports – mostly energy sector equipment, cars, agricultural goods and aircraft.

Since Muammar al-Qadhafi came to power on 1 September 1969, Libya has experienced political stability despite institutional transformations as well as tension and conflicts with foreign nations. Since the removal of international sanctions, Libya’s ties with the rest of the world have improved significantly. It has initiated measures aiming to increase its international action. The political system has never followed a multi-party democracy model. It is anchored around the notion of Libyan Jamahiriya, or ‘State of the Masses’, where people are expected to govern through a large number of People’s Committees and Congresses.
Since the suspension of UN sanctions, however, the government has displayed increased willingness to tolerate comment on and criticism of political decisions in the People’s Congresses and in the public arena. This new tolerance has benefited from the easing of diplomatic tensions with the United States, European Union and other states, and the lack of internal Islamist opposition.
Against the backdrop of overall political stability, 2009 saw many changes. A major cabinet reshuffle was announced in March 2009 involving the foreign affairs, economy, finance, health, communications and education ministries. Prime Minister Baghdadi Mahmudi maintained his post. A smaller reshuffle is expected in the first quarter of 2010.
Libya’s political agenda is dominated by uncertainty over the leadership succession, although many analysts indicate Saif al-Islam is the most likely candidate. As there is no specific constitutional process for succession, the uncertainty is natural. Strong advocates of the Jamahiriya system are at odds with those who favour the introduction of political parties and a presidential system.
On the international arena, Libya has intensified relations with neighbours and sub-Saharan countries in order to play a greater role integrating the African continent, notably through existing regional economic communities such as the CEN-SAD. Assistance is channelled through the Libyan Fund for Aid and Development in Africa (LFADA), under the guardianship of the Secretariat of the General People’s Committee for Foreign Liaison and International Cooperation. The fund attempts to stimulate economic growth in African developing nations, focusing on basic infrastructure, agricultural, power and water projects and other development initiatives. It is also used to respond to humanitarian crises in the region such as recently seen in Somalia and the Sudanese region of Darfur.
Libya chaired the African Union for one year from February 2009 and pursued an agenda of strengthening continental unity. The liberation of the man convicted of the 1988 bombing of a US jet over Lockerbie, Scotland, and his welcome back to Tripoli triggered international discontent but it is unlikely to have a long-term impact on Libya’s efforts to normalise relations with the European Union and United States. In January 2010, tensions with European countries increased when Libya stopped granting visas to nationals from the European Schengen area in retaliation to Switzerland’s refusal to grant visas to selected Libyan nationals. However tensions are expected to ease, prior to the March 2010 lifting of visa restrictions.