LIBYA - Libya's Political Leadership - The System.

What Qadhafi has created is both de-centralised and centralised decision making bodies.There are 3,000 committees which meet twice a year on health, education and finance. There is a 3,000-member committee which assigns priorities and budgets. There are local committees which co-ordinate national

US consultants, including Michael Porter, a Harvard professor, were there as guests of the nascent reform movement, and they appeared at a conference in February organised by Qadhafi's favoured son, Saif ul-Islam (Saif), the main force behind the drive to retool the economy. All stepped quietly around the question of true political reform.

The New York Times in March 2007 quoted "a former political prisoner who like other dissidents here was afraid to be identified for fear of punishment" as saying: "Look, we have all reached the conclusion that political change is impossible; it is impossible to change the system. So the only thing we can do is support the initiatives taken by someone like Saif and hope that it leads eventually to where we want things to go". It is hard to see how change can come quickly in such an undeveloped economy.

Officials pay homage to Qadhafi's philosophy, which is embodied in his Green Book, a melange of pop psychology, socialism, populism and Islamism. Ahmad Ali Kojman, a director of Wa'atassemo Foundation - Libya's main charity group run by Qadhafi's favoured daughter who is locally addressed as HE Dr. Aisha Mu'ammar al-Qadhafi", was in March 2007 quoted as saying: "Most people don't understand the system. Those who do, understand it should be the democracy used all over the world". Since criticising the system is a red line, even the outside consultants avoid doing so.

The New York Times quoted Porter, "an expert on competitiveness who has helped to plan economic reform efforts" in Libya, as saying "carefully at the conference": "We have to create a process of improving everything. It won't happen overnight. It will take years".

In Libya, where more than half the population is younger than 20, people say they want jobs and often ask how an oil-rich country can be so poor. People in March said they had believed their troubles were the result of international sanctions. But sanctions were lifted years ago and they said they had not seen much improvement in their daily lives.

The NYT quoted "Idiris Mismari, who publishes a Libyan cultural digest in Egypt because it is banned at home", as saying: "In many ways, the economic initiatives being proposed are satisfying what people are looking for. So that allows everybody to ignore political reforms". But there is great scepticism that the government will follow through on those promises.

The NYT quoted Giumma Attigha, a lawyer who heads a human rights committee in Libya, as saying: "The main problem the regime has is to build the trust of the people. There is a lack of credibility for the regime". Libya has been as isolated and cut off from the rest of the world as Albania was under its dictator, Enver Hoxha. Students continue to go to school in military fatigues and learn to assemble weapons in class. Time is almost irrelevant in Tripoli, and so appointments are often skipped with no explanation. The streets are filled with pictures of Qadhafi, his fist up in the air or his gaze turned towards the heavens. One of the Qadhafi slogans posted around town reads: "My mission is to incite the people to exercise authority without representation".

The NYT added: "Consultants and officials say the biggest obstacle to development is the lack of adequately educated Libyans". A survey of government managers, for example, found that only about 3 to 5% had any training in the last 20 years. So far, the big changes, foreigners based in Libya says, are the estimated 25 new ATMs in Tripoli. And Saif was allowed creationg of a new Economic Development Board (see DT). But Libyans do say there has been social change. Not long ago Western music was banned, studying English was banned, private property was banned, being a lawyer was banned and capitalism was a crime.

Today Libyans want to be part of the world, but they are afraid to leave the cocoon of a welfare state where everyone was poor but expectations were low. The NYT quoted Nassereddin Ali, 33, a playwright in Tripoli, as saying: "People are depressed and bewildered. There is a fear of tomorrow and the future. People don't know what to do: Should they live for today, tomorrow or yesterday?"

When the Tripoli international trade fair opened in Tripoli in April 2007, families in their thousands flocked to stalls and stands from more than 30 countries, from Italy to China, Yemen to Turkey. And, for the second consecutive year, Libyans could wander through a US exhibition area featuring companies such as Pfizer, Briggs & Stratton and Lincoln Electric. The FT on April 25 reported a young Libyan as noting that people used mobile phones to snap pictures of an American flag hanging at a US stand. In the past, the only glimpse of the Stars and Stripes for many would have been as it was set ablaze in street protests.

Tripoli has engaged five international consultancies to develop an economic strategy, restructure the civil service and modernise outdated, poorly functioning health, education and banking sectors. Yet many barriers to sustained reform remain, from the country's esoteric, quasi-socialist political system which has stymied growth and enterprise to an inefficient bureaucracy, with civil servants scared to make decision in case it gets them into trouble.

In March 2007, up to a dozen businessmen were held for more than a week, ostensibly for tax reasons. But observers viewed the arrests as a warning to them not to get too big for their boots. Government officials, however, insist they are pressing on with changes which will enable Libya to adapt to the globalised economy.

Mahmoud Gebril, head of the National Planning Council, says: "We are in the process of reading [watching] globalisation [and] we believe that we have a lot to offer. This is what I can call a transformation of society. It's not just a question of installing a factory here and there; you are talking about a...new culture". Tripoli is preparing a "2025 vision", he says, which will target developing sectors such as tourism and IT. The aim is to diversify the economy, develop the tiny private sector which was shut down from the late 1970s to the late 1980s, and boost foreign investment with an eye on small, successful economies such as Ireland and Singapore for lessons.

Gebril speaks of the need to reform the state media. But that does not necessarily mean an independent, private media. He says: "It's not a question of who owns the media, it's a question of whether media is a valid tool for free participation of people. I think the [political] structure theoretically allows for that".

It is an example of the ambiguities that emerge as officials speak of reform while staunchly defending Qadhafi's political system. Lest anyone forget who is in control, "The Brother Leader" strikes poses on huge billboards along with 37, the number of years since Qadhafi led a 1969 coup.

Decision-making is blighted by inconsistency and incoherence. A 2006 World Bank report estimated unemployment at 25%. The system prevented Libyans from employing their countrymen or renting properties, with a restriction of one property per family. A measure to prevent exploitation curbed the growth of business - once a minimum of 500 partners was needed to set up a firm - and created a housing shortage.

Officials, however, say the problems were a result of poor application and that they are correcting faults, even if political change is not on the horizon. Ma'toug al-Ma'toug, secretary (minister) for manpower, employment and training, says: "The way things work might have problems. But I think if we did embark on revising our way of managing and handling the units, the system is excellent. Ma'toug faces the task of restructuring a bloated public sector, including reducing the number of civil servants from over 1m to 600,000 by end-2007. Other changes are designed to attract foreign investment in non-oil sectors, with a reduction on the minimum investment for foreign firms from $50m, to $3.9m, or $1.6m if Libyans provide more than 50% of the capital.

Yet doubts persist about how far the reforms will proceed. The FT on April 25 quoted Oliver Miles, deputy chairman of the Libya British Business Council and a former British ambassador to Tripoli, as saying: "Libya has to tackle the same issues facing every Arab country but here it's not clear where the leader is - with reform or against it. He's not come off the fence".

Among ordinary Libyans, some change is acknowledged but there are complaints that it is not happening fast enough. Questions about politics are often met with nervous glances or simply ignored - a symptom of decades of living under an autocracy. A Tripoli resident says: "You cannot talk about the Godfather, his family or what he's doing". There are corruption and inequitable wealth distribution. Yet some residents profess their adulation for Qadhafi without cajoling. The FT on April 25 noted: "In Tripoli's Old City, a warren of narrow streets, cafes and markets where anything from fresh fish to live porcupines are sold, a trader points to an embroidered portrait of Col. Qadhafi, saying: 'I will never sell that because I love him'".

On May 29, when BP signed an EPSA with NOC covering huge areas for integrated gas E&P and LNG exports, the US/US major was part of a big business delegation accompanying then PM Tony Blair on a visit to Qadhafi's tent near the latter's hometown of Sirte. The FT on May 30 noted: "The tent was decorated with imprints of camels and shuddered with every gust of Saharan wind. In this unlikely setting...Blair...sought to demonstrate how British diplomacy has transformed a pariah state into an ally. Mr Blair described the talks as 'positive and constructive'...[Qadhafi], once paymaster and arms dealer to the IRA and a host of other terrorist groups, is now on first name terms with the Prime Minister... Mr Blair pays tribute to a reliable ally. 'There is nothing I've ever agreed with him that should be done that hasn't been done', the (then) Prime Minister said before the meeting. 'It shows that it is possible to go from a situation where Libya was an outcast from the international community to a situation where our relationship has been transformed'".

Blair, whose premiership was taken up on June 27 by Gordon Brown, was on May 29 greeted with great fanfare as he landed at Sirte airport. Beneath a large poster of Qadhafi, a guard of honour presented arms and a motley brass band struck up a merry cacophony bearing some resemblance to God Save The Queen. Qadhafi, unshaven, unkempt and swathed in brown robes, smiled thinly as Blair arrived in his tent. Later Blair said Britain and Libya will co-operate more closely in the fight against terror.

Abdel-Basset al-Megrahi, the Libyan intelligence man convicted of the Lockerbie bombing, was on June 28 granted the right of appeal, reigniting the controversy over who was behind that. The independent Scottish Criminal Cases Review Commission referred Megrahi's case to Scotland's High Court for a second appeal after identifying six grounds where it believed a miscarriage of justice might have occurred.

Megrahi, from Abdel-Salam Jalloud's powerful Magariha Tribe, was found guilty in 2001 of the 1988 bombing. He is serving a life sentence in a prison near Glasgow and lost his first appeal in 2002. Megrahi on June 28 said: "I reiterate today what I have been saying since I was first indicted in 1991: I was not involved in the Lockerbie bombing in any way whatsoever".

Some victims' relatives and independent observers had long been dubious about Megrahi's conviction, particularly over the reliability of prosecution witnesses and forensic evidence. The news that he was to be granted a fresh appeal came as Britain and the EU were seeking to bolster their relationship with Libya.

There is talk Megrahi could be freed in exchange of the release of Bulgerian medics, but British officials deny any link between the two cases. Libya's Supreme Judicial Council (SJC) on July 17 commuted the death sentences against five Bulgarian nurses and a Palestinian doctor to life imprisonment. Earlier, the families of 460 Libyan children infected with HIV virus started receiving compensation. Under Muslim tradition, the settlement makes it possible for the SJC to spare the lives of the medics. In the previous week Libya's Supreme Court confirmed the death sentences against them, leaving the SJC as their last hope. The new arrangement is the result of lengthy talks between Libya, Bulgaria and the EU.

The money received by the families, $460m on the basis of $1m per family, came from the Qadhafi Foundation, a charity headed by Saif ul-Islam, which played a leading role in the talks. The medics, sentenced to death first in 2004 and again after appealing in 2006, have been in prison for eight years. They claim they were tortured to say they infected the children, with 56 of them having died.

Experts say poor hygiene in the hospital was the reason for the outbreak. The Libyan courts heard evidence from French scientist Dr Luc Montagnier, who first isolated the HIV virus, that the start of the infections predated the arrival of the nurses at the hospital. Sofia has given the Palestinian doctor Bulgarian citizenship so he is included in a deal to release the medics.

French President Nicolas Sarkozy has indicated his willingness to travel to Libya to resolve the dispute. He has spoken to Qadhafi and his wife Cecilia recently visited Libya. On July 20 the BBC reported that President Sarkozy was to Libya on July 25 with the hope he will help resolve the situation quicker.