Democracy Lab

Libya Goes for Broke

The economic paradox of Libya: It’s rich, but it’s bankrupt.

Libya has been an especially difficult place to live over the past few weeks. With a string of high profile assassinations, a jailbreak, and a series of sometimes thwarted car bomb attacks, there is plenty for Libyans to be exasperated by. Yet amidst the lawlessness of recent weeks, nothing has frustrated the Libyan streets more than the daily power outages, sometimes running up to an excruciating 16 hours at a time. 

The government has offered explanations, from overconsumption in the summer months to lack of maintenance, a legacy underinvestment in the network, and even sabotage by Qaddafi loyalists. This may be post-Revolution Libya, but given the country's vast riches, a lack of electricity is a problem that seems especially hard to explain away. 

The country boasts some of the world's largest proven oil reserves, substantial capabilities for natural gas production, $168 billion in foreign assets and an enviable 2000 km-plus stretch of coast on the Mediterranean. For all these assets, Libya (pop. 6.4 million) also has a relatively small number of mouths to feed. In other parts of the world, the combination of small population and ample natural resources has generally proven a surefire formula for success. Why does Libya fail to follow suit? 

During Qaddafi's reign, at the very least it was clear why infrastructure and public services were lacking: the Colonel and his cronies were visibly enriching themselves on the back of oil exports, leaving little of the country's bounty for the average Mohammed to enjoy. Now that the Qaddafi family and their business associates are gone, however, the lack of public investment is more puzzling. In a nascent democracy, it is also far less tolerable. 

Truth be told, conditions for ordinary Libyans have not improved in the two years since the Revolution. The hospitals are "unfit for human beings," in the Health Minister's own words. The schools are decrepit. Sewage spills pungently into the once-pristine Mediterranean shoreline. Even an internet connection is a serendipitous occurrence. For Libyans and observers alike, it is not immediately obvious why Libya should be in such dire straits. 

Incompetence and widespread corruption top the list of popular explanations for the country's current condition. Both are, to some extent, true. Emerging from dictatorship, public servants are equal parts unskilled and corruptible. But the reality is that even a competent and fully transparent government would find governing today's Libya an impossible task. The reason is simple: despite its apparent wealth, Libya is broke. 

All you have to do is run the numbers. The country's projected national budget for 2013 amounts to some 67 billion Libyan dinars (or $52.5 billion), 90 percent of which will be derived from the export of oil throughout the year. Of this, LYD 20 billion ($16 billion) is earmarked for public sector salaries and a further LYD 10 billion ($8 billion) for subsidies and transfers. After operating expenses, what's left for "development and reconstruction" is LYD 19 billion ($15 billion) -- a meager LYD 3,000 ($2,300) per head -- to basically build a country from scratch. 

The figures are frightening, but the current government can't be blamed for them. Libya's fiscal policy is largely inherited: the hefty salaries and subsidies are the remnants of the country's recent socialist past. Unlike its Arab Spring peers, Libya hasn't only emerged from political autocracy. Perhaps more importantly, it is also emerging from Qaddafi's most indelible of legacies: decades of Soviet-style command economics. 

A young Qaddafi, the son of a camel herder from a rural central Libyan village, was taken, during the 50s and early 60s, by the ideas of the iconic Egyptian president-cum-dictator Gamal Abdel Nasser. Among them, a distaste for monarchies, the dream of a powerful United Arab States, and a fervent anti-capitalist sentiment. Years later, after his successful 1969 coup, Qaddafi published his own synthesis of the Nasserite ideology in his now-infamous "Green Book." 

Part desert-inspired philosophy, part political and economic manifesto, the Green Book with its grandiose "Third Universal Theory" laid the foundations for Qaddafi's brand of socialism. It contains such maxims as "land is the private property of none" and "wage earners are but slaves to the masters who hire them." These and other Qaddafi aphorisms were taught at every level in Libyan public schools, with students learning to recite them by heart. In Qaddafi's visionary society, citizens would want for nothing, for controlling another's need is akin to slavery. The state would necessarily be the sole provider because workers -- now "partners" -- would freely associate for the benefit of the collective. 

Under Qaddafi, the state indeed became the near-sole provider of jobs; even today, between 70 and 85 percent of the Libyan workforce is employed by the state. Large-scale subsidies (applied to everything from petrol and electricity to rice and tomato paste) kept Libya well isolated from the world: the state monopolized imports, buying in bulk from abroad and setting up state-run cooperatives in each city where ordinary Libyans could buy their subsidized basic staples and foodstuffs. These hugely discounted goods equally served a political purpose: they kept Libyan mouths just about full enough not to be inclined to speak out of turn. 

At the same time, Qaddafi engaged in an all-out witch-hunt against the "evil bourgeoisie" with their exploitative profit motive. The wealthy Libyan merchant families that emerged during the toppled Kingdom of Libya (1951 - 1969) saw their assets (lands, businesses and homes) confiscated wholesale by the regime. Many then fled the country -- largely to Egypt and the United Kingdom -- only to be subject to often very public assassination attempts by Qaddafi envoys mandated to nip the cash-rich, foreign educated opposition in the bud. 

Monopolize the labor market, implement far-reaching subsidies, crack down on private enterprise; rinse and repeat over four decades, and what you end up with is a population with a deeply entrenched cultural and economic dependence on the state.  

Of the various interim governments since the Revolution, Prime Minister Ali Zeidan's, so far, has the best grasp of the problem. His predecessors made matters worse by initiating a system of stipends for the fighters and injured of the Revolution. "This predictably spiraled out of control; amongst the 450,000 registered claims, tens of thousands of names were found to be duplicates, fakes or long deceased." 

Zeidan's cabinet, on the other hand, has shown more wisdom, cracking down on the abuses to the stipend system and announcing the phasing out of oil and food subsidies by 2016 (only partially replacing them with a monthly cash transfer). This is a bold policy for a shaky government, one that aims straight at the root of the problem. If implemented successfully, this move would substantially relieve the budget, which could then be meaningfully redeployed towards infrastructure, health care, and education -- the visible improvements so coveted by the Libyan electorate. But at a time when people expect more, not less, from the government, subsidy reform is a hard sell. 

Zeidan himself has gone to great lengths to explain why the money isn't there. A roundtable discussion on the budget was held on national television, featuring the Ministers of Finance, Oil, and Planning. The topic of the budget is a must at the prime minister's Sunday press conferences where Zeidan spends much of his airtime explaining the bureaucratic impediments his Cabinet face. These obstacles boil down to two: Libya's interim legislature, the General National Congress (GNC), has set up and given a powerful mandate to an "Audit Bureau" to review, sign off, or veto every planned government expense. The Audit Bureau has been notoriously slow in approving spending requests and the government has called for its restructuring to resolve the impasse. On top of this, the GNC has also denied the government the ability to shift spending between the line items on the budget: where one item records a surplus, the country's executive body does not have the authority to shift the monies to another more needy area of the budget. 

What's more, oil production fell below 1 million barrels a day in June this year for the first time since the Revolution (from a peak capacity of 1.6 million barrels). The government sounded the alarm that a "crisis" level had been hit. At the lowest point during the Revolution, oil production briefly came to a total standstill. Libya's rapid recovery, within a few months, to 100 percent of pre-Revolution production levels was astonishing and the subject of much international praise. 

These days, "crisis" level has been redefined: oil production has plummeted dangerously to just 30 percent of capacity due to violent unrest and strikes. The government has already warned that it won't be able to meet its commitments for the year: between salaries, subsidies, and discretionary infrastructure spending, the latter will no doubt be the first on the chopping block. 

This leaves Zeidan between the proverbial rock and a hard place. He will remain weak and untrustworthy so long as he can't produce visible results which require spending, but at the same time, he can't spend so long as he's untrusted by the bureaucrats at the GNC and the Audit Bureau and weak in the face of the security situation (therefore not credible enough to enact the all-encompassing fiscal reform that can save his government). The man doesn't stand a chance. 

But the underlying problem -- Libya's severe fiscal imbalance and unsustainability -- has little to do with Zeidan and everything to do with the essence of the modern Libyan state. Culturally and economically, the Libya that emerges post-Revolution is consistent with the Libya pre-Revolution and indeed the Libya pre-1969: the country is and remains the quintessential rentier state. 

The "rentier state," a concept first postulated in the 1970s, describes a country owing the vast majority of its wealth to the "rents" it earns from the sale or lease of an abundant resource to an external party. That has come to describe many of the Middle Eastern nations that depend on the sale of oil to foreign buyers for their livelihoods. The literature  goes further, describing a rentier state as one in which the government earns the rents and therefore controls and administers the nation's wealth. Few locals are meaningfully employed in the rent-generating industry and there is no real need for taxation. 

As a consequence, a dysfunctional social contract between governor and governed arises: the state doesn't need the citizen in order to exist, while the citizen is destitute without the state. Implicitly then, the state is not subordinated to the demands of the citizen -- beyond the bare minimum to avert revolt. Because of this, scholars have to support the idea that prototypical rentier states face disproportionately bigger obstacles to achieving democratization. 

This dysfunctional social contract has existed in Libya ever since it -- well, became Libya. King Idris al-Senussi I, Libya's first and only monarch, was the Mohammed bin Rashid al-Maktoum of the 50s and 60s. Like Maktoum, Dubai's present day ruler, Senussi was a benevolent dictator with a vision for his people: he took the rents earned from newly-discovered oil and turned them into streets, hospitals, and schools. Then came Qaddafi, who kept the "dictator," saved on the "benevolent," and used the increasing oil rents to prop up his loyalists and cronies, crushing the rest. With the collapse of the Qaddafi system in 2011 came the National Transitional Council and Libya's post-Revolution transitional governments, who scratched the dictatorship while reviving the benevolence, distributing oil rents to the fighters, injured and more recently, every child under the age of 18. For this is precisely what a rentier government does: it distributes its money as it sees fit -- always with an eye to keeping just enough people happy to preserve its power. 

Yet even in country with Libya's ample natural wealth and small population there are inherent limits to the largess -- and they are now making themselves apparent. The combination of a frighteningly low rate of oil production and the inherited "big government" budget means that there is no longer any money to distribute. People's expectations do not change overnight, however, and frustration is mounting as a consequence. 

For the moment, the lack of visible improvements will be seen as Zeidan's failure and his failure alone. Yet there is something much larger at stake. Subsequent prime ministers are fated to run up against the same systemic constraints, and frustration will build accordingly. There is a risk that people will begin to see the lack of progress not as the shortcoming of a particular government, but as the failure of democracy itself. Eerily, we could see replicated in Libya the street interviews that sometimes crop up from post-Saddam Iraq -- riddled with violence, power outages, and poverty -- where the neighborhood butcher, once enthusiastic about freedom, looking dejected sighs "at least I could put food on the table when Saddam was alive." 

If democracy is to have a chance, Libya's fiscal policy must be reformed in a manner that addresses the underlying social contract wrought by rentierism. Several crucial reforms are needed in order to achieve the paradigm shift that was promised but not delivered by the February 17 Revolution. The government must make itself smaller. Policymakers must make oil less important to the economy and swing the balance towards private sector growth. 

Shrinking the government means staying the course on subsidy reform. It will be painful: prices will rise quickly and families will feel the impact at every gas station and supermarket. But there is no choice. The budget can no longer afford subsidies, and every oil price shock or day of strikes makes the public wallet lighter. It will take a sense of civic duty and all the political will Libya can muster to see subsidy reform through to implementation. 

At the same time, it's important to recognize that subsidy reform isn't enough by itself. Removing subsidies must be paired with instituting a credible social safety net to catch those at the bottom of the economic ladder who can't afford to absorb a price increase. Money no longer tied up in indiscriminate subsidies (disproportionately benefiting the rich) can be redeployed towards more targeted welfare schemes, based on income level, geography, or otherwise-determined need. 

Beyond subsidies, the temptation to keep spending remains, particularly around election time or when the government runs out of better ideas. Every new financial commitment adds to the cost base, reinforces the current dysfunctional social contract, and hammers another nail in the coffin of economic development and intergenerational equity. To prevent this from happening, Libya's Constitutional Assembly must adopt a fiscal discipline rule in the new constitution it is creating. 

Fiscal discipline rules vary, but the basic idea is to impose limits on how much a government can spend or how much debt it can incur in a given year. The key aspect of these rules, and why it is essential they be enshrined in the constitution, is that they impose a discipline that lasts longer than a government or an election cycle. Importantly, they stop a government from doing the politically expedient thing in times of plenty: overspending to secure reelection. With a fiscal discipline rule, the constitution would better serve its stated purpose: to safeguard Libya's prosperity both today and tomorrow from political exploitation. 

The number of countries adopting a fiscal discipline rule has increased dramatically in recent years from just five in 1990 to 81 in 2012 -- notably several Latin American countries have adopted them to curtail runaway inflation and restore investor confidence following a series of currency exchange crises. As a case study, Brazil has adopted fiscal discipline rules enshrined in law, demanding that the government establish a three-year rolling target for a positive primary budget surplus (government revenues minus expenditures, before interest payments, must be positive). 

While they are not a panacea, fiscal discipline rules can at the very least serve as early warning signals. In the last two years, $300 billion Brazilian real ($131 billion) have been spent by the Brazilian government on fiscal stimulus programs (for instance, subsidized home mortgages). Over the same period, however, annual GDP growth has declined from 7.5 percent to just 0.9 percent, meaning essentially that the stimulus hasn't worked. Without a fiscal discipline rule, the government would have the option to continue to ramp up spending -- as far as incurring debt -- throwing good money after bad. 

Bound by fiscal discipline however, Brazil is mindful that in 2012 the primary budget surplus stood at 2.4 percent (officially 3.1 percent) and at the current pace of spending is projected to reach 0.9 percent in 2014 -- an election year. As a consequence of this trend, Standard & Poor's have downgraded  the outlook on Brazil's credit rating from "stable" to "negative" and President Dilma Rousseff's government is now scrambling to restore fiscal credibility accordingly, by instituting budget freezes and spending cuts. This means Rousseff won't be able to spend her way to re-election. Libya, with its immature and fragmented political spectrum and inexperience with democracy, would benefit hugely from curtailing politician's ability to overspend around election time. 

Beyond this, Libya must learn to embrace private enterprise. The government has no capacity to continue hiring, the oil industry is capital-intensive (read: not a big job creator), and youth unemployment stands at a staggering 30 percent. The only practicable way to relieve the pressure on the budget and bring about greater and more inclusive growth over the long term is to lay the foundations for a thriving private sector. The government can start with the low-hanging fruit: privatizing a number of state-owned enterprises like the General Posts and Telecommunications Company (the owner of the country's two mobile operators) and pushing the fifteen commercial banks it majority-owns (who are sitting on LD 40 billion of idle cash) to lend to small and medium enterprises. 

Strengthening the private sector doesn't just generate more money and jobs. It changes how the individual views himself: not as a vulnerable recipient of state largess but as a maker of his own destiny through the sweat of his brow. Combined with taxation and the ballot box, this then lays the foundation for a renewed social contract between governor and governed: the citizen creates the wealth and pays a portion to the elected government, which is then accountable for the provision of the public services the citizen demands. 

It's unquestionably asking a lot for Libya to relinquish its legacy political, economic, and social order all at once. But for February 17's political promise to be fulfilled, for democracy to be seen and believed to be viable in Libya, people need to sense the economic improvement first hand. Development needs investment, and investment urgently needs fiscal reform. Libya must move ahead now, while there is still time.    

ARIS MESSINIS/AFP/Getty Images

Democracy Lab

Libya's Hard Landing

The days of euphoria are long gone. Can Libyans reboot the revolution?

TRIPOLI — This month, Libya marks the second anniversary of the liberation of Tripoli and the fall of the regime of Muammar Qaddafi with the country mired in chaos: Militia violence stalks the land, strikes threaten to cripple the oil industry, jihadist violence is on the rise in the east and economic stagnation is everywhere. The promised constitution, the cornerstone of the reform process, has failed to materialize, with politicians deadlocked both over the role of Sharia law and bitter regional rivalries. It is a picture that few in this oil-rich nation would have predicted in the heady days of revolutionary euphoria.

In August 2011, Libya's newly liberated capital was awash with tricolor flags, emblems of the uprising. The tricolor was the original Libyan flag, adopted on independence in 1951, and replaced by Qaddafi with a plain green flag, detested by most Libyans. Qaddafi was still alive at the time, to be captured and killed two months later in Sirte, but the revolution already seemed won. In that heady atmosphere, the rebels' interim government, the National Transitional Council, sounded a surprising note of caution. The war had been long and damaging, the wounds deep, so the council members issued a constitutional declaration, otherwise known as the Road Map, which envisaged a lengthy, 18-month transition to full democracy. Stage One was the election of a transitional parliament; Stage Two, parliament's supervision of a new constitution. Once that was adopted, by referendum, Libya would be ready to take its place among the world's democracies.

In the post-war euphoria, Libya seemed to have everything going for it. The country boasts the largest oil reserves in Africa, plus huge deposits of natural gas and $168 billion in foreign assets -- all for a population of a mere 6 million. Surely, now that the dictator was gone, Libyans could finally enjoy their birthright. The future looked rosy.

The Road Map made a bright start when Libya held its first free elections for more than half a century, more or less on schedule, in July 2012. Turnout was high and violence low; election observers lined-up to pronounce it free and fair. The voting took place amid scenes of euphoria. Those tricolor flags once again filled the streets.

The elections also brought a surprise defeat for the Muslim Brotherhood, which had been victorious in Libya's neighbors and fellow Arab Spring participants, Egypt and Tunisia. The Brotherhood's Justice and Construction Party polled only ten percent of the votes, beaten into second place by the National Forces Alliance (NFA), an unlikely coupling of former rebels and former Qaddafi supporters, united in their determination to keep the Brotherhood out. The Brotherhood suffered from the lack of a tribal base, and because in this conservative Islamic country, there is suspicion towards any party claiming a monopoly on interpreting the faith.

On election night, NFA leader Mahmoud Jibril offered himself as a man to heal the wounds of war. As former rebel prime minister, he would guarantee that the promise of revolution would be fulfilled, and as a former economic advisor to Qaddafi, he would ensure that representatives of the old order would be protected against possible witch hunts (which, so far at least, have not materialized).

But by the time the GNC met in September to elect a prime minister, Jibril's alliance had fractured, with liberals and civil rights groups accusing him of siding with the apparatus of the former regime. On September 12, with the country distracted by the killing of the U.S. ambassador Chris Stevens in Benghazi the day before, he narrowly lost the contest for prime minister to Mustafa Abushagur, a U.S.-educated former dissident more popular with the former rebels.

But Abushagur never tasted life in office. Partly he was a victim of the structure of Libya's transitional parliament, the General National Congress (GNC). Keen to ensure all groups in a tribal society were represented, the architects of the new congress, with much prodding from a United Nations support team, contrived to keep parties weak and independents strong. Just 80 seats were allocated to the parties, with 120 to independents. It is a structure that is highly representative, but also problematic for coalition building; the NFA has 39 seats, the Justice and Construction Party 17, with the balance made up of an alphabet soup of small parties and individuals creating ever-changing alliances.

Those individuals turned against Abushagur when he presented a cabinet of technocrats to congress for approval, grumbling that parties were not represented in the cabinet. He was dumped without ever taking office. Another former dissident, Ali Zeidan, was elected in his place.

Zeidan, who worked before the revolution as a lawyer in Geneva, had similar dissident credentials to Abushagur's. He also had a close alliance with congress's new speaker, Mohamed al-Magariaf. Both men defected together while serving in Qaddafi's embassy to India in 1980, Zeidan a diplomat, Magariaf as ambassador. They went on to form the National Front for the Salvation of Libya, the most influential of the dissident groups. Together, they seemed to be a team ready to do the job of guiding Libya through Stage Two of the Road Map, the making of a constitution.

Well-built and studious, Zeidan followed Abushagur's example in offering to congress a cabinet of technocrats, daring congress to reject a second prime minister.

Zeidan's strategy worked, but it was mid-November before the last of his cabinet took office, after a grueling series of investigations by a commission appointed to weed out former Qaddafi officials from positions of power. His problem -- Libya's problem -- is that anyone who is anyone worked in some capacity for the old regime.

The prime minister's problems began once he entered office. Foreign diplomats urged him to avoid the mistake the Americans made in Iraq, where de-Baathification created a large and powerful force outside government. Instead, Zeidan co-opted former members of the Qaddafi regime, keeping most bureaucrats in their places. The price of this policy was to sow distrust among the rebels.

Libya's revolution was one of the periphery against the center. It was led by the militias of Benghazi, Misrata, and Zintan, and ended not with Tripoli rising up, but with the city being captured by those militias, hugely aided by NATO bombings. Those militias and the communities that spawned them, continue to resist attempts to create a national army and police.

"It is important to understand a basic problem," wrote Umar Khan in the English-language Libya Herald newspaper. "The government blames the militias for still clinging to their weapons whilst the militias accuse Congress and the government of allowing former regime figures to get back into power."

This mutual suspicion complicated Zeidan's efforts to tackle Libya's two problems: Militia violence and a moribund economy.

Libya's violence has different dynamics in each of its two main provinces. In western Tripolitania, where most people live, the guns never properly fell silent. The divisions of war continued on into the time of peace, with score settling between those militias and tribes who backed the rebellion, and those who opposed it. Last November the former rebels of Misrata, the most powerful army in Libya, launched a full-scale offensive, backed by the government, to smash former-Qaddafi elements clustered in the desert town of Bani Walid. Elsewhere in the province, it is smuggling rather than politics that causes the violence. Militia gangs battle for the trade in petrol and weapons heading out of the country and immigrants and drugs heading into it.

Cyrenaica, in the east, has violence from a different source, in the shape of Islamist militias. Benghazi, its capital, was the cradle of the revolution, with the whole province joining the rebels within 100 hours. Among the rebels that swept to power two years ago were Islamists who had been suppressed by Qaddafi. They played an important part in the revolutionary war, and since then have battled government forces intermittently to keep their own vision of an Islamic state alive. Islamists don't merely an Islamic state -- Libya is already almost 100 percent Sunni Muslim -- but one where imams, rather than a secular parliament, hold sway. For many of them, those best qualified to steer the country along the right path are the most learned -- the Islamic scholars and imams. Relying on the less schooled population to choose their leaders through elections seems to some Islamists rather like the sheep leading the shepherd.

The most obvious weapon to get the militias off the streets was to offer them jobs, but Zeidan faced a herculean task in sorting out the chaos left by Qaddafi.

Qaddafi came to power in a coup in 1969, displacing King Idris -- who oversaw Libya's independence, and came to see Libya almost as his own personal fiefdom. Libyans will often tell you that the dictator commanded his sons, "What is below the ground (oil and gas) is mine, what is above it is yours." True, or apocryphal, that dictum was the reality for more than four decades. While Qaddafi kept control of the oil and gas earnings, his seven sons were given carte blanche to carve out their own business empires. One son had a monopoly on mobile phones, a second on cement production, while a third, Hannibal, commissioned a massive 4,000-bed super liner that was never completed. Each of them collected a group of like-minded businessmen, thugs, and party hacks who enriched themselves in the process. Nowhere in this process was there room for the normal structures of commerce, law, regulation, or the free market.

An insight into the bizarre nature of Qaddafi's Libya came with the WikiLeaks publication of U.S. embassy cables detailing the tussle for the Tripoli franchise of British clothing store Marks and Spencer. In 2008 the franchise was bought by Husni Bey, one of Libya's most prominent tycoons. The cable recorded Bey's rivals complaining to Qaddafi that the store had "Zionist" ownership back in Britain, and should be shut down. Qaddafi's figurehead Prime Minister Al-Baghdadi Ali al-Mahmoudi then ordered it closed, according to the cable, unless Bey agreed that Mahmoudi's allies got a slice of the business. In the end, it stayed open after British diplomats assured the Libyan government that there was no "Zionist" ownership of the store.

All of this left the economy on its knees. Few government ministries have reception desks or press offices. Obtaining information from, for instance, the Justice Ministry, requires turning up in person at the gate and hoping a guard has the phone number for a minister's aide. Libya has no railway, no public bus service, no postal system, and weak or non-existent commercial law.

An added complication for Zeidan is that he has inherited a bureaucracy with neither the skills nor the inclination to embrace modernization. Corruption under Qaddafi was the norm. Trying to introduce a new set of values was an uphill battle. Zeidan, who was elected as an independent, doesn't have a core constituency to count on other than the support of three National Front seats.

As a new year dawned, the twin ills of violence and stagnation became intertwined. The violence, in particular the killing of Ambassador Stevens, deterred foreign investors with the skills and expertise Libya desperately needed. Stagnation is everywhere.  Libya faces an acute housing shortage, but work abandoned in the revolution has yet to restart on vast apartment projects in the suburbs of Benghazi and Tripoli. With no agreement on where to dump the capital's rubbish, it has gathered in a tide across the great lawns of Qaddafi's sprawling Bab al-Azaziya compound in the city centre.

The logjam in payments for reconstruction, salaries, and pensions saw waves of protests outside congress, which sits in a conference centre adjacent to Tripoli's luxurious Rixos hotel. (Qaddafi demolished the capital's parliament building years before.)

Inside congress, lawmakers had gotten bogged-down over how to structure a 60-member-strong commission that was to write the constitution. The Road Map called for the commission to design a constitution to be approved by referendum, but there was no consensus on two key issues: (1) how to reconcile Islamists and liberals regarding the place of Sharia law and rights for individuals, and (2) how much autonomy to give the regions.

It was the issue of the regions which doomed the Road Map. While all Libyans consider themselves patriots, the gulf between the three provinces, Cyrenaica, Tripolitania and Fezzan is wide. Tripolitania has two thirds of the population, but this fuels resentment in the other two provinces that they are being neglected. When it came to designing a constitution, members of Fezzan and Cyrenaica demanded the constitutional commission be split 20-20-20. Tripolitanians in turn complained this left them under-represented.

The three provinces were created by the Ottoman Empire and united as a single entity only in 1934, by their Italian occupiers. Indeed, the current name of the country comes from the Italians, taken from an ancient Greek name for North Africa. It doesn't help that the populations in Cyrenaica and Tripolitania are widely separated by hundreds of miles of desert with only a single road linking them.

The mutual suspicion that divides the regions is overlaid by distrust breaking along tribal lines. Libya's tribes are not political entities, in the sense that they have no overarching leaders, but they operate as an extended family, with obligations to help fellow members and a consequent distrust of other tribes. It is the instinct that might see a Kansan in New York give a job to a fellow Kansan, multiplied a hundred-fold.

In February, in the face of daily protests and eviction from its chamber by wounded former-rebels claiming they had not been given benefits, Congress threw in the towel on the Road Map, announcing that the constitutional commission would be elected directly.

When those elections will happen remains unclear, because the same deadlock over regional representation that stalled Congress threatens to torpedo efforts to agree on how the new commission is to be elected.

In late March, the issue was eclipsed by a new crisis. Revolutionaries demanded that the government be purged of former-Qaddafi officials. Congress had by now evolved into something similar to the parliaments of Egypt and Tunisia, with the Brotherhood's Justice and Construction Party facing off against former Qaddafi elements of the NFA, leaving liberals sandwiched uneasily in the middle. The comparison is not exact: The NFA is also anchored in Cyrenaica, who are proud rebels, while distrust of the NFA has seen many in Misrata, besieged in the revolution and the most pro-business city in Libya, align with the Brotherhood.

Seeking to force the issue, pro-purge rebel militias blockaded the prime minister's office, the foreign and justice ministries and stormed parliament. Congress got the message, and in May passed the Political Isolation law, with some members claiming they were intimidated into doing so. The law is draconian, banning all former-management-level Qaddafi officials from politics, government and the security forces for ten years. Magariaf was the first to fall on his sword. Despite a long career as a dissident, his former ambassador job disqualified him from politics, so he resigned.

Supporters of the law argue that the revolution is incomplete if Libya is left in the hands of the people who ran it under Qaddafi. Critics say the Brotherhood, having failed at the ballot box, wants to use the law to move its supporters into newly vacant positions of power.

Before the purge law could be enacted, events took a new twist when Egypt's army overthrew its Muslim Brotherhood government. In Libya, anti-Brotherhood forces sensed a change in the balance of power. Crowds stormed and burned Brotherhood offices, and for good measure smashed the NFA's Tripoli headquarters too, blaming both parties for Libya's chaos. Rivalries between security forces and Islamists exploded into open war, and in the chaos there was a new bout of score settling among rival militias. Brotherhood politicians, sensing the national mood, backed-off on demands for the Isolation Law to be enacted. As bombings and assassinations mounted, Zeidan announced a pared-down "emergency cabinet," declaring Libya was in a "state of crisis."

Almost unnoticed, Congress formally agreed an outline plan for elections for a constitutional commission. But it left the details of the election -- and the blame should the provinces rebel against it -- to a group of unhappy officials.

The picture for Libya is not universally bleak. On February 17, the country saw unprecedented celebrations to mark the second anniversary of the start of the revolution. Tens of thousands of milling crowds filled the streets across the land, waving their tricolors. It's a unique paradox of post-revolutionary Libya; division at the top is countered by a broad consensus among the population that a united, democratic Libya is the way forward.

ABDULLAH DOMA/AFP/Getty Images