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David Goldwyn: Terrific. Thanks, Alan [phonetic]. Thanks very much. Now we have heard from each of our panelists on a wide range of subjects, and I have a stack of questions from the audience, which fall into three baskets. One is sort of regional relationships, both across the Maghrab and in North, South of Africa; economic development, and particularly how decisions are getting made; and then political reform and development and some specific cases. So I'm going to deal with them in that order and in those baskets. And without citing each entry, let’s ask questions. We have questions from the Middle East Institute, from the State Department, and from Human Rights Watch and from some individuals. So I’ll leave it to you to guess whose question is which, as we go through the process.

Let’s start with regional affairs. I guess the -- there are two questions here. One deals with your relations with Maghreb countries, which have been, in varying degrees, some are close and some are not. But how are your relations with your neighbors across the Maghreb changing? Are there any specific cases of integration? And then the second question is Libya has begun to embrace globalization. Why? What do you think the driving forces are and what lessons are there for other Middle East countries and for other African countries? And maybe Dr. Sawani, maybe we can start with you.

Youssef Sawani: Thank you, David. As far as the relations with the Maghreb neighbors, I think they are normal in a sense, which means that there have been no strikingly any important developments, I would say. The Arab Maghreb Union somehow is shelved, it is frozen, and despite Libya’s continuo attempts to revitalize, to activate the Union and its institutions, and move forward towards bringing [indiscernible] into more integration. I think the reason is very obvious. The Maghreb area is suffering from a long history of dispute between Algeria and Morocco on the one hand, and a competition for leadership amongst Libya, Algeria, and Morocco.
Fairly recently - and this is especially when Libya took up the presidency of the Arab Maghreb Union - there have been attempts, as I said, to try to bring in some fresh air into relations between the members of the Arab Maghreb Union. And this was particularly the case, as far as relations between Libya and Mauritania are concerned.

More importantly, however, was the admission into Libya’s political discourse of the idea of the Mediterranean cooperation, south and north of the Mediterranean. The Arab Maghreb countries and Europe or the European Union on the one hand, and the very fresh recent proposal or idea that French President Sarkozy of the Mediterranean Union or Mediterranean kind of association of arrangements, which it seems now has been bent from its original position and it is leaning more towards the German interpretation of European interests in the Mediterranean basin.

So relations between Libya and its neighbors now in the leadership discourse is geared towards benefiting or taking advantage of this European, a new approach, especially the French approach, and try to work out some kind of arrangements wherein Libya would benefit more through consolidating relation with the European Union and trying to also to employ its stronger voice in Africa as well.
As far as the admission of Libyan -- you know, Libya of globalization and its dynamics, I think this has been very, very obvious and clear, either in political discourse as I said earlier or in political actions and economic arrangements as well. And I should remark that himself has grown to be a very practical politician, very dynamic, and very well-prepared to adapt to change, which, really, would shift Libyan politics, as I said, from previous positions based entirely or to a large extent to an ideology to a more, a new, fresher approach that would be more focused and based on national interest and on cooperation. And I think that would nicely fall into the admission into Libyan politics, which is, as I said, fairly remarkable that politics is the art of the possible.
David Goldwyn: Dr. Gebrel, anything to add there in terms of the relevance of the Libyan example for other Middle East countries or for countries in Africa in terms of this embrace of globalization?

Mahmoud Gebrel: Well, I think we are back to the question of modeling, if we can provide the model in all sectors [sounds like] of life, in our foreign policy and our economic development. Not to forget that foreign policy will not have credibility worldwide without a very strong economic model that can give its credibility dimension. That is why whether we are talking about North African context or the regional context in general or in Africa, having this strong economic model is the essence of both, legitimacy of foreign policy movements to the sustainability of that foreign policy movement. But lacking a very strong model of economic development will strip any foreign policy from its credibility.
Regarding the issue of globalization, I think this is a question of no question. Globalization is the air that we breathe today. To talk that we embrace globalization, we take all globalization or we reject a globalization, I think is some sort of tautology that has no meaning whatsoever. And this might take back to the United States when this globalized world starts to get molded and crystallized by end of the ‘80s. This was copied during that time of the collapse of the Soviet Union. I think during that moment the United States had its golden opportunity to provide the model for the world, to lead.

Unfortunately, the military boots stepped over that opportunity unfortunately. And instead, I would say that McDonald’s fried chicken did much, much better good to the United States interest than the military boots. But unfortunately, decision-makers did not follow up -- that is what Joseph [phonetic] and I quote the soft power. It was a golden opportunity and unfortunately, they did not capitalize in it.

Globalization, when we talk about technology, we talk about knowledge of a globalized economy based on knowledge. I think you have an edge here only if the United States manages to turn into economic bases instead of, military bases around the world. And I think we have some common interests there, both Libya and the United States. If the Libyan market is trying to aspire to establish some economic hubs, some economic zones along the coast to be the bridging factor between Africa and the North, I think we can have a very fruitful discussion in that area just trying to get the real content. When we talk, we listen to each other, not to forget that we have to have the common language pursued [sounds like]. Thank you.

David Goldwyn: Thank you, Dr. Gebrel. Let‘s come to the second set of questions. They are both on economics. One is economic priorities and the other is economic management. And Dr. Gebrel, let me come back to you with your planning hat and your economic development board hat.

The first question is sort of priorities in the period when Libya did not embrace globalization, as well as the period during sanctions, you built up a lot of needs in all sectors. What is the top priority in terms of changing the economy and specifically, of the question on technology or matter of technology, what technology you are looking for? That is the economic priority question.
The economic management question is a little bit political, which is that the perception is that economic management is really hoed either in individual ministers or at the very top of the Libyan government. And do you see reform in a way that the economic side of the hoe will be changed so that it will either be more authority given to ministries. Or as Dan Yergin [phonetic] was talking about earlier with the speed of the decision, there will be delegated authority to entities like the national oil company to make decisions on a technical basis more quickly than they do now.

Male Voice: [Inaudible]

David Goldwyn: Priorities first, yes sir.

Mahmoud Gebrel: Okay, the question of priorities, I think -- first of all there is an exercise going on in the National Planning Council that is called “Visioning Libya until 2025.” I hope by July, more or less, some sort of a clear picture of the path or direction of the Libyan economic development model would be obvious.
Questions of priorities, I think our utmost important priority is, diversify the sources of our national income. We are a one-commodity economy; we have been dependent in that commodity since 1965. I think the model in the past did not yield the results we aspired for. If we do not seize the opportunity during the 10, 15 years to diversify the economy by moving into at least tentative -- this is what the study shows so far, what you can call a service, knowledge-based economy where tourism and transit trade and construction, as fields will play the most decisive role on the Libyan GDP.

Having said this, achieving those objectives is not an easy thing. First of all, we have to have a very determined political will. And two, we have to stain the course with some patience. We have to be open enough and decisive enough at the same time. The third thing, we have to manage our wealth in a very strategic sense that turns our oil, in order to make the most of those coming 15 years. Managing the oil wealth properly is a must. Without it, I do not think we can manage to diversify sources in our national economy.
Positioning Libya in its regional context to find that competitive edge is a must. This is one of the results or outputs of that study, which is going on right now. After we position this country, I think another exercise of mobilizing the resources around the new potential areas of economic advantage for Libya is a must. This definitely now will require to talk about the question of management - managing the development process; not only managing the wealth but managing the development process itself. Is it a development that is carried out by the people or by the government? Definitely the decision is made lately that it is going to be development by the people. If this is done properly, this should give it both legitimacy and sustainability.

Private sector should play a very important role in the coming years, but this will require some hospitable environment for the private sector in terms of no legislations, a very clear recognition for rights of property and independent judiciary. These are the elements that constitute the triangle of investment, a very hospitable environment for investment, whether local or international.

The question of governance will be very important in this regard. Downsizing the government, the government should play a regulatory role instead of intervening in each activity of the economy. These are not easy questions to answer or tasks to be tackled in, especially in a country, which has been moving in the direction of welfare state with each culture where the citizen is dependent on the state in every single step, while the government is the Big Daddy turning the citizen into a productive force with work ethics is not an easy task at all. Training and education play a major role in that issue.

David Goldwyn: Thank you, terrific. Well, the mention of the independent judiciary is a good segway to the next category for questions, which is on political reform. And instead of asking these all at once, since there are a number of them, let me start from the general and move to the specific. And I guess the first question is, and I think goes to Dr. Sawani first is, do you predict significant changes in the judicial system and specifically do you anticipate change in the criminal code? Do you anticipate an abolition of the death penalty? And what kind of system do you see coming into place for an independent judiciary?

Youssef Sawani: Thank you. Well, obviously, when I try to give an answer to any question, as I said, I talk as just an analyst, an observer of Libyan politics. So none is to be taken as representing either parties, government and all non-government in Libya. There is, as I said, great opportunity for political reform, for legal reform, for judiciary reform. And my interpretation of March the 2nd speech that the leader made fairly recently is that it opens the way widely for exploring ways of going through these time, you know, where you needed reforms.

As far as the judiciary is concerned, I think there has been an ongoing activity within Libya, in Libyan government circles, academia, and the different elites, wherein the subject matter has always been judicial reform and legal reform. There is a very keen interest and there is a consensus that legal reform, rule of law, our independent judiciary are very much needed, not only for the sake of political reform or for rewriting or probably writing the social contract between the state and the populace. But also, these are terribly, importantly needed to face or to cope with the different challenges, and to benefit from the different opportunities that globalization offers and puts before Libya. Diversification of the economy, downsizing the government, benefiting from foreign direct investment, nourishing civil society, and private sector will definitely have to be based on advancement on those many fronts.

As far as judicial reform itself is concerned, I think now work is underway to review and moderate different legislation on Libya. The penal code, criminal code, procedural code, civil code, commercial code, you name it. There have been a number of specialized commissions that were set up by the government, including private lawyers, academics, intellectuals, judges and indeed, government officials to look into ways of upgrading the existing legislations and make it, as I said, very well or very much in shape to cope with the challenges and to benefit from opportunities.

The death penalty, obviously, has always been there in Libya’s legislation and its penal code, and I think it will definitely raise some kind of a cultural, religious debate. In Islam there are provisions for the death penalty for a variety for reasons. But Islam also offers forgiveness and tolerance as the best approach towards dealing with those societal illnesses or actions that in other ways may be seen criminal and may be dealt otherwise. So there are different schools of thought, one has to admit, when it comes to the death penalty. However, there is one important document in Libya, and that is the charter on human rights, which is the Libyan document that sits at the very outré [sounds like], that the very objective of Libyans is to abolish the death penalty.
I definitely would hope that we would reach a situation wherein the death penalty is not just a demand on the Libyan government to abolish, but something that humanity at large should reach a consensus. And I think that the United Nations General Assembly in the last couple of years or so has initiated or has an initiative that is directed towards abolishing the death penalty. A number of human rights organizations are definitely pushing and advocating this change at the world stage. And I think unless humanity reaches a consensus on this, obviously approaches will always vary to this issue. Thank you.

David Goldwyn: Before I ask Dr. Gebrel about your sense of the timetable for some of these reforms with your planning hat, I wanted to give David Hamod and Alan Hegburg a chance to comment. I wonder if you could list two or three sort of reforms that are important from a US investor’s point of view, whether those are property rights or settlement disputes or whatever. What would be your two or three things that you would hope for or look for in terms of reform? David, you want to go first?

David Hamod: Sure. I think the key elements have already been touched upon - the rule of law, dispute resolutions. And I think, probably most important from an investor’s point of view, a strong investment code that can be counted on to stay in place, regardless of who is in power, from one year to the next. I think perhaps the greatest disincentive for large investments into Libya at this point by US companies is that the investment code law number 5 is very, very promising, but there may still be some weaknesses that need to be shored up. And I would say as investors look at the prospect of investing in information communications technology, healthcare, tourism, education, construction engineering, and a wide variety of other sectors, if they are looking at investing tens of millions or hundreds of millions of dollars they may seek additional insurances. And I'm sure that based on what we have heard today, the leadership in Libya is moving in that direction.

Alan Hegburg: Well, thanks, David, but I just want to say I am truly impressed by hearing my Libyan colleagues talk about the reform movement because I was not aware of the commitment and the size and comprehensiveness of it, and I wish you well. I mean this is not easy to do, as everyone knows. Second note, what we would like -- the Secretary of Energy is fond of saying, “We are not going to tell you how to organize your oil sector.” So, I'm not going to do that. I’ll leave that up to David; he can speak on that.
But I will say, and I have no idea what the contract terms are, for any of these contracts that have been signed. We are not privy to those. Those are confidential, obviously, and proprietary, so I do not know what is in them. But I will tell you the things that we hear from investors in the oil and gas sector, and not in any particular order or not in a sort of priorities order. Obviously, contract sanctity is very important and stabilization clauses are often mentioned in any discussion, particularly when there is a tax or other kind of problem ongoing with the investor and the host government.

And I think, from my perspective and from when I was in the oil industry, those were really quite important. And just personally here, if you looked at an investment and you looked forward, which is what we ed to do on the political side, and say, “What are those kinds of things that would likely lead to a change of terms?” And there are three or four that are really quite important and you can identify them in advance because they reappear in a lot of different contexts around the world. Some of those that I have met are those, so the sanctity of contracts stabilization clauses is important.
I think also something that is very hard to implement but actually is important, and that is competitive markets. My impression is that companies prefer to operate in a competitive marketplace than in a structured marketplace in which the government has a say over pricing and all those other kinds of decisions. And I'm not saying this is the case of Libya; I'm just making a comment sort of generically here.

It is particularly important in the gas business, particularly if you are going to have gas cross border, gas pipelines where governments have intervened in these markets to set prices and determine volumes and those kinds of things. I much prefer to have the producers have the option to sell to whatever market they can get their best price, and that is the case in the United States obviously. You can sell forward; you can sell spot; you can sell to the pipeline; you can swap; you can do all sorts of things with your production. That is much rare in the international marketplace and it would seem to me that in domestic terms, that might have some benefits both to the society in general because the marketplace would be much more competitive and allow consumers to decide on the kinds of things that they were going to buy, and because I think it makes it more attractive to investors.
David Godlwyn: Dr. [indiscernible], my question for you is on the timetable, just for those of who are distant from the internal Libyan political system. Can you give a sense of the time horizon for these kinds of judicial and legal, and other kinds of reforms? In our own process, it would be completely indeterminable because it would depend on whether anything could get out of a committee in Congress in the first place. But in your system, is this one-year, a two-year, or a five-year evolution as you see to make these changes?

Male Voice: The structural and legislative changes, I do not think they are a problem at all. The real problem in the Libyan context and in the context of the oil-producing countries in general is the cultural problem because a welfare culture is a problem in itself. So it is a question of creating new values, new skills, and attitudinal change. It is as if you are reinventing the sense of citizenship. How you empower people on changing their mind and provide them with the right skills and the right incentives to play a very effective role in building their own country is not an easy thing. We have a legacy that people depend on the state in every single step of their life. So it is not just like that [snaps fingers], having new systems and new courts and new system of law, have independent judiciary, and then -- I think the Libyan shadow economy is the largest in the Arab world.

Now we are in the process of contracting with Hernando de Soto who I think he is a well-known scholar in this field just to help try to understand this shadow economy. Libyans and, again, oil-producing countries work under the assumption of hit-and-run. There are pawns looking for transactions. They do not look for sustainability of a growth. There is also difference in our culture between project and enterprise. Enterprise means growth and means sustainability; but a project, it is a one-shot deal.

So we find our private sector mostly - not all of them - moving from one activity to another activity, looking for quick wins. You cannot depend on this type of private sector to build a developmental case. So you have to change the culture, train the people, convince the people, or provide them with the right incentive system. Building this is a time-consuming process. It is not just a question of drafting new laws and new systems. I wish it were like that.
David Goldwyn: Alan, a quick comment -- [cross-talking]
Alan Hegburg: Thank you very much. De Soto, of course, is a famous prudent economist who actually influenced some of the things I was saying, and I really admire what you are doing here because this is really tough stuff. I would just offer the observation that in a number of Middle Eastern countries these similar reforms are already under way. I mean, Egypt has a very ambitious reform program; the Saudis have done some reforms also. I mean, there are reforms that have taken place in Iraq, as difficult as that is the case. But these elements are getting some attention in a part of the world where I think it is very difficult to move ahead, as you said, and I admire your courage and ambition, and I wish you all the success in the world.
David Goldwyn: Terrific. The next basket of questions I have and they go to Dr. Sawani, you are the winner on this one, it deals with the very sensitive case of Fathi al-Jahmi. Certainly, there has been a lot of US attention to this, and in recent weeks there have been stories about his potential release. So the question is do you think he will be released, and if so, when?
Youssef Sawani: Well, thank you. Now, I think I probably do not have to speak on behalf of Gaddafi in front of the foundation. Fathi al-Jahmi was detained because he -- I would not e the word misspeak given the conditions it has especially in the year of elections in the United States. But he committed an action that was unlawful. However, the court found out that he was not in a position to be convicted and that was the decision of the court, so he was referred to psychiatry. Then the Gaddafi Development Foundation intervened and did its best to try to safeguard his rights and make sure that he receives appropriate medical attention.
In the last few months or so, we have been in constant talks with his family and with authorities, obviously, and there was proposal on part of the foundation to the family that they take him home and look after him as ordinarily Libyans do. The family thought that it was not appropriate that they had neither the resources nor probably the desire to do so. So the Gaddafi Development Foundation also offered that they take him into a private clinic if they wanted, and there was also no possibility of making this happen. Simply because they lacked the resources and most importantly, and this is on record also, they trust the state-owned and run Tripoli Medical Center than the private sector - which is something I share, by the way - when it comes to medical health and health services.
So there was this decision on behalf of his family to maintain him at the Tripoli Medical Center where he is now receiving appropriate medical attention. And as far as we are concerned, he is in the custody of his family. What it means is that his family can decide who comes to see him, to visit him, to talk to him, and they talk directly to the doctors and see what is appropriate for him. We do not consider him any longer a political prisoner.
Definitely, the security forces still adhere to the view that al-Jahmi needs protection, simply because they think that because of his mental situation, if he goes out and he is not protected by them he may go on and involve himself in situations where he will be probably a subject of imminent danger. So they want to maintain some kind of a protection. And I think there was some kind of talks between them and the family and they proposed to the family that if the family were willing to take the risk, they could let him go home. So the family obviously objected to the idea or to the proposal.
We at the Gaddafi Development Foundation have been doing whatever we could in the context, and I have to underline this - in the context - to deal with the different sensitivities of the situation in our general approach of trying to advance political and human rights in Libya. But also we are aware of the different dynamics that are at play domestically and internationally. And in that direction, we invited the Human Rights Watch and the Physicians for Human Rights, and facilitated their visit. They went and saw al-Jahmi and they published their report. Even though which it still calls for the release of al-Jahmi, it registers the positive developments that have taken place so far. I personally wish Mr. al-Jahmi the very best of health and that he may be able to resume his normal life very soon. And we at the foundation are doing our best really in advocating a speedy conclusion to this affair.
But we would also need to emphasize the following: That this case has attracted a lot of attention and publicity, and I would say some kind of political exploitation and opportunism on behalf of many parties. And I think that can hamper the positive development of the situation, not only of al-Jahmi but of human rights in general, and that because simply it ignores the dynamics at play and the context, Libyan and otherwise, and we also -- I think that political opportunism on behalf of some parties would inflict harm, not do Al-Jahmi and the human rights cause any good in Libya.
And I think the attempt on behalf of some parties to employ in the case of Al-Jahmi and others to block the developments of positive relations between the two nations is really unacceptable to. Because simply, it ignores the dynamics and it ignores the importance of fostering furthering relations between Libya and the United States, where the danger does not lie in individual cases despite their importance, but more importantly, in the need to unite forces in efforts in fighting the common enemy, the movement towards political reform, human rights in Libya, liberalization will take time.
Reform by definition, it is a very slow process as Dr. Gebrel has just referred to, and I think Libya will need more than appreciation on the things that it has been doing. And I think building on the positive developments, it is far important and far outweighs any negativity that still remain in place. Thank you.
David Goldwyn: Thanks, Dr. Sawani. It is 12:45 and I have committed and also been reminded to end the panel at 12:54 and so I will. But first, I want to offer three words of thanks. First, thank you to our panelists, both for your candor and for your brevity, and for allowing the time for all these questions, sensitive as they are, to take place.
Second, thanks to Middle East Institute and to ExxonMobil and to the Green Book Foundation for facilitating a conversation, which would have been unimaginable five years ago.
And thanks to all of you for listening so patiently and we will now break. We ask that you take everything with you because the room will be completely reset for lunch. To exit quickly into the foyer, there will be at least a 20 or 30 minute break. We ask that you be back in about 20, 25 minutes or so for lunch and then the speech by Jeff Feltman.
So if we can give a hand to our panel, I would appreciate it. Thank you.
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