|London, 31st August, Transparency of Libya’s oil wealth must be a key priority of Thursday’s negotiations over the country’s future, said Global Witness today. The meeting, which is to be co-chaired by UK Prime Minister David Cameron and France’s President, Nicholas Sarkozy, could mark a crucial step along the path to future peace and prosperity in Libya.
With the UN in the process of ‘unfreezing’ $1.5bn of Libyan funds to the NTC, and with companies queuing up to do business in Libya, how the NTC and their partners manage Libya’s finances will set a precedent for decades to come.
“With billions of dollars now being unfrozen and returned to Libyans, the meeting on Thursday offers a great opportunity to put in place practices that will ensure Libya’s wealth is managed well for the long-term,” said Brendan O’Donnell, Senior Campaigner at Global Witness. “As hosts of the meeting on Thursday, the UK and France must ensure that the transparent management of Libya’s oil wealth is at the top of the agenda.”
Given Libya’s recent past, the management of public wealth will be crucial to public perceptions of the trustworthiness of the transitional government. An important first step would be to publish all Gaddafi’s oil contracts, setting a precedent of openness from the outset.
With the immediate establishment of prudent management and financial responsibility, Libya could build the foundations for a bright future; but any precedent of mismanagement set within the transitional period could result in Libya’s main source of income – 95% of the value of its exports and 80% of government revenue in 2010 – evaporating before its citizens’ eyes.
Global Witness welcomes the current commitments by the National Transitional Council to good governance and believes that the Thursday meeting is an excellent opportunity to commit to key safeguards to oil and public funds benefit the Libyan people:
Concrete transparency provisions should be written into the transitional constitution to ensure the just exploitation of Libya’s natural resources. These should require the public disclosure of how Libya manages its oil sector and disclosure of all revenues associated with it.
Public finances including unfrozen assets, funds raised against frozen assets, resource trading and aid should be made open to public scrutiny. The terms of existing oil contracts should also be disclosed and details of agreements made by the NTC with governments and companies involving sovereign funds or the exchange of cash, crude oil or ‘IOUs’ secured against frozen assets should be made public and open to scrutiny by Libyan civil society and NGOs. This is particularly important as the UN, EU and others start to unfreeze and return billions of dollars of Libyan assets held overseas.
All funds should be released through a transparent mechanism such as a strengthened Temporary Finance Mechanism which was set-up by the NTC and the Libya Contact Group to manage aid flows.
Governments should assist the NTC to track down and recover the funds that Gaddafi and his cronies looted from the state, and punish those banks that accepted this money. Prevent new oil concessions should be brokered until an elected government is in place. Any deals at this time could raise concerns within Libya that international support for the NTC is driven by a desire for access to oil rather than for the benefit of the Libyan people. The NTC is likely to have to honour Qaddafi-era contracts in order to get oil revenues flowing. But no new deals for the exploration or exploitation of oil fields should be considered until an elected government can review existing rules and laws to ensure robust transparency and accountability, The Libya contact group should use its influence to ensure that companies in their markets do not attempt to broker deals at this time.
“Negotiations over how the interim government manages unfrozen funds and oil trades could set the scene for a new era of economic justice for Libyans – or could mark a great lost opportunity if transparency is not a priority on the agenda in Paris,” continued Brendan O’Donnell, Senior Campaigner at Global Witness.
Note to editors:
In July this year Global Witness published a leaked document detailing $65bn worth of investments held by the Libyan sovereign wealth fund, the Libyan Investment Authority. According to the document HSBC, Société Générale and Goldman Sachs were among the key western bankers for Colonel Gaddafi’s regime.