Libya - Domestic policy

Libya's petroleum industry remains the backbone of the economy in terms of export. However, during the 1990s an economic downturn, combined with international sanctions imposed in 1992 for Libya's support of international terrorism, greatly reduced the per capita income, led to black marketeering, and produced increasing charges of corruption in the public sector. The petroleum industry only provides 10% of the employment for Libya's population, so agriculture is considered by the regime to be vitally important for alleviating unemployment. Libya is a major food importer, and though the regime has a goal of food self-sufficiency, there is little likelihood that this goal will be achieved any time soon. The success of the "Great Manmade River" project, announced in 1983 and officially instituted in 1991, to bring water from underground lakes in the Sahara is an important component in achieving this goal. Until then, animal husbandry will remain the most important sector of agriculture in Libya.

In 1994, a recognition of the growing importance of Islamic fundamentalist strains in the Arab world led to the passage of new laws instituting shariah (Islamic law) in family law and certain criminal proceedings. However, Qadhafi is a firm believer in the Islamic basis of women's rights and other progressive social changes that he has instituted. These will make a continuing contest with Islamic fundamentalists almost inevitable. Among the notable Islamist groups are the Militant Islamic Group, the Islamic Martyrs' Movement, Libya Islamic Group, and Supporters of God. Observers believe these groups represent a real threat to Qadhafi's government, but information on them remains sparse. In 1997 the General People's Committee adopted the "Charter of Honor," imposing collective punishment on family and tribal members of Libyans convicted of serious crimes against state order. The charter is directed against opposition groups, both Islamist and other political groups mainly living in exile outside the country.

In the late 1990s, an internal debate broke out in Libya among old-time socialist hardliners and reformers who believed that the country would have to liberalize the economy and open itself to international investment in order to survive. After UN sanctions were suspended, Qadhafi took the advice of the liberalizers and has made halting steps toward economic liberalization. He still insists on partial state ownership of most enterprises and has said repeatedly that he is not totally abandoning socialism, but he does welcome partnerships with foreign firms. European companies have been quick to move into the economy.