The vote of confidence in favour of the new Libyan government chaired by Abdelhamid Dbeibah constitutes a new starting point for Libya with the exit from the destructive conflict in which the country has been plunged for ten years and opens a new era of peace and stability. These political agreements will allow Libya to rebuild state institutions and move away from the spectre of violence and rebuild the common bond.
The end of the conflict in Libya and the entry into an era of peace will have major consequences at various levels including political, economic and social aspects. At the economic level, Libya will embark on a reconstruction program following the destruction of years of civil war which will be at the origin of great economic turmoil. This return to strong growth in Libya will allow it to play an important role as it has done throughout its history at various levels including trade, investment and the movement of immigrant workers.
The study that we have just finalized on behalf of UN-ESCWA shows that the return of peace in Libya will have important consequences for the Libyan economy. At the same time, this effervescence will be at the origin of strengthening of regional cooperation insofar as the countries of the region and particularly Tunisia will be among the great beneficiaries of peace in Libya.
Peace in Libya and the return to growth
The first results of our study concern the return to growth with the end of the conflict. However, this new dynamic will have a significant impact at the international level and particularly on the countries of the region.
The return to growth will have three major effects. The first is that Tunisia will be a great beneficiary of the return to growth in Libya and the GDP will experience a significant surge in comparison with the base scenario that we have retained in this study and which is the continuation of conflict and war.
( See figure 1 ).
We have succeeded in accurately measuring the volume of GDP growth in Tunisia following the peace in Libya. The Tunisian GDP will register an annual average growth of 3.8% compared to the baseline scenario which is the continuation of the conflict in Libya. This increase over the next five years between 2021 and 2025 is estimated at $ 9.7 billion or the equivalent of 26.77 billion dinars, that is to say nearly 25% of the GDP for the year. in progress ( see table N ° 1).
The second result we reached in this study concerns the impact in terms of growth following the peace in Libya which will not be limited to Tunisia but will affect neighbouring countries including Egypt, Algeria and Sudan. additional growth will be $ 152 billion over the next five years.
The third result we have achieved is the economic turmoil following the peace which will not be limited to the countries of the region but will affect other countries like Turkey or countries in Europe like France, Germany and the United Kingdom. Italy.
But, the most important remark concerns the weight of the benefit of the effects of peace on the countries of the region which will be better off, in comparison to other countries in particular in Europe and Turkey. This is what I call the crowding-out effect as peace in Libya will strengthen regional cooperation and trade at the expense of other countries and regions. This effect is indicative of the scale of regional economic relations between Libya and its neighbours, which will resume their takeoff with the end of the conflict.
But, the economic impact following the end of the conflict will not be limited to growth but will also affect investments.
Peace in Libya and investments.
The end of the conflict in Libya and the new prospects for growth will push many companies to come out of their wait-and-see policy, producing multiple crises and will seek to take risks again and revive their investments.
In this study, we sought to measure the volume of investment that will be made following the reconstruction of Libya in other countries. This study allowed us to achieve three major results. The first result is that Tunisia will experience significant growth in investments following the return of peace in Libya. In our model, we have estimated that the growth of investment will be on average 5.49% per year compared to the reference scenario which is the continuation of the conflict (See table N ° 2 ).
The second result is that the consequences on investment are not limited to Tunisia but also affect the other countries of the region, notably Algeria, Sudan and Egypt with different levels depending on their level of diversification.
The third result is that many regions will also benefit from the return of peace, including European countries, notably France and Germany. Turkey will also see investment growth. However, the return on investments in these countries will be less marked than in neighbouring countries.
The return to growth and investment will have a positive impact on employment.
Peace in Libya and the return to employment
The return of peace in Libya, growth and the resumption of investment will have positive consequences on employment in a large number of countries which will experience a significant drop in unemployment. This drop-in unemployment will come from two sources. The first is that of the return to employment in the countries following the resumption of investments. The second source concerns the reopening of Libyan borders to foreign labour with the end of the conflict and the decline in the spectre of violence.
Our study showed three types of results in the field of employment. The first result concerns our country, which will experience a significant drop in unemployment over the next five years, which could reach -6.07% in 2025 (See Table 3).
The second result relates to the countries of the region which will also benefit from this dynamic and will also record a drop in unemployment following the arrival of major labour movements in Libya.
The third result concerns the other countries and other regions which are not historically major suppliers of labour to the Libyan market. This situation will not change drastically with the reconstruction of Libya and the workforce from these countries will be limited and therefore its impact on unemployment as well.
Peace in Libya and foreign trade
The expected improvement in the economic situation following the peace in Libya and the return to growth will have positive effects on trade.
Our study shows three major results. The first is that Tunisia will be the main beneficiary at the commercial level of the return of peace in Libya. Our exports to Libya will experience annual average growth of $ 308 million compared to the reference scenario, which is the continuation of the conflict. The growth of our exports to Libya will be the most important among the countries of the region and could register an average annual increase of 3.59% between 2021 and 2025
(See tables 4 and 5 ) .
Our imports will also experience significant growth during the same period with an annual average of 6.31% (See table N ° 6 ). This growth in imports comes in response to the growth in investments and the development of demand for our products following the return of peace in Libya.
Thus, the return of peace in Libya will be at the origin of greater economic effervescence and regional commercial dynamics which will benefit our companies which will help them to emerge from this serious economic crisis.
The second result of our study concerns the regional impact of the return of peace in Libya with the commercial dynamism that the countries of the region will experience, in particular Sudan, Egypt and Algeria.
The third result concerns the commercial impact of the return of peace on other countries. Our study shows that other countries such as Turkey and European countries, in particular France and Germany, will benefit from this commercial dynamic. But, the gain of these countries will be less important than that of the countries of the region. This result leads us to reaffirm our hypothesis of a crowding-out effect due to the end of the conflict in Libya. This new commercial dynamic will be more beneficial to neighbouring countries and will contribute to strengthening the dynamic of cooperation within the region.
The end of the conflict in Libya will also have sectoral effects.
Peace in Libya and sectoral effects in Tunisia
We are also interested in this study in the sectoral impact of the return of peace in Libya and we will limit ourselves in this article to the presentation of the results concerning Tunisia.
Our study shows that the sectoral effects will not be equal and some sectors will register greater gains than others. At the production level, the cereal sectors, chemical industries, mechanical activities and other industrial sectors will be among the major beneficiaries.
(See table N ° 7 ) .
We also achieved the same results when we examine the sectoral effects for exports that are not evenly distributed. Our results show that the cereal sectors, animal production, agro-food industries, chemical industries and electrical and mechanical industries are among the major beneficiaries of this new commercial dynamic.
(See table N ° 8 ) .
The weight and orientation of these effects towards well-defined economic sectors are significant of the nature of the economic relations between Tunisia and Libya or what I have called the diversification effect. Our country has embarked since independence in an important process of diversification of our economic fabric to build a new model of development and thus break colonial domination. This new development model was based on industrial activities. Our study shows that it is these sectors that are the basis of the diversification of our economy and of its development model which are the greatest beneficiaries of the return to peace in Libya.
These results highlight a key issue that concerns Libya’s strategic role in regional cooperation and integration.
The strategic role of Libya
The return of peace in Libya will be at the origin of a great economic and commercial effervescence without precedent at the regional level. The conflict and the outbreak of war in Libya have had negative effects with the decline in growth and trade in the region. But the return of peace and the return of growth confirm this strategic role of Libya in the region.
To understand this role, three essential elements must be mentioned. The first is geographic and concerns Libya’s strategic position in the region as a crossing point between East and West North Africa. Libya is also an entry point between the North and the South of the African continent. This geographical position has given Libya a major role in the situation in the region. The conflicts and turmoil in national politics in Libya extend beyond the borders of the nation-state to influence the regional order and neighbouring countries. At this level, the return of peace in Libya will allow the regional order to emerge from war and insecurity to build new cooperation and a new partnership.
The second element that explains Libya’s strategic role in the region is linked to its economic and financial potential. These capacities have enabled Libya to become a major player in regional cooperation and integration through investment, trade and movement of labour.
The third element which is at the origin of this importance of Libya concerns the nature of the Libyan economy. Despite attempts at diversification, the Libyan economy has remained strongly linked to the oil industry. This specialization has opened up great possibilities for economic and commercial cooperation at the regional level, particularly with Egypt and Tunisia, which have started the process of diversifying their economies in the aftermath of independence.
These elements explain Libya’s strategic place in regional cooperation. This role is put in place through three important effects. The first is the growth effect which concerns the extension of the return of economic effervescence in Libya and which will have a ripple effect on all the countries of the region.
The second is what I called the crowding-out effect and which shows that neighbouring countries will be the most important beneficiaries of the return of peace and economic growth in Libya. From this point of view, the Libyan economy contributes to this renewed cooperation and regional partnership.
The third is that of diversification insofar as the new economic dynamic in Libya will be oriented mainly towards the sectors which are at the heart of the new development model and efforts to diversify our economy.
This new post-conflict economic dynamic should lead us to define a new cooperation strategy with Libya for the future.
For a new strategic partnership between Tunisia and Libya
This study has shown us the great prospects that the end of the conflict in Libya will open and which will strengthen regional cooperation. At this level, we must get down to work to build a new vision of economic relations in Tunisia and Libya. This new strategy must be based on four essential elements. The first concerns trust which must be the basis of these new relationships. These relationships of trust go through the commitment of the two countries to defend their strategic interests and to make the national security of the neighbour a common priority that the two countries must undertake to defend.
The second principle of this new cooperation is the commitment to make a successful democratic transition in both countries. These processes have known great crises since the revolutions of the Arab Spring. The end of the conflict in Libya and the end of the political crisis in Tunisia will largely contribute to strengthening the democratic experiences of the two countries.
The third principle concerns the need to elevate the strategic interests of the populations of the two countries above all others and to take bold measures to ensure freedom of movement and settlement in both countries a concrete reality and not a utopia that is difficult to reach.
The fourth principle concerns the nature of cooperation between the two countries. At this level, we must free ourselves from a vision that has prevailed in some in the past and which has only considered this cooperation from the point of view of immediate gain. The new vision must set as its objective the principles of partnership and shared benefit which must be part of the construction of a strategic partnership between the two countries.
The end of the conflict is a major development for the Libyan people that help end the civil war. This new political moment will have consequences that will go beyond the borders of the nation-state in Libya to strengthen political, economic and social cooperation in the region. This new moment invites us to define a new strategy that will make strategic cooperation a concrete reality and no longer wishful thinking.
