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Guardian.co.uk

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September 11, 2011

The National Transitional Council’s pledge to honour contracts signed by Gaddafi‘s regime stores up trouble for the future.

The crumbling of the Gaddafi regime has intensified discussion of the challenges that lie ahead for Libya. Democracy, pluralism, national reconciliation and religion are all critical issues that will need much work. In my own opinion, though, re-establishment of the rule of law is the most pressing of all issues. Corruption, left unchecked, constitutes a threat to the future security of Libya.

A few years into its existence, the Gaddafi regime began to morph into a criminal enterprise that siphoned off Libya’s wealth either for personal enrichment or to buy friends for the regime both at home and abroad.

Naturally, the government controlled all revenues flowing into the Libyan treasury and maintained a vice-like grip on contracts. Over the years, the percentage “commission” on any given contract grew exponentially and, in many cases, was reported to exceed the actual value of the base contract.

We are unlikely to ever know the full details of the financial wrongdoings that have taken place in Libya over the past 40 years. However, what is undisputable is that Libyan government contracts were the primary vehicles for corruption.

Contracts with foreign companies provided an easy and convenient way of laundering money outside the country. At least part of this money was used by the regime to finance international terrorist activities includingsupporting the IRA, the Lockerbie bombing and endless conflicts in the African continent. Contracts with local acolytes provided an equally easy and convenient way of financing the drugs trade, smuggling and other criminal activities.

Much of the corruption in Libya is institutionalised in long-term contracts signed by the Gaddafi regime with companies all over the world, most notably in Russia, China, Italy, Germany, the UK and the US.

The National Transitional Council has been under tremendous pressure from these countries to publicly state that these contracts will be honoured – which it has done, perhaps because of its dependence on the goodwill of the international community. It seems to have done so without placing any condition or reservation. To renew contracts without removing the embedded fraud, where it exists, is a huge mistake…While they might feel they cannot afford to alienate the very countries that have supported them, short-term expediency cannot trump long-term interests and those interests are serving the needs of the people they work for: the people of Libya who will be in no mood for business as usual…Read more.