Tentative economic ties
Rebuilding Libya a low priority for Swiss firms
A woman lives with her family in their destroyed home in Sirte city (Reuters)
Eight months after the death of former Libyan dictator Moammar Gaddafi and the downfall of his regime, Swiss companies still have little appetite for doing business in the North African state.
While some firms may be coy about revealing their interests, it appears that others have been put off by the arrest and imprisonment of ABB workers in 2008 and the continued unpredictability in the country ahead of this week’s elections.
Not even the lure of lucrative contracts to rebuild Libya’s war-torn infrastructure and the presence of trade missions from other countries has been enough to persuade Swiss executives to travel to Libya in appreciable numbers.
French, Italian, British and even Danish trade missions have for months been active in the country in the race to secure future business, with the United States also eager to get a piece of the action.
The countries in the vanguard of the United Nations military assistance to rebels during the Libyan civil war last year appear to have the edge in the “new” Libya. By contrast, German media has reported that some of its companies have experienced a colder reception after its government abstained on UN votes on military action.
The Swiss business community has displayed a marked reluctance to join the race for Libyan contracts.
Construction firm Implenia and cement producer Holcim told swissinfo.ch that they had no plans to engage in Libya.
The Swiss state export trade agency Osec is still advising firms to adopt a “wait and see” approach and said that in any case it had received very few enquiries from companies about trading in Libya.
Swiss-Swedish energy infrastructure specialists ABB have good reasons to both engage in Libya and to stay away. The company has been present in the country for a number of years, but found itself at the wrong end of a diplomatic dispute between Switzerland and Libya in 2008.
Two of its employees were arrested by the Libyan authorities in 2008 for alleged visa violations. The detention was in retaliation for the arrest of Hannibal Gaddafi, son of former leader Moammar, for alleged abuse of staff in Geneva in July 2008.
One of the men, Rachid Hamdani was only allowed to leave the country in February 2010. The other, Max Göldi, endured four months in prison before being released and returned home in June of that year.
In addition to the detention of the two ABB workers, Libya forced the closure of other company offices in the country, withdrew assets from Swiss banks, restricted oil supplies to Switzerland, cut the number of flights allowed by Swiss International Air Lines and at the end of 2008 issued a trade embargo.
Swiss exports to Libya subsequently dried up from SFr282 million ($293 million) in 2008 to SFr98 million ($102 million) last year. Imports from Libya to Switzerland declined even more dramatically, from SFr3.3 billion in 2008 to SFr485 million last year.
Imports fell in such spectacular fashion almost exclusively due to the Libyan restrictions on oil exports and Swiss measures to seek supplies from elsewhere.
Following the fall of the Gaddafi regime, the new interim leadership in Libya lifted the Swiss trade embargo in January of this year.
For ABB, which had previously been active in Libya upgrading the country’s energy infrastructure, the business reasons for re-entering the country are clear, particularly given the added need to repair the damage inflicted by the civil war.
But the political and security situation in Libya is still far from obvious, with several competing clans eager to fill the power vacuum left empty by the deposed Gaddafi. Elections to vote in a government were initially scheduled for mid-June, but were put back to July 7.
ABB is therefore taking its Libyan operations step by step. “ABB is slowly starting to resume work in Libya but this is still at a low level and we are keeping the security situation under close review,” ABB spokesman Antonio Ligi told swissinfo.ch.
Total Swiss trade links with Libya are likely to remain low key for some time to come, with energy the only significant business sector between the two countries at the moment.
Libya will also have to work hard at restoring its reputation in Switzerland. In 2008, Libya was by far the main provider of oil to Switzerland, but has since slipped down to third place behind Kazakhstan and Azerbaijan in the list of current suppliers.
Libyan oil concern Tamoil also faces problems in Collombey where its Swiss-based oil refinery has come under the critical scrutiny of the canton Valais authorities. Earlier this year, the canton demanded significant improvements for the refinery to bring it in line with environmental standards.
Tamoil has promised to invest millions into this task, but faces key inspections this autumn and next summer. If it fails to impress inspectors, the canton has the power to order the refinery to shut down.