- The General People's Congress of Libya this weekend announced a major government reshuffle, creating seven new ministries and changing the leadership of several government agencies. Leading reformists such as Prime Minister Shukri Mohammed Ghanem have been removed from their positions, indicating that free market reforms will be slowed down.
PM Ghanem took Libya on an unprecedented path when reforming many of the revolutionary pillars of its leader Muammar Gaddafi. Strongly supported by the leader's powerful son, Saif Gaddafi, the US-educated government head opened the formerly isolated country's economy to foreign investments and free trade reforms. Only recently, he announced plans to privatise most Libyan state-owned companies.
This liberalist economic policy put the business-friendly Prime Minister in increasing conflict with the revolutionary guards at the General People's Congress. The only legal "party" in Libya remains dominated by "conservatives", which in a local context means followers of Mr Gaddafi's socialist inspired revolution.
As is usual in Libya, the sudden decision by the General People's Congress to sack the Prime Minister was read out in a facts-only statement in national broadcasters. The government-controlled news agency JANA only reproduces the Congress' statement on its resolution "defining the sectors to be run by general people's committees [government]." There follows a list of names and no explanations behind the reshuffle.
The changes made by the Congress - which functions as a Libyan parliament - are wide ranging. The country's new Prime Minister is Ali Baghdadi Mahmudi, a medical doctor, former Health Minister and until yesterday Libya's Vice-PM. Dr Mahmudi is expected to give less attention to deep ploughing economic reform than his predecessor.
The modestly announced reshuffle has a larger dimension. A total of seven new ministries are created, including housing and social affairs. The new posts make it clear that a change in economic and social policies is sought. Ahmed Mohammed Moneisi, until now head of the Central Bank, was named Libya's new Finance and Economy Minister.
The General People's Congress further made several changes in the country's government agencies. Dismissed Prime Minister Ghanem was made the new head of the powerful National Oil Corporation, which should give the reformist large powers to continue opening up Libya's key oil sector to foreign investors. This has also been the sector of Libya's economy that mostly has attracted interest abroad.
Most observers have seen the unexplained reshuffle as a major victory for the conservative revolutionaries in the Libyan "parliament". It is expected that the new government led by Dr Mahmudi will leave most state companies unreformed while allowing further liberalisation of the oil sector, in addition to seek a clearer social profile.
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