The current political crisis in Libya has led to a growing terrorist threat, arms proliferation, irregular migration, a humanitarian crisis, and the depletion of state assets that make doing business in Libya difficult. Libya continues to present a challenging business environment.
Libya has been embroiled in a conflict between different factions. The internationally recognized government is based in Bayda and its House of Representatives relocated to Tobruk. Government authorities lack control over much of the country. Tripoli and its environs are controlled by a coalition of militias known as Operation Dawn, and affiliated authorities calling themselves the “National Salvation Government.” The United States has supported the UN-sponsored political dialogue with the goal of establishing a government of national accord in Libya. Once formed, a unity government will face the difficult task of building effective state institutions, including security forces, to restore public services, to expand infrastructure, to rebuild and diversify the economy, and to rid the country of terrorists and criminal networks.
The Libyan government has repeatedly expressed interest in receiving greater foreign investment, but there continue to be serious obstacles to realizing that goal. The government’s inability to control armed groups across the country has led to seizures of critical infrastructure facilities, political and extremist violence, and difficulty in enacting security sector reform. While the Libyan government has made progress in honoring some contracts signed prior to Libya’s 2011 revolution, lingering ambiguity regarding its intention to honor all such contracts heightened investor concerns. As a practical matter, deteriorating security, pervasive corruption, the lack of an independent and transparent regulatory framework and dispute settlement venues, ambiguous interpretation of laws regarding private ownership and property rights, and an opaque and difficult to navigate regulatory system limited potential foreign investment in Libya. State-owned firms continued to dominate the Libyan economy—particularly the upstream oil and gas sector; high public sector wages impeded diversification of the economy, drained public resources, and resulted in high unemployment, especially among Libya’s large youth population.
The Commercial Service strongly recommends that US companies only do business with the Libyan private sector at this time, and seek payment for goods and services upfront.
Libya is subject to a United Nations Security Council (UNSC) arms embargo, most recently modified under UNSCR 2174, which stipulates that UN member states shall immediately take the necessary measures to prevent the sale, supply, or transfer of arms and related materiel of all types to Libya, with certain exceptions. The United States implements the UNSC arms embargo through §126.1 of the International Traffic in Arms Regulations (ITAR) as well as the Export Administration Regulations (EAR). In addition, there remain several designated individuals and entities subject to an asset freeze. Please see the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) websites for further information about such designated individuals and entities.