Colonel Qadhafi's most prominent son has an impressive network of friends in the Gulf monarchies, which is good news for all concerned as Libya opens up to its own special version of economic liberalism and GCC-based investors line up mega-projects in North Africa.
There are still bilateral spats between Libya's Colonel Muammar Qadhafi and Gulf Cooperation Council leaders, but an expanding web of intimate financial and business links between North African and GCC countries is emerging as a dominant driver of relationships between governments and their business arms.
This is partly a symptom of the dramatic political and economic shift which followed Qadhafi's 2003 decision to abandon his nuclear weapons programme, which had been aided by the AQ Khan network. This, even more than the Lockerbie bombing settlement, opened the way for rapprochement with the west and an economic opening up of the Jamahiriya(State of the Masses) to accompany it.
It is also the result of Gulf investors' growing interest in North Africa,which has seen mega-projects announced by UAE, Qatari and other investors; a growing number of major GCC players see Libya and its neighbours as countries they can now enter with a natural advantage.
The economic reform programme led by the Brother Leader's favoured son Saif Al-Islam Al-Qadhafi has generally been interpreted as a way of rebuilding Libya's links with the European Union and United States.
Apart from a surprisingly streamlined licensing process introduced to promote hydrocarbons exploration, the practice of reform has moved more slowly than the theory so publicly espoused by Saif Al-Islam. Judging from the dozens of companies who have discussed doing business in the Jamahiriya with GSN's editorial team, Libya is still an extremely difficult place for a majority of Western companies to operate.
The new relationship which has been forged most rapidly is between Libya and the GCC which has advanced despite Muammar Qadhafi's continued predilection for meddling in the region, and especially for baiting the rulers of Saudi Arabia. Frictions continue: in March, Qadhafi spurned the Saudi-organised League of Arab States summit in Riyadh and instead gave an interview to Al-Jazeera Satellite Channel in which he teased Arab leaders, saying: "We feel for them, the poor things. We know they are in a position of weakness. They have no power or strength."
More recently, one of Qadhafi's bumptious attempts to 'mediate' led to complaints from Yemen that he was supporting the Al-Houthi rebellion, in the northern district of Saada, and that Libya had given refuge to Yahya Al- Houthi, brother of the rebel leader killed in 2004, whose followers are still fighting the army.
Yet still the finance apparently flows.
Qadhafi's play-acting and interference have so far not interrupted the growing sphere of common financial interest.
To a striking extent, these interests have been eased and guided by the close relationships between the children of the ruling elites, who have carved out niches in business and high finance.
Men of business
This has been helped by influential individuals, led by Saif Al-Islam, who numbers among his friends influential Abu Dhabi Crown Prince Mohammed Bin Zayed Al-Nahayan (MBZ) and senior Qataris including heir apparent Sheikh Tamim Bin Hamad Al-Thani.
MBZ and Saif Al-Islam have reportedly gone falconing together.
Among business players emerging with a significant role is said to be Cairo-based, 50-year-old Hassan Tatanaki, chairman of Isle of Man-registered oil services company Challenger and long standing friend of Saif al-Islam.
Exiled Libyan opposition sources claim Tatanaki, who lives in Abu Dhabi, plays a key role in managing business interests close to the regime. Unsurprisingly, he also has excellent relationships with ruling elites in the Gulf. In October 2006, Bahrain-based Venture Capital Bank (VCB), and US private equity firm Global Emerging Markets (GEM) acquired a stake in Challenger. VCB is partially owned by Saudi investors, in particular emerging Saudi investor Mann Al-Sanea. Challenger's Saudi Arabian operation is based on a joint venture with a company part-owned by Prince Turki Bin Abdullah Bin Abdelaziz, one of King Abdullah's sons.
Tatanaki is the driving commercial force behind the much publicised Green Mountain Conservation and Development Authority (GMCDA), a pet project of Saif Al-Islam. This was widely reported as an innovative environmentally-friendly development project designed by leading British architects Foster & Partners in one of Libya's national parks. The core of the project will be three luxury hotels, which a private company owned by Tatanaki will finance and build.
Tatanaki is also a patron of the London based Prince's School of Traditional Arts which is chaired by 30 year old Saudi Prince Khalid Bin Bandar Bin Sultan Al Saud the eldest son of former Saudi ambassador to Washington, Prince Bandar. A fellow trustee is Kuwait's Loay JassimAl-Kharafi,the son of Kuwaiti parliamentary speaker, Jassim, and nephew of billionaire Kuwaiti investor Nasser Al Kharafi. Loay is increasingly prominent in Egypt and heads Egyptian operations for the Al-Kharafi Group. He also has business ties to Qatar's Al-Misnads.
Other trustees are Bakr Binladen, chair of the Binladen Group and the most senior member of the family,andMohammed Abdul Latif Jameel, whose family has long held the Toyota dealership for the Kingdom - they imported the first Toyota Landcruiser in 1955 for the future King Khalid. Mohammed Jameel has a strong interest in art and contributed toward the refurbishment of the Victoria & Albert Museum's Islamic art collection (the Jameel Gallery).
Another important figure to have recently emerged is the Tehran-born British property magnate Vincent Tchenguiz, whose Consensus Business Group (CBG) signed a deal to establish Libya's offset office in September. This piece of financial architecture will eventually enable foreign defence companies to invest in a Libyan fund to meet the offset and counter-trade obligations commonly included in large arms supply contracts.
A spokesman for Tchenguiz said the fund's size was potentially "huge".
Aside from his UK property business,Tchenguiz has set up offset arrangements for governments around the world. He also arranges investments for the Qatari government and Qatar Investment Authority the closed fund through which hydrocarbons wealth is invested around the world. In 2003 he acquired two important City of London properties on behalf of the Qatar government.
Tchenguiz also has strong ties to the Al-Nahayans.
It has been suggested that Tchenguiz is preparing a UK property fund on behalf of the Libyan authorities. CBG refused to comment on this.
The Qatar connection
Tchenguiz points to Qatar as the most important relationship to have developed between Libya and a Gulf country. In 2007, a proliferation of business and diplomatic connections bubbled up between this pair of dynamic hydrocarbon boom countries.
Most mysteriously,the Brother Leader personally telephoned to thank Emir Sheikh Hamad for helping to mediate a deal that led to the release of the six Bulgarian medics convicted of infecting children with the AIDS virus an event which opened the way for Tripoli to enjoy a much-improved relationship with the EU.
Qatar may have helped finance the generous compensation deal or acted as an intermediary for money from other sources.
Libya's state-run Jamahiriya News Agency said Sheikh Hamad expressed his"happiness"; Jana said the role he played"reflected the profound links between Qatar and Libya."
In June,Libyan Prime Minister Baghdadi Ali Al-Mahmoudi led a high-level mission to Doha and came back with a series of agreements for the creation of a joint investment fund, a joint real estate fund and a joint bank.
A similar banking joint venture between Abu Dhabi's First Gulf Bank (FGB) and the Saif Al-Islam-sponsored Libyan Fund for Social and Economic Development (LFSED) was announced in September. The resulting Gulf-Libyan Bank will be the first concrete business result from what is reportedly.
Grandiose projects in North Africa: Libyan national pride meets Gulfi commercial daring
Real estate has felt the impact of increased Gulf interest in the Libyan economy more than any other sector. The fusion of the ambitious style of mega-developments pioneered in the UAE and Saudi Arabia with Libya's even more urgent ambition to overcome decades of stagnation and isolation has produced some of the most grandiose development plans to be found anywhere. Chief among these are two projects led by Sharjah-based Tameer Holding and Dubai-based Emaar Properties, both planned to be about twice the size of Riyadh's flagship King Abdullah Economic City (also being developed by Emaar). Tameer is 50% owned by Saudi Arabia's Al-Rajhi banking family.
Tameer described the $20bn Madinat Al- Hanaa (MAH) development, initiated in 2006, as its "move into the African continent". MAH is projected to provide homes for 500,000. If completed as planned, it will occupy 40km2 on the coast 25km from Tripoli. Emaar says its planned Zowar-Abou-Kemash (ZAK) city is the largest in its global mega-project portfolio.
Some observers question whether such mega projects can possibly be completed at a commercial return. The Jamahiriya will celebrate the 40th anniversary of the Al-Fatah revolution in September 2009. Brother Leader Muammar Qadhafi and family hope to have an impressive array of modern infrastructure newly built to demonstrate the fruits of his rule, whatever the cost. This motivation explains a number of other ambitious and high-profile construction projects that have been commissioned for completion in that month.
But many supporters of the Libyan real estate phenomenon say it is driven by commercial opportunity, not national pride. Muftah Benomran, chairman of London-based Seven Stars Holdings - which is in the early stages of developing a special economic zone near Benghazi named Al-Medinah Al-Hurra, and who is also talking to the government about the creation of business parks - says Gulf developers understand the Libyan opportunity better having so recently gone through the same sort of reform and opening at home.
"This has made them pioneers in North Africa," Benomran said. Having exhausted domestic marketing potential they are "excited" about projects in Libya, Algeria and Egypt.
Unsurprisingly, Dubai Ruler Sheikh Mohammed Bin Rashid Al-Maktoum's flagship Emaar is the most advanced, developing a series of multi-billion dollar tourist resorts along the length of Africa's northern coast from a Mediterranean-style development at Marassi near Alexandria to the Bahia Bay golf complex on Morocco's North Atlantic coast between Rabat and Casablanca; Emaar is remaking the Bouregreg valley that divides Morocco's capital Rabat from the corsairing city of Sal, a scheme of breathtaking scope favoured by modernising King Mohammed VI.Anis Fathallah, head of investor relations at Tuninvest Finance Group, which was recently appointed Abu Dhabi Investment Company's local adviser for North African private equity opportunities, says a combination of liberalisation, improving macroeconomic fundamentals and a burgeoning private sector based on family-owned or privatised businesses has driven the growing interest of GCC investors in North Africa. Maghreb economies are also attractive because of their tourism opportunities, relatively well-educated populations and proximity to Europe. And, Fathallah concluded, "North African countries are being increasingly viewed as a single region thanks to cultural similarities."
Gulf States Newsletter 2007
