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Libya beats a path to foreign bankers

Slow-paced reform and privatization look set to provide opportunities for foreign investment in the Libyan banking sector, but with a lot of provisos.

SINCE LIBYA'S 2003 acceptance of responsibility for the 1988 Lockerbie aircraft bombing and renunciation of its pursuit of weapons of mass destruction, Tripoli has begun to come in from the cold. In 2003, the UN lifted multilateral sanctions, and a year later the US began easing its own sanctions regime against Libya. The trade embargo has now been removed, although sanctions relating to terrorism remain in place, blocking US arms exports to Libya, limiting US aid, and requiring the US to vote against loans from international financial institutions. Libya's leader, Colonel Muammar al-Qadhafi, has become the toast of Europe.

Changes on the international scene have been accompanied by reforms at home. The reformist charge is being led by prime minister Shukri Ghanem, an economist and former head of the secretariat of the Organization of Petroleum Exporting Countries. "Ghanem's ideas are revolutionary compared with his predecessors," says a local analyst. "It's the first time that Qadhafi has put the right man in the right job."

The financial sector is just one area of the economy where changes are gradually being made, with privatization under way and legislation in place to allow foreign banks into the country.

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