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Benefits of Peace in Libya: Neighbouring Countries and Beyond VISION ESCWA, an Innovative Catalyst for a Stable, Just and Flourishing Arab Region

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Benefits of Peace in Libya: Neighbouring Countries and Beyond VISION ESCWA, an Innovative Catalyst for a Stable, Just and Flourishing Arab Region Benefits of Peace in Libya: Neighbouring Countries and Beyond VISION ESCWA, an innovative catalyst for a stable, just and flourishing Arab region MISSION Committed to the 2030 Agenda, ESCWA’s passionate team produces innovative knowledge, fosters regional consensus and delivers transformational policy advice. Together, we work for a sustainable future for all. E/ESCWA/CL6.GCP/2020/2 Economic and Social Commission for Western Asia Benefits of Peace in Libya: Neighbouring Countries and Beyond UNITED NATIONS Beirut 2 © 2021 United Nations All rights reserved worldwide Photocopies and reproductions of excerpts are allowed with proper credits. All queries on rights and licenses, including subsidiary rights, should be addressed to the United Nations Economic and Social Commission for Western Asia (ESCWA), e-mail: [email protected] The findings, interpretations and conclusions expressed in this publication are those of the authors and do not necessarily reflect the views of the United Nations or its officials or Member States. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Links contained in this publication are provided for the convenience of the reader and are correct at the time of issue. The United Nations takes no responsibility for the continued accuracy of that information or for the content of any external website. References have, wherever possible, been verified. Mention of commercial names and products does not imply the endorsement of the United Nations. References to dollars ($) are to United States dollars, unless otherwise stated. Symbols of United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document. United Nations publication issued by ESCWA, United Nations House, Riad El Solh Square, P.O. Box: 11-8575, Beirut, Lebanon. Website: www.unescwa.org Photo credit: ©iStock.com/aghezzi ©iStock.com/Allan Watson ©iStock.com/chrispecoraro ©iStock.com/giamplume ©iStock.com/Taha Sayeh 3 Content Acknowledgements 9 Acronyms 9 1. Introduction and Objectives 11 2. Libya and Regional Economic Cooperation 15 A. The performance of Libya’s external economic linkages 15 B. Importance of Libya to the economies of Egypt, the Sudan and Tunisia during the pre-conflict period 23 3. Peace in Libya and the Regional Cooperation Agenda: The Methodology 27 A. Methodology 27 B. Scenarios 29 4. Peace in Libya and the Regional Cooperation Agenda: The Results 31 A. The growth effects 31 B. The effect on employment 32 C. The effect on investment 33 D. The sectoral effect 34 5. Conclusion and Policy Options 41 A. Libya’s external exchanges and regional cooperation 42 B. The effects of the conflict on regional cooperation 42 C. The effects of peace on regional cooperation 42 References 43 Sectoral and Regional Dimensions of the Arab Trade Simulation Model 44 List of Libya Project Publications 46 BENEFITS OF PEACE IN LIBYA: NEIGHBOURING COUNTRIES AND BEYOND Content 4 List of Tables Table 1. Real GDP levels 31 Table 9. Value added by sector in the 36 Sudan Table 2. Unemployment rate 32 Table 10. Value added by sector in 37 Table 3. Total investment 33 Algeria Table 4. Exports to Libya 33 Table 11. Tunisia exports to Libya 38 Table 5. Total exports 34 Table 12. Egypt exports to Libya 38 Table 6. Total imports 34 Table 13. The Sudan exports to Libya 39 Table 7. Value added by sector in Egypt 35 Table 14. Algeria exports to Libya 39 Table 8. Value added by sector in Tunisia 35 5 List of Figures Figure 1. Evolution of Libya’s exports of goods, 15 Figure 17. Destination of Libyan exports to 21 including oil, 2000-2010 selected countries during the period 2011-2019 Figure 2. Evolution of Libya’s imports of goods, 15 Figure 18. Trends in Libyan trade with Turkey 21 including oil, 2000-2010 during the crisis, 2011-2018 Figure 3. Trends in total exports and fuel exports, 16 Figure 19. FDI inflows, outflows, and inward stock, 21 2000-2010 2000-2019 Figure 4. Sectoral composition of Libya’s imports, 16 Figure 20. Greenfield outward FDI, 2003-2016, 22 2000-2010 CAPEX Figure 5. Distribution of Libya’s exports per major 16 Figure 21. Libya’s FDI composition by country of 22 destinations, 2000-2010 origin, 2003-2016 Figure 6. Distribution of Libya’s imports per major 17 Figure 22. Libya: Remittance outflows, 2011-2018 23 origins, 2000-2010 Figure 23. Remittances sent from Libya by 23 Figure 7. Destination of Libyan exports to selected 17 destination country in most of the Arab region, countries during the period 2000-2010 2010-2017 Figure 8. Source of Libyan imports by selected 17 Figure 24. Contribution of exports to Libya to 24 countries during the period 2000-2010 total Tunisian exports of goods, 2000-2010 Figure 9. Trends in Libyan trade with Turkey during 18 Figure 25. Contribution of exports to Libya to 24 the period 2001-2010 total Egyptian exports of goods, 2000-2010 Figure 10. FDI inflows, outflows, and inward stock, 18 Figure 26. Ratios of exports to Libya versus total 25 2000-2010 exports 2019-2010: cases of Tunisia and Egypt Figure 11. Libya: Remittance outflows, 2000-2010 19 Figure 27. Trends in remittance inflows 25 originating from Libya to total inflows 2010-2017 Figure 12. Evolution of Libya’s exports of goods, 19 including oil, 2011-2019 Figure 28. Evolution of Libya’s GDP if the crisis 29 continues Figure 13. Evolution of Libya’s imports of goods, 19 including oil, 2011-2019 Figure 29. Libya’s GDP recovery path 29 Figure 14. Distribution of Libya’s exports per major 19 Figure 30. Real GDP evolution in Libya’s 32 destinations, 2011-2019 neighbouring countries Figure 15. Distribution of Libya’s imports per major 20 origins, 2011-2019 Figure 16. Source of Libyan imports by selected 20 countries during the period 2011-2019 BENEFITS OF PEACE IN LIBYA: NEIGHBOURING COUNTRIES AND BEYOND Content The reconstruction in Libya will generate numerous job opportunities that could benefit workers in the region. KEY MESSAGES The Sudan will experience a significant drop in unemployment, estimated at 13.93 per cent over the period 2021-2025. 13.93% the Sudan UNEMPLOYMENT DROP over the period 2021-2025 Peace in Libya will contribute to strengthening Unemployment will also decrease by 8.84 regional cooperation, and will ensure significant gains in per cent in Egypt, 6.07 per cent in Tunisia, 8.84% and 2.18 per cent in Algeria. Egypt GROWTH EMPLOYMENT INVESTMENT for neighbouring countries, namely Once peace is established in Libya, investment RESUME will increase in various Arab countries. This 6.07% Algeria Egypt the Sudan Tunisia increase is projected at 5.98 per cent for Egypt, 5.49 per cent for Tunisia, Tunisia and 2.01 per cent for Algeria over the period $161.9 The total gains for the region from peace in Libya will be $161.9 2021-2025. billion over the period 2021-2025. The Libyan peace process could 2.18% billion generate $99.7 billion in gain for Egypt, $29.8 billion for Algeria, $22.7 billion for the Sudan, and $9.7 billion for Tunisia. TOTAL GAINS Algeria over the period 2025-2021 The reconstruction in Libya will generate numerous job opportunities that could benefit workers in the region. KEY MESSAGES The Sudan will experience a significant drop in unemployment, estimated at 13.93 per cent over the period 2021-2025. 13.93% the Sudan UNEMPLOYMENT DROP over the period 2021-2025 Peace in Libya will contribute to strengthening Unemployment will also decrease by 8.84 regional cooperation, and will ensure significant gains in per cent in Egypt, 6.07 per cent in Tunisia, 8.84% and 2.18 per cent in Algeria. Egypt GROWTH EMPLOYMENT INVESTMENT for neighbouring countries, namely Once peace is established in Libya, investment RESUME will increase in various Arab countries. This 6.07% Algeria Egypt the Sudan Tunisia increase is projected at 5.98 per cent for Egypt, 5.49 per cent for Tunisia, Tunisia and 2.01 per cent for Algeria over the period $161.9 The total gains for the region from peace in Libya will be $161.9 2021-2025. billion over the period 2021-2025. The Libyan peace process could 2.18% billion generate $99.7 billion in gain for Egypt, $29.8 billion for Algeria, $22.7 billion for the Sudan, and $9.7 billion for Tunisia. TOTAL GAINS Algeria over the period 2025-2021 8 Opener 9 Acknowledgement This study was prepared by the United Nations the structural challenges of forging a new social Economic and Social Commission for Western Asia contract and State institutionalization and advancing a (ESCWA) secretariat, drawing on a study prepared for sustainable development framework for the country. ESCWA by Dr Hakim Ben Hammouda, former Minister of Economy and Finance of Tunisia and Managing This report will focus on the consequences of Partner of Strategia Consulting Group. The study ending the conflict and having peace in Libya on has been elaborated in the frame of the Libya Socio- regional cooperation and, in particular, on trade with Economic Dialogue (Libya SED) project, funded by the Tunisia, Egypt and the Sudan. This report provides a German Federal Ministry for Economic Cooperation quantitative assessment of the economic impacts of and Development (BMZ) and jointly implemented by peace in Libya on regional cooperation. This work is ESCWA and GIZ.
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