Libya Accommodates to Lower Oil Revenues: Economic and Political Adjustments

Abstract

Libya enjoyed steadily rising oil revenues after 1960 and became a significant member of the world's trading community. By 1980, oil revenues were over US $20 bn and these enabled development spending to approach US $10 bn per year as well as permitting large allocations to consumption, defence, and international ventures. The sums involved in the three sectors cannot be defined precisely as defence spending, and the cost of such military campaigns as the 1981 intervention in Chad are not available. Whether such data were precisely known or not, the spending options were limited to these three sectors, and trade-offs had to be made between them when financial resources became constrained. The first two sectors, development and consumption, were of great interest to the population in general, while defence and international ventures were of interest to the leadership as well as having appeal to that special constituency which populated the military establishment of the country.