The United States welcomed the March 30, 2016 arrival of the Government of National Accord in Tripoli. The Government of National Accord faces 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 political crisis in Libya has led to a growing extremist 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.
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. Lingering ambiguity regarding the standing of contracts signed prior to Libya’s 2011 revolution has 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 limit potential foreign investment in Libya. State-owned firms continue to dominate the Libyan economy—particularly the upstream oil and gas sector; high public sector wages impede diversification of the economy, and drain public resources. There is high unemployment, especially among Libya’s large youth population.
Libyan banks suffer from a liquidity crisis. American companies operating in Libya report that they continue to experience difficulties with approval of letters of credit and getting access to foreign currency, even after letter of credits are approved.
The Commercial Service strongly recommends that U.S. 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, several designated individuals and entities are subject to an asset freeze and/or travel ban by the UN, the United States and/or the European Union. Please see the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) websites for further information about such designated individuals and entities.