A Low-Cost Engagment for Post-Gaddhafi Libya

The transition from disaster relief to developmental aid can be smoothed by long term planning and encouragement of small business growth

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Over the weekend, the rebels in Libya achieved something stunning: just a week after the media were wondering if the war there was a stalemate, the rebels had surrounded Tripoli, Muammar Gaddhafi's last stronghold. The next several days saw Gaddhafi's main compound ransacked, and pickup trucks drove the streets, filled with fighters ecstatically firing automatic weapons into the air in celebration. The fighting is certainly not yet over, but the international community, which has made siding with the rebels a major campaign over the last five months, must decide what to do next.

Typically, the International Community follows up interventions with massive occupational forces, backed up by a large cadre of expatriate aid workers trying to build a new society in their own image. This model has, by and large, failed to produce stable societies in the aftermath of internationally sanctioned intervention. But there is a better way. There is a better way to help Libya, spending less money and achieving more for its people.

Societies shattered by decades of misrule and then by conflict have some very basic needs: in the short term they need immediate assistance in providing basic services like clean water, sewage, and medical care to their people (and by all accounts from Libya, this more true now than ever). But in the medium and long term they need a thriving economy to generate wealth and create societal stakeholders that will push for reform, ultimately resulting in stable and effective governance.

The various civilian and military agencies of the United States--the Pentagon, the State Department, and USAID, among others--are good at providing the short-term necessities of a post-conflict environment. Especially when combined, the disaster relief programs of USAID and the logistics capabilities of the U.S. military make for a potent combination for easing suffering and preventing large scale humanitarian disaster.

The transition from disaster relief to development, however, is difficult and fraught with challenges. Often, the planning for development consists of an almost Soviet-like system of top-down control, central economic planning, and community investment that ignores anything like local society, preferences, or the private sector. This has been the case in Iraq, where an enormous amount of money was spent restarting state-run industries, and it has been the case in Afghanistan, where CERP money and poor civilian planning have built roads to nowhere, computer labs without electricity, and powerplants that are impossible to run without generous American subsidy.

There's no need to bother with such expensive, complex, and difficult undertakings. New, alternative models for handling post-conflict development promise to be cheaper and more sustainable than traditional reconstruction. However, these methods require one thing the United States is particularly bad at: long term planning.

Post-conflict Libya is going to need an economy. It would be a mistake, however, to rely on oil revenues to create that economy. Oil is good for some members of society, but it is rare that an economy solely reliant on oil is capable of developing normally (the so-called "Dutch Disease"). By many accounts, the upper and middle classes have driven the rebellion in Libya, and their fury is driven by Gaddhafi's refusal to develop or allow a private sector economy. Rather than importing thousands of overpaid foreign development consultants, the International Community should instead seek to unleash the natural entrepreneurship of the Libyan people themselves.

One doctrine that shows promise for unlocking the natural business savvy of the Libyan people while avoiding an expensive, difficult, and possibly counterproductive international reconstruction process is Expeditionary Economics. Expeditionary Economics, as its known, is a framework for creating the framework of a functioning private-sector economy--the foundation of any successful, stable society. Instead of focusing on the large-scale investment of transnational corporations into feeble state-run corporations, as is typical in "private sector development" efforts, Expeditionary Economics instead calls for a focus on personal entrepreneurship, small business development, and the laws and institutions that enable them.

While the West's generosity often goes without saying, the International Community must be careful not to flood Libya with too much money. The most expensive cities in the world include bizarre places like Kabul, Afghanistan and Luanda, Angola. The enormous influx of aid and development money can have a devastating effect on a growing economy, distorting prices and thus excluding the very locals such reconstruction efforts are meant to help.

Small business creation is essential for the development of any healthy economy. In academic studies on the nature of economic growth, the rate of small business creation is strongly correlated with the health and employment of society at large. But helping small businesses does not require a huge influx of aid. Rather, by focusing on the development of institutions and regulations that encourage small business creation and growth--the very heart of Expeditionary Economics--the International Community can create a sustainable, self-sufficient future for Libya at a fraction of the cost of a traditional reconstruction effort.

When it chose intervention in Libya, the International Community, including the United States, assumed a responsibility for what happens next. We owe it not just to Libya, but to ourselves, to see the future of Libya, post-Gaddhafi, develop in a responsible and sustainable way. By focusing on the fundamentals of what makes a society function, rather than the expensive trappings of an already-developed society, we can do far more in Libya with far less than we realize.