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Libya Defence and Security Report Q1 2009
[April 14, 2009]

Libya Defence and Security Report Q1 2009

(M2 PressWIRE Via Acquire Media NewsEdge) adds new report: Libya Defence and Security Report Q1 2009 The three months to the end of December 2008 brought a number of issues relevant to the Libyan defence industry to the fore. One is Libya's current membership of the UN Security Council, which should allow it to play a leading role among Arab and African states in diplomatic efforts to block the arrest and trial of Sudan's president, Omar al-Bashir. The International Criminal Court (ICC)'s chief prosecutor, Luis Moreno-Ocampo, has called on judges to issue a warrant for the arrest of al-Bashir, who is accused of personally ordering genocide and other war crimes. However, the Arab League and the African Union (AU) have both called for the case to be suspended, arguing that it could hinder ongoing efforts to achieve a negotiated peace in Darfur.

Another key theme is that the Libyan defence industry is practically non-existent, and what does survive is almost entirely state owned. Multinational involvement has been legalised only relatively recently, with the lifting of the UN and EU arms embargoes in September 2003 and October 2004 respectively, and foreign companies are now beginning to penetrate the market. The authorities in Tripoli have been in talks with several European defence companies, eager to establish themselves in what should become a significant market, now that the arms sales restrictions have been lifted. As larger foreign companies move into Libya, its domestic defence sector is likely to experience a large expansion. Libya's extensive array of military equipment is in desperate need of modernisation. Precise details of the modernisation path to be taken are not yet known.

The prospects for Libya's defence industry look reasonably good. Defence expenditure was estimated to remain at about US$670mn in 2007, and is forecast to rise to some US$730mn by 2010, as the defence industry opens to foreign investors and new technology and hardware becomes available to the country.

The signing of new defence contracts and the trading of Libya's valuable oil reserves will provide further funds for military expenditure. Import figures will rise substantially over the coming years, as Libya updates and replaces its ageing Soviet equipment.

For the time being, we continue to expect that the Libyan government will increase defence spending by 5% annually, in real terms, over the coming years. Absolute increases will depend in part on how the country's economy fares in the face of the global financial crisis. Thus far, the economy has avoided recession, but our oil price forecast for 2009 at US$75.00/bbl implies a significant but not disastrous downturn for the Libyan economy. ((Comments on this story may be sent to (c) 2009 M2 COMMUNICATIONS LTD

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