Libya has substantial challenges ahead, and the rebels’ victory is only the end of the beginning. Much more needs to be done to build a stable, democratic state.
Libyan oil production is unlikely to recover until 2013, requiring the global oil market make up the losses for at least another year. If handled properly, Libya’s offshore sovereign wealth is sufficient to enable reconstruction.
Saudi Arabia fed the Libyan shortfall through a complex swap arrangement sending heavy Saudi crude to Asian refineries and light crude slates to primitive European refiners. But ad hoc arrangements aren’t the answer. Policymakers should be asking tough questions about what international institutions can do to better coordinate outages.
The Libyan revolution has implications for the wider region. The US should welcome Qatar as an emerging regional leader while taking care to avoid potential problems in Libya, which faces many of the same domestic challenges as Iraq.