After Victory, the Hard Part: Remaking Libya from Scratch

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Zohra Bensemra / Reuters

Rebel fighters stand guard over detainees during the final push to flush out Gaddafi's forces in the Abu Salim district of Tripoli on Aug. 25, 2011

And now, the tough work begins.

With fierce fighting still raging in parts of southern Tripoli, rebel fighters attempting to storm Muammar Gaddafi's hometown of Sert 300 miles along the coast and a massive manhunt continuing for Gaddafi and his sons, the realization intensified on Aug. 26 that Libya's precarious state could be tipped into either prolonged insurgency or a new democracy in some measure depending on the outside world's quick actions. Western and African leaders scrambled to accelerate the rebels' efforts to put together the basics of government, while the National Transitional Council (NTC) — now the only thing resembling a Libyan authority — warned that it could not wait if it wanted to avert all-out disaster. "Our friends worldwide talk about procedures for security," the council's head Mahmoud Jibril told reporters on Aug. 26, after meeting Western and Arab officials in Istanbul. "But we cannot have such a goal without being able financially and economically to establish our power and the NTC rule."

Establishing that rule will not be easy. Gaddafi's holdouts took back two areas of Tripoli overnight that the rebels had captured on Aug. 25. And the old regime's forces remain holed up in Sert, as well as in areas farther south near the borders of Niger and Chad. That raises the prospect that as an interim government, the NTC might not have control over the entirety of the huge country.

Even in areas where their support is overwhelming, the rebels face a daunting task in governing. Libya will effectively need to remake itself from scratch into a modern country after 42 years of one-man rule — and that is leaving aside the ravages from the past six months' fighting.

That work effectively began on Aug. 26. Overnight the U.N.'s Libya sanctions committee approved the release of $1.5 billion from Libya's global investments, all of which had been ordered frozen by the U.N. after the revolt erupted in February. The amount falls far short of the more than $3 billion the NTC says it urgently needs to start governing. In a blitz of meetings in Paris, Milan and Istanbul on Aug. 25 and 26, Jibril repeatedly warned that a delay would be perilous, since if the Council fails to deliver basic public services quickly, it could increase the risk of an insurgency's taking root among disillusioned Libyans, whose expectations are running sky-high.

Releasing all the money the new leaders are hoping for could prove tricky. Libya's worldwide fortune is believed to be worth about $100 billion. But some of that might be difficult to trace, since Gaddafi's financial dealings were opaque and billions were invested discreetly during years of international sanctions. "These will be in a web of offshore companies which are very difficult to trace," said Middle East economist Said Hirsch on Sky News on Aug. 26. "This will take a very long time to access the entire assets."

Most urgent is paying millions of public workers, including police, many of whom have not received salaries during months of turmoil. Also: paying oil bills, which would keep the power on in hospitals — which are overwhelmed with battle casualties — as well as allowing Libyans to fill their gas tanks, open their stores and turn their lights on at home. But Hirsch said the NTC would also urgently need to win over Libya's disparate tribes and interest groups, from which Gaddafi won compliance and support over the years by lavishing patronage. "For the Transitional Council to have influence in the next few months, they will have to make sure that these groups are happy," he told Sky News.

As the clearest proof that the council has finally won the battle for Libya, the NTC's oil and finance minister, Ali Tarhouni, told reporters on Aug. 26 that the rebels would immediately relocate their headquarters from Benghazi to the capital, saying, "I proclaim the beginning and the resumption of the work of the executive office in free Tripoli as of this moment."

For some rebel leaders, their arrival in Tripoli will be a homecoming after only a short absence. Several key figures, including Jibril and the council's chair, Mustafa Abdel Jalil, long worked within Gaddafi's system before defecting to the rebels in February. Jalil used to be Libya's Justice Minister. Indeed, in 2004, he approved death sentences against five Bulgarian nurses who were bogusly convicted of infecting patients with the HIV virus; the nurses were freed in 2007. Jibril — an economist who spent years living in the U.S. — had headed Libya's National Economic Development Council, a project overseen by Gaddafi's powerful son Saif al-Islam.

Leaders of the African Union on Aug. 26 argued over whether to recognize the NTC as the legitimate Libyan representatives, with some saying that they wanted rebel leaders to negotiate power with former Gaddafi officials. Although that prospect seems highly unlikely, the vote underscored the strong sympathy Gaddafi still retains among many Africans, as well as the debt the AU feels it owes him. Gaddafi co-founded the organization, to which more than 50 countries belong, and then helped finance it for years, and the Gaddafis also plowed billions into hotels, land and other investments across the continent.

Libya's new leaders are unlikely to be so generous, since the country's earnings could be minimal for a while yet. About 95% of Libya's revenues come from only one activity — pumping oil. With 47 billion barrels of proven oil reserves and a population of just 6.4 million people, it could be highly prosperous. But energy analysts say it could take years for the oil industry to recover from the past six months. From producing about 1.6 million barrels a day before the conflict, the industry has ground to a virtual halt. Returning to its prewar levels will require security, especially in key oil areas like Sert, which is currently a battleground. "The question is how quickly they can come back onstream," Samuel Ciszuk, senior Middle East and North Africa energy analyst at IHS Global Insight in London, tells TIME. "That is still very hard to assess."