Libya’s People’s Congresses, the country’s highest authority, have voted to hold-up President Muammar Gaddafi’s plan to disband the government and give oil money directly to the people

The Libyan leader, who has advocated handing out oil revenues directly to the citizens to beat endemic corruption in the government, would have distributed about $32 billion this year alone. In addition to countering criticism of corruption in the government, he argued that it was so deeply entrenched that ministries must be disbanded and oil revenue handed directly to the people. However, the majority of the Libyan Basic People’s Congresses, while agreeing to the oil plan in principle, voted last month to delay its implementation until “special measures” were set in place, the official Jamahiriya News Agency reported.

Only 64 of the 468 Basic People Congresses (LBPCs), or municipalities, voted for Gaddafi’s plan to hand out the money now, while 251 endorsed the plan in principle “but asked for it to be delayed until appropriate measures were put in place”.

The opposition party believes that the plan would wreak havoc in the economy by fanning inflation and spurring capital flight. The vote appeared to be a diplomatically couched rejection by Libyans who, after enduring years of U.S. sanctions because of the country’s link to terrorism, are eagerly eyeing a chance to re-emerge on to the international arena.
In an indication of the country’s strong position, Libya’s Central Bank governor declared that the country had a $44 billion budget surplus in 2008, is free of debts and had build a foreign currency reserve of $136 billion between 1995 and 2008.

“My dream during all these years was to give power and wealth directly to the people,” the Libyan leader told the public as he put forward the plan. Nevertheless, Gaddafi himself warned Libyans that the scheme, which promised up to 30,000 dinars a year to about a million of Libya’s poorest, would cause chaos before it brought about prosperity.
“Do not be afraid to experiment with a new form of government,” he told them prior to the vote, before warning.

“This plan is to offer a better future for Libya’s children. If you fail to make it succeed, I will then wash my hands of you.”
Consequently, many Libyans began wondering where they would send their children to school if there was no education ministry or whether hospitals would continue to operate or not if the health ministry was dismantled.

On the other hand, the vote to postpone Gaddafi’s plan will¬†block further discussions on the distribution of oil money for several months at least, giving time for it to be watered down.

Gaddafi has recently been speaking loudly about the country’s oil industry, a vital sector and the country’s main cash cow. But with crude prices plummeting to $40 per barrel from mid-July highs of nearly $150, Libya is seeing its revenues shrink.

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