February 6, 2012: Three months after the Kaddafi dictatorship was overthrown the new government has a serious cash-flow problem and a lot of other woes as well. Only $6 billion of the $150 billion of Kaddafi era assets have been returned to Libya. The rest is on the way but legal and diplomatic hurdles cause delays. Meanwhile the government has a $22 billion a year payroll (the government is the largest employer) and spends $14 billion on providing electricity, fuel, and other goods to citizens. Kaddafi used oil revenue to run a welfare state, which made most Libyans fearful of opposing him. The government has to continue this welfare state spending for a while and expects to come up $10 billion short in the next year. The NTC is looking for loans. Libya is a good credit risk, as it has over $5 trillion worth of oil reserves. But too much money is not available right now. Oil production declined 98 percent during the fighting and is not quite back to half its pre-war level. The oil dependent economy shrank 60 percent in the last year and most Libyans are feeling the pain and are not happy about it. Many government employees have not been paid for months.

Then there are the problems at the top. The NTC (National Transitional Council), which is to be replaced by June elections, is secretive and not trusted. Many Libyans believe there is a lot of money coming in that is promptly disappearing. Rumors and conspiracy theories abound. Confidence and cash are in short supply. The NTC is even having a hard time organizing the June elections, or maintaining order within the NTC itself. There are already charges of corruption and too many secrets. Libyans are having a hard time ruling their country, or themselves.

What the country lacks right now is unity and discipline. Dozens of armed militias occupy parts of the country and demand to be paid for their services. The cash, goods, and privileges owed varies and many of the militias are fighting with other militias over territory and such. The government has not yet been able to form a large enough security forces to disarm the militias and there is not enough money or other assets to buy off the militias. As long as the militias exist, reconstruction and reviving the economy will be difficult. That's because the militias act as mini-governments in the areas they occupy. The militias take what they want and injure or kill those who oppose them.

The militia violence is causing the NTC much embarrassment. Militias control many jails and prisons, and it's gotten out that many captured Kaddafi aides and followers have been beaten and killed while in custody. Most of this violence was revenge, but some was intended to discover the location of hidden wealth. The NTC was embarrassed when it was revealed that this misbehavior was taking place in some NTC controlled prisons as well.

Neighboring Mali complains that a recent uprising by Tuareg tribesmen was made possible by weapons and ammo stolen from Libyan stocks during the rebellion last year. Moreover, many Tuareg served as highly paid mercenaries for Kaddafi. While a lot of these hired guns were killed most made it back home, with weapons and cash.

February 1, 2012:  Outside Tripoli, rival militias fought for two hours over who would control a beach mansion belonging to a son of deposed dictator Moamar Kaddafi. The NTC eventually got enough troops to the area to halt the fighting. This was the first time in weeks that such a gun battle was seen in Tripoli, as the NTC is slowly gaining control of the city (the largest in the country).

January 28, 2012: Bowing to pressure from Islamic groups, the NTC changed the new electoral law to eliminate a guarantee that ten percent of the 200 seats in the new parliament would be reserved for women.

January 26, 2012: Turkey delivered 30 police cars and 6,000 police uniforms to the NTC. Turkey, and several Arab Gulf States, has been very active in helping the NTC restore law and order, as well as the economy.

January 25, 2012: The NTC recognized another tribal faction as the ruling power in pro-Kaddafi stronghold Bani Walid (a town of 50,000, some 150 kilometers southeast of Tripoli), which technically returned the town to NTC control. The NTC claims that the recent unrest in Bani Walid was about tribal politics, not support for Kaddafi.

January 24, 2012:  In Egypt, a bomb was found in a Libyan airliner that had just arrived from Libya. The bomb was disabled. It’s unclear who was responsible for this.

January 23, 2012: About a hundred Kaddafi supporters attacked Bani-Walid and drove out the pro-NTC tribal gunmen. The town had been captured by the NTC only four months ago and pro-Kaddafi tribesmen fled to nearby towns and plotted a return.

January 20, 2012: Thousands of demonstrators, in several towns and cities, urged the NTC to make sharia (Islamic law) the basis of the new legal system. Most Libyans oppose this and many Sharia supporters just want less corruption.