European strategic ambitions simply won’t be met by the continents industrial base alone, it needs to strike trade partnerships that will get it the resources it needs.
According to the latest statistics, Europe’s manufacturing base has fallen from 17.7% of total GDP in 2000 to 14.3% in 2026. This makes the EU’s ambition for that number to return to 20% in the coming decade even more remarkable. In an increasingly polarised geopolitical world order, the ability to source and produce your own material will prove ever more valuable. Equally, establishing new, reliable supply chains that can circumvent some of the traditional routes currently under threat will be essential.
Libyan potential
Libya may not seem an immediately obvious candidate. A civil war more than a decade old, characterised by two governments operating out of Tripoli and Benghazi has dominated the news agenda. Political instability alone would seemingly be enough to ensure Europe looks elsewhere. However, this would be a mistake, overlooking the country’s obvious features that could see it make an active contribution to boosting Europe’s industrial capacity.
The first obvious plus in Libya’s column is geography. As one of the closest nations to European shores, the ability to establish and grow strong supply routes is evident. The continent is still reeling from ongoing disruption in the Straits of Hormuz, with a conflict between two non-European powers actively harming the European economy. Libya, given its proximity, provides an alternative, relatively uncomplicated route for supplies to flow from.
Shorter supply routes
A short hop over the Mediterranean could see both a significant increase in the rate of critical supplies flowing into Europe, as well as a reduction in cost due to an uncomplicated travel route. Despite Libya’s obvious political issues, the ease of connectivity would be a major plus, with supply ships able to hit European shores within hours rather than days.
For a continent that is dependent on ‘just-in-time’ supply chains this is a major asset in Libya’s favour. The immediate availability of essential materials is critical to making these supply chains work. However, Libya must be able to quick deliver such materials to become the reliable trading partner Europe requires. This is especially the case given ongoing concerns about the country’s political situation.
Proof points
Therefore, Libya must show evidence of its ability to offer the products needed. The country’s industrial potential is well established. In 2024, Libya exported over $30bn worth of industrials, almost exclusively to European destinations, ranking in the top third of the world. What will help take Libya to the next level is production-ready projects that can start exporting right away.
Near Benghazi, plans are afoot for the world’s largest Direct Reduced Iron complex in the world. The deal, between Ahmed Gadalla’s Alushibe Holding Group and Turkey’s Tosyali Holding is expecting steel to come off the production line in 2028. The value of the whole facility is expected to run to $2.5bn. The fact a deal of this nature could be struck in the current political environment is encouraging. The fact a port is due to be added on is a further boost.
Gadalla’s broader commercial empire includes a major beverage plant in the works at Zulfa, as well as one of the region’s largest cement companies in the form of the Libya Cement Company. These are the kind of industrials that can provide the ready-made, large-scale supplies Europe will crave in the years to come as its strategic priorities come into sharper focus.
Private sector potential
Encouragingly, projects of this scale are clearly both forging ahead in terms of construction, financing and attracting international investment. It demonstrates how the private sector can overcome the deep divide in Libya’s national political picture.
From Europe’s point of view, most importantly, it highlights how a pipeline of industrial projects will be coming online, able to feed the continent’s increasingly lofty strategic ambitions. A steady supply of iron, oil, cement and other essential components of any long-view industrial strategy can embed Libya’s place as a key strategic partner of the European continent.
With Europe’s own ability to mine, manufacture and refine raw materials struggling to achieve lift off, combined with an increasingly volatile geopolitical picture out of its control, identifying straightforward, reliable international partners will prove key. As part of its search, Europe need only look a short hop across the Mediterranean.
