LONDON Investors peering through the receding fog of war will find plenty of promise and a few pitfalls in a post-Gaddafi Libya.
If peace takes hold in Africa's largest oil producer after a six-month civil war, the long-dormant economy could rapidly flourish provided there has been no substantial damage to the oil and gas infrastructure underpinning its national wealth.
Much remains undecided as anti-government forces gain control of Tripoli in their final push to end the four-decade rule of Muammar Gaddafi but a new Libyan government could herald a bonanza for Western companies and investors.
"Libya is a fantastically wealthy country that doesn't need foreign money but foreign expertise. This could be the start of an experiment in hydrocarbon-fueled capitalism with a lot of money up for grabs," said Emad Mostaque, Chief Middle East and North Africa strategist at Religare Capital Markets.
Though less advanced than the rest of North Africa even prior to the civil war, the Libyan economy has ample resources it could marshal for national reconstruction.
An estimated $150 billion in sovereign assets once controlled by Gaddafi and his inner circle has been frozen abroad by foreign governments and 144 tonnes of gold is held by the Libyan central bank.
WEALTH AND POLITICS
Combine that with a modest population of 6.4 million and standards of education on a par with established emerging economies such as Malaysia and Mexico, and Libya looks well placed for recovery, said Sven Richter, head of frontier markets at Renaissance Asset Managers.
"From that point of view, they are in a quite enviable position," he said.
A sovereign wealth fund set up in 2006 to manage Libya's oil revenues could also prove pivotal if the new government does not purge all personnel associated with Gaddafi.
Though somewhat depleted, the Libyan Investment Authority still holds billions of dollars in cash and a number of lucrative equity stakes in Western blue-chip companies such as Pearson (PSON.L) and UniCredit (CRDI.MI).
It could spearhead infrastructure development and make up for some of this year's slump in foreign direct investments, which according to United Nations data swelled Libya's coffers by $3.8 billion last year.
Investment from the fund could also help broaden the Libyan economy away from oil and help attract other sovereign wealth funds and longer term foreign investors.
Politics, however, remains key.
"In the last couple of weeks, there have been increasing questions about the unity of the rebels, especially after the killing of General Abdel Fattah Younes just 12 days ago," said Raza Agha, MENA economist at RBS.
The death of the rebel military commander after he was taken into custody by his own side for questioning remains unexplained, underscoring the disparate nature of the rebel National Transitional Council as a mix of Gaddafi opponents.
"Beyond Gaddafi, there is a lack of any unifying institution or individual. In Egypt and Tunisia, for example, the military was held in high esteem by the population," said Agha.
If it can hold together, the new government is likely to be friendly toward the West, having come into power supported by NATO air strikes.
An official at Libyan rebel oil firm AGOCO has already said the company may have difficulties working with China, Russia and Brazil which opposed tough sanctions on Gaddafi.
So Western companies look well positioned as billions of dollars in oil exploration and construction contracts come up for grabs as part of the reconstruction effort.
Religare's Mostaque also expects Qatari banks and firms to benefit when Libya reopens its doors to investment.
Qatar was quick to establish links with Libyan rebels and was the first Arab country to contribute planes to police United Nations-backed no-fly zones over the country.
Until fighting broke out in February, Libya was the world's 12th largest oil exporter though its output was modest, coming in at about 1.6 million barrels a day or 2 percent of global oil output. The disruption of Libyan supply was thus easily compensated by increased Saudi production.
The incoming government will likely focus on raising the country's production capacity with a view to capitalizing on its oil reserves, the ninth largest in the world.
Investors also see potential in Libya's banking and insurance sector, which briefly enjoyed foreign investor interest when decades of Western sanctions were lifted in 2004.
France's BNP Paribas (BNPP.PA) took a minority stake in a local bank when banking rules were eased and Renaissance's Richter expects foreign interest to revive when stability returns.
"Financial services demand will be driven by the oil industry," he said.
(Additional reporting by Natsuko Waki and Jeremy Gaunt; Editing by John Stonestreet)