The winners and losers of 40 years under the Colonel's watchful gaze

Life under Gaddafi can be good – just know the right people and keep your mouth shut.

(AP)

Tripoli's makeover is really only one street deep. Behind the white-washed avenues and carnival lights lie the same jumbled streets of shattered pavements where pedestrians vie for space with cars and street-hawkers.

All this under a warm, stale drizzle that falls from the city's relentless air conditioners.

In the absence of shopping malls, neighbourhoods are still defined by trade. On Kanady Street the business is car accessories and business is good. "For a Libyan, 70 per cent of the money you spend on a car goes on buying the car," Khaled explains. "The rest is to pimp it up," he says with a smile, pleased with his up-to-the-minute English.

Kanady's crumbling shop-fronts in their dozens belie the stock that sits inside: the latest woofers, tweeters and speakers the size of coffins boasting bass lines that can shake foundations. Leather headrests with flat-screen TVs, in-car game consoles and digital alarms.

Libyans who can afford to buy one spend a lot of time in their cars, the engineering student explains. The Islamic People's Republic is a dry state and, in the absence of bars, clubs or cafés where girls and boys can mix, cruising and listening to music is what passes for fun. "Sometimes for hours," says Khaled, 25.

There's another reason though.

Thanks to price controls, petrol is cheap – as little as 10p a litre.

That makes sense in a country sitting on top of some of the world's largest oil reserves. What it doesn't take into account is what some diplomats in Tripoli call the "dysfunctional economy".

Much of Libya's crude is transported to Italy to be refined and then re-imported into the home market. This leaves Libya paying more in petrol price subsidies than it spends on education and health combined.

Cheap fuel is a pacifier that the regime understands well and even creeping price rises of a penny or two over the last couple of years have drawn rare protests.

"It might seem cheap to you, but it's a question of perspective," says Khaled. With little else to show for its hydrocarbon wealth, Libyans expect affordable petrol. The son of a doctor, with two years to left to study in engineering and metallurgy, Khaled knows not everyone has it easy.

His impressive English – flip and knowing – comes from satellite television and hours of watching Top Gear on YouTube. His studies, which have focused on calculating corrosion rates on oil pipelines, make him well-placed to profit from his country's reopening to the West.

"I'm looking to get a job at the National Oil company," he says.

But hard work may not be enough to get him there. "It comes down to who you know, not just what you know," he shrugs.

Khaled is part of an emerging Libya that can be hard to see behind the raucous pantomime which Col Muammar Gaddafi creates everywhere he goes. Less often discussed than his sponsorship of terrorists and guerrilla groups are the achievements of his 40-year-old revolution.

In the 1960s, fewer than one in five of King Idris Senoussi's subjects was literate. Today literacy rates stand at 83 per cent. The first stretch of a grand North African highway was opened last week; and electricity, as the armies of air conditioners testify, is near-universal. Under the quixotic Colonel, life expectancy hovers around 75, having risen from 44.

In the past six years, since the end of the international embargo, everything has changed. Khaled says. The cranes that sketch Tripoli's skyline are the first tangible signs that the capital may become the next petro-city, another Dubai or Doha.

But welfare paid for by oil wealth, matched with price controls that hold down the cost of living, have left Libya – like many of the oil states – with a huge and listless army of unemployed. Nearly 30 per cent are jobless and as many as two million immigrants from south of the Sahara fill the void doing the menial jobs Libyans eschew. Senegalese, Gambians and Eritreans line the dusty roadside with their tools, waiting in the scorching heat for a day's work.

They are largely loathed for their pains, and it is not uncommon to see a black labourer pelted with a few stones, for all Col Gaddafi's flaunting of African Union chairmanship.

The paradoxes that confuse attempts to understand Libya meet you at the airport. Signs assure you that there are "Partners not Wage Workers" in Libya, a country that ministers later tell me is much "misunderstood" as it practises "direct democracy" through hundreds of people's revolutionary committees. However, the capital is dressed in a crude cult of personality that allows for no partners. There is only one face on any billboard in the entire city – that of Col Gaddafi.

Libya's people may be living longer, but the contradictions are clear in its ailing health sector. A late-night trawl through Tripoli's hospitals in search of the dying Abdelbaset Ali al-Megrahi, the Libyan agent blamed for the Lockerbie bombing, provides a good look behind the curtain.

Parts of the capital's sprawling central hospital are 250 years old, a transplant surgeon explains. The quality of the equipment, hygiene and personnel vary wildly between its overcrowded wards.

"If people get really ill here they go to Tunisia," says the surgeon. "Only those who can't afford it stay here." Many of Libya's best doctors have left the country in frustration at under-investment and political interference.

Megrahi was eventually tracked down to the VIP ward of the Tripoli medical centre, where foreign doctors are rumoured to have been brought in to care for such a high-profile patient, although this has been officially denied.

The future in Libya may belong to people like Khaled, but then again it may not. Like the young engineer and more than half of all Libyans, Abdelnasser al-Rabbasi was born after Col Gaddafi seized power. But he hasn't seen the construction boom of the last six years. He was 32 when he was arrested in 2003 and has spent much of that time in Abu Salim prison.

Al-Rabassi is serving a 15-year sentence for "dishonouring the guide of the revolution" – one of the leader's compendium of titles. The dishonour in this case was to write a short novel about corruption and human rights.

Entitled Chaos, Corruption and the Suicide of the Mind in Libya it was a play on the title of something written by Col Gaddafi himself.

"I might just as well have carried a gun or blown myself up with explosives," al-Rabassi told Human Rights Watch earlier this year. "I don't have anything to hide. I'm not part of any group or anything like that."

The security guard and part-time writer is paying an appalling price for threatening to call Libya on some of its contradictions.

Libya: How Gaddafi changed life

*Libya gained independence in 1951, with Colonel Muammar Gaddafi taking power from King Idris I in 1969 in a military coup.

*The population is more than 6.3 million. Libyans enjoy a life expectancy of about 75, one of the best in Africa.

*Oil was discovered in the country in 1959, bringing great wealth to the monarchy. Today, it continues to dominate the economy providing 95 per cent of export earnings – $46bn (£28bn) last year – and government subsidies mean that petrol prices can be as low as 10p a litre. With some 41.5 billion barrels still untapped, the country's reserves are the largest in Africa.

*Under the reign of King Idris I, less than 20 per cent of Libya's population was literate – today that number is 83 per cent.

*Close to 80 per cent of the population live in urban areas and as of 2007 there were around 4.5 million mobile phone users.

*According to a report from a Libyan newspaper, this year a government census placed the unemployment rate at 20.74 per cent, which would make it the highest amongst the five countries in the Maghreb region. In the same piece it was stated that more than 33,000 families reside in unhealthy housing conditions.

*Because of poor conditions for agriculture, around three quarters of Libya's food is imported.