Gadafy used to be as anti-western as they come. Libya supported the IRA and other terrorist organisations. He would affirm the superiority of his system of government over all challengers. In 2003, however, he decided that the country should open up. Libya was suffering as a result of UN sanctions; but Gadafy also seems to have decided that Libya must emerge from isolation. He renounced his programme for developing nuclear weapons. Libya has not formally accepted responsibility for the Lockerbie disaster, but has paid reparations to the relatives of those who died.

Libya has a small population. But what happens there could have an impact in North Africa and across the Middle East. How far is Gadafy's change of direction real? What are the chances of effective reform? It was to explore these questions that I went to Libya with David Frost and Professor Benjamin Barber, a celebrated theorist of democracy, to engage him in debate.

Gadafy cut an imposing figure, clad in a gold-colour robe, and began by attacking multiparty democracy, which he sees as a sham. What kind of democracy is it, he asked, where a party with 40% or less of the votes rules in the name of everyone? I have no time for that argument and said so. It is just not true that multiparty democracy doesn't have a popular mandate in western countries. More than 95% of people in such societies agree that they want to live in such a democracy. In Libya, what is a nice idea in principle - self-rule through a plethora of peoples' committees - works out quite differently in practice.

Gadafy steps into the vacuum left by the absence of effective mechanisms of government, and the result is a de facto dictatorship. Libya will not progress if the current system stays intact. Libya needs a new constitution, and representative government must play a significant part in it. On economic change, Gadafy was less equivocal. He was not negative about globalisation, as so many politicians in developing countries are, and recognised that Libya must change to prosper. He accepts the need to reform banking, diversify the economy, train entrepreneurs and dismantle inefficient state-owned enterprises. Impressive progress has been made towards these objectives in the past three years.

As one-party states go, Libya is not especially repressive. Gadafy seems genuinely popular. Our discussion of human rights centred mostly upon freedom of the press. Would he allow greater diversity of expression in the country? There isn't any such thing at the moment. Well, he appeared to confirm that he would. Almost every house in Libya already seems to have a satellite dish. And the internet is poised to sweep the country. Gadafy spoke of supporting a scheme that will make computers with internet access, priced at $100 each, available to all, starting with schoolchildren.

Will real progress be possible only when Gadafy leaves the scene? I tend to think the opposite. If he is sincere in wanting change, as I think he is, he could play a role in muting conflict that might otherwise arise as modernisation takes hold. My ideal future for Libya in two or three decades' time would be a Norway of North Africa: prosperous, egalitarian and forward-looking. Not easy to achieve, but not impossible.



· Anthony Giddens is a former director of the London School of Economics