Shukri Ghanem: Libyan politician who deserted the Gaddafi regime

Reformist: Ghanem in March last year, when he was still in charge of Libya's oil industry (REUTERS)

Shukri Ghanem, whose body has been found floating in the River Danube, was an important figure in Libya, where he and one of Colonel Gaddafi's sons unsuccessfully tried to persuade the dictator to introduce free-market reform. Returning to Libya in 2001 after a career abroad, he quickly rose to become Prime Minister, but was demoted three years later after falling foul of the country's old guard. When the uprising which toppled the Gaddafi regime broke out he joined a number of other major figures in defecting. He did not find favour with the triumphant insurgents, however, and spent his last months in exile in Austria.

He and Gaddafi's son, Saif, did have some success in nudging the dictator towards a rapprochement with the west. An urbane and relatively reformist figure, he formed an alliance with Saif aimed at modernising a Libyan administration which had stultified during decades of Gaddafi rule. But by 2008 it had become clear that the Colonel was not about to launch radical new initiatives, and had decided that the old ways would continue.

Shukri Mohammed Ghanem was born in Tripoli in 1942, graduated in English from Benghazi University and went on to study in the US, taking master's degrees in economics, and law and diplomacy. He also held a doctorate in international economics. Specialising in energy, particularly in oil, he became director of research at Opec in Vienna. It was there that he met and befriended Saif – who, as second eldest of Gaddafi's seven sons, was to become his heir apparent.

Saif was studying in Vienna – he would later attend the London School of Economics, where he received a PhD in an episode which would cause acute embarrassment to the university. Together Ghanem and Saif agreed on the need for new approaches which included an openness to new ideas, increased international trading and political changes to steer Libya out of its economic and political stagnation.

In 2001 Saif brought Ghanem home to Libya and helped him into senior posts in economic affairs, foreign trade and the all-important oil industry. Within three years he had, under Saif's sponsorship, become secretary to the General Peoples' Committee – in effect, prime minister. Together the pair set about bringing in reforms, Saif openly advocating democracy, governmental transparency and openness. He spoke of "reinventing a country, with a new constitution, new laws and a commercial and business code."

Their agenda also encompassed rapprochement with the West. Libya had been classed as a pariah state following incidents such as the 1984 killing of PC Yvonne Fletcher outside the Libyan embassy in London, and the bombing of Pan Am flight 103 over Lockerbie in Scotland, in which 270 people died. Gaddafi agreed to pay billions in compensation, though Ghanem insisted this did not amount to an admission of responsibility. When it was put to him that the payment did not mean acceptance of guilt he replied, "I agree with that, and this is why I said we bought peace."

Gaddafi also agreed to western demands for the ending of Libya's programme to develop weapons of mass destruction, opening the way to improved relations with western governments and businesses. Internally, Ghanem and Saif sought to modernise the economy through widespread privatisation and new deals with foreign oil concerns. Here they ran into trouble from what Ghanem called "diehards". He complained that reform attempts were being opposed by "those who were getting illegal fringe benefits in their jobs, and those who are afraid of the unknown."

The problem was that although Colonel Gaddafi gave Ghanem and his son a fair deal of leeway – at least by dictatorial standards – the ageing leader did not in the end buy into the new ideas. In 2006 he demoted Ghanem from the prime ministership, but Ghanem continued to make use of his political and personal skills as one of Libya's most seasoned international negotiators who mixed easily with foreign politicians, business figures and journalists, and put him in charge of oil and gas.

Saif would later announce that he was leaving politics, saying he had decided that he would no longer "intervene in state affairs." It was always a tall order to believe that Ghanem and Saif could succeed in persuading Gaddafi and the rest of the Libyan establishment that dictatorship could or should be transformed into democracy.

As oil supremo Ghanem continued to build trading links with the outside world, though at one stage it looked as though he was being removed from that post. He made little secret of his frustrations that his ideas had been blocked, and that his country was not prepared to move away from dictatorship.

Ironically Ghanem was said to have his own dictatorial tendencies. One Libyan oil figure said of him: "He was very authoritative, very strong-minded and tough with his employees. Some people were even afraid of going to his office. You would hear of people being fired if they challenged him. He was like a small Gaddafi of the oil sector."

When the Libyan uprising broke out he continued to profess loyalty to the regime, dismissing speculation that he might defect. Once he had slipped away, however, he said he had left "to join the choice made by young Libyans to fight for a democratic country."

He added: "I worked in Libya for many years, thinking I could make changes from the inside." But he said "unbearable violence" was being used by Gaddafi. "This war," he said, "is getting even worse every day and there is no end to it."

One of the most high-profile figures to desert, he fled first to Tunisia and then to Vienna but did not link up with the rebels. Since then the new regime has reportedly been examining files implicating him in corruption in the oil industry. On 29 April his body was found floating in the Danube after he went missing after going for a walk. A cause of death has yet to be established.

Shukri Mohammed Ghanem, politician: born Tripoli October 9 1942; Prime Minister of Libya 2003-2006; married (three daughters, one son); died Vienna 29 April 2012.