As far as I know, the most common German pronunciation for Libyen (the country of Libya) is /'ly:bi@en/, i.e., as if spelled Lybien. Similarly, the adjective libysch is commonly pronounced /'ly:bIS/ (like lübisch meaning “of Lübeck”).
On tagesschau, the prestigious German news show, it seems to be house style to pronounce it the way it’s spelled: /'li:by@n, 'li:bYS/. At any rate, I’ve heard several different speakers pronounce the name that way. (Given the state of affairs, the country has been in the news for several days, so you hear it from someone else every day.)
Now while /'li:bIS/ is not a problem, I find it hard to get my tongue around /'li:by@n/, for reasons I can’t quite put my finger on, except that they probably revolve around the front rounded vowel in the second syllable in combination with something else—the fact that the syllable is unstressed or that it’s followed not by a consonant but by schwa, or something. At any rate, I can see why the pronunciation /'ly:bi@n/ is so common: it’s a lot easier. And, interestingly enough, even the news speakers seem to have trouble wrapping their tongue around the official pronunciation on occasion.
Also, when foreign correspondents are shown, they tend to pronounce the name of the country the “normal” way, rather than the “official” way the newscasters use. So, the spelling pronunciation seems a bit artificial to me on the part of the newscasters.