Economic lifeline as the oil flows again

Libya’s fractured political and military balance shifted again on September 11, as the self-styled Libyan National Army of General Khalifa Haftar seized control of the Oil Crescent from a local militia that had blockaded the area. Days later, the National Oil Corporation (NOC) said that exports from the ports would resume immediately. On September 21, a tanker left the port of Ras Lanuf for the first time in two years.

A protestor carries a placard depicting a portrait of general Khalifa Haftar during a demonstration in Benghazi against the UN-backed unity government

The resumption of oil exports raises the prospect of a much-needed boost to a war-ravaged Libyan economy. It may help stave off the threat of bankruptcy: Libya’s hard currency reserves fell from $111 billion in 2011 to

$40 billion in July 2016. ‘Instead of hurting each other, we should be cooperating to generate as much revenue as we can for the benefit of all Libyans. It is time to let Libya’s oil flow freely and get Libya back on its feet,’ said NOC chairman Mustafa Sanalla.

Yet, it remains to be seen whether such cooperation will transpire as competing authorities continue to vie for control of revenues. The NOC and Haftar have been on opposite sides of the Libyan political divide, with Haftar widely seen as a spoiler to international peace efforts. His victory in the Oil Crescent could prove a hammer blow to  the fading fortunes of the internationally-backed Government of National Accord (GNA), sending attempts to mediate the Libyan conflict back to the drawing board.

The GNA was formed in March this year, per the terms of a UN-brokered agreement of December 2015. It is led by the Presidency Council, a nine-member body designed to incorporate rival power bases. Yet, the implementation of the UN deal has been flawed from the outset, with the composition of the Presidency Council seen as stacked in the favour of those in the west of the country, and in the power base of Misrata in particular. This has, in turn, led the pre-existing House of Representatives, based in the Eastern city of Tobruk, to refuse to recognize the GNA.

‘The GNA has been unable to deliver any tangible results to Libyans’

Little over six months following its formation, the GNA looks forlorn. It has been unable to deliver any tangible results to Libyans, its weakness evident from the fact that it is holed up in the Abu Sitta naval base in Tripoli, with many of the members of the Presidency Council reported to be unable to enter the ministries that they supposedly control. Its mandate expires at the end of the year, but even the exact date of the expiry is disputed.

While the resumption of oil exports is undoubtedly good for the economy, the fact that it is Haftar’s forces who have allowed the reopening of the ports is significant. Haftar, aligned with the House of Representatives, has sought to undermine the GNA, rejecting the UN process and claiming to pursue a campaign against Islamists in the east of the country with the support of the UAE and Egypt. Despite his opposition to the GNA, there have been numerous reports on the military assistance that Haftar is receiving to target extremist groups through the deployment of French, US, UK and Italian special forces. All these countries have expressed their commitment to the GNA as the sole representative of the Libyan people, and thus stand accused of double-dealing.  

Haftar’s capture of the Oil Crescent was initially condemned by the US, France, Italy, the UK, Spain and Germany in a statement on 12 September. Yet, the international powers’ call for ‘all forces to withdraw’ from the oil crescent sparked protest within Libya. In response, the head of the GNA, Fayez al-Serraj, sought to cool the situation by calling for a new round of dialogue. Since then, the international community has shifted its position, welcoming the export of stored crude (production is still hindered by blockades of other elements of oil infrastructure) and the handover of the ports to the NOC.

The result is an uncertain situation in which the NOC, until now aligned with the GNA, is seemingly working with Haftar, the predominant force seeking the GNA’s downfall, with the blessing of the international community. Libyan politics can be fickle, but in this case offers the potential to provide much needed relief to Libyans. The challenge is to ensure that it does just that, and does not provide yet another windfall to the militias that have got Libya into this predicament.