Haftar plays the oil card in Libya's conflict

Haftar plays the oil card in Libya's conflict
Comment: Khalifa Haftar's move to take control of Libyan oil installations gives him more leverage to pressure his opponents in his quest for power, writes Guma El-Gamaty
8 min read
14 Sep, 2016
Oil and gas exports constitute over 98 percent of Libya's revenue [Getty]

Sunday's swift attack by forces loyal to Khalifa Haftar on the oil ports in what is known as the "oil crescent" - based off the middle of the Libyan coast - shows that the conflict between the various competing factions in Libya is not easing up. 

Instead, the battle to control the most valued assets in the country, namely Libya's oil fields and installations, could be reaching a dangerous escalation. The terminals in the oil crescent represent the outlets for nearly half of Libya's oil exports, which amounts to around 700,000 barrels per day (bpd).

The latest move by Haftar's forces could deal a huge blow for the newly formed UN-backed Government of National Accord (GNA) as it seeks to assert its own authority over Libya's oil revenues. Oil and gas exports constitute over 98 percent of Libya's revenue.

Any major disruption to these exports means a sharp decline in revenue, for a country that has a typical rentier economy, where the state is the main employer, providing monthly salaries for almost 1.5 million Libyan citizens in a country with a population of just under 6 million.

Unlike some other countries in the Middle East, the conflict in resource rich Libya is not essentially ethnic, religious or ideological but rather overwhelmingly driven by a race to grab power and wealth through whatever means, in the post 17 February 2011 revolution vacuum.

During the 42 years of Gaddafi's absolute rule, Libyans were deprived of any experience of institution building or power sharing, and had no control whatsoever over their wealth which came nearly exclusively from oil revenues. Instead Gaddafi controlled and manipulated the distribution of this wealth as he saw fit, and used it as a powerful tool of patronage and co-option as well as coercion where the vast money from oil helped him to build a powerful oppressive security apparatus.

Since the launch of his "Dignity" operation in May 2014, where he began a military attack on rival revolutionary fighters and Islamist groups based in Benghazi, Haftar has always maintained a narrative which claimed that his mission was only to fight terrorism and rid Libya of its troubles.

The battle to control the most valued assets in the country, namely Libya's oil fields and installations, could be reaching a dangerous escalation

On the other hand, his opponents have accused him of trying to emulate President Sisi of Egypt by repeating the same model in Libya where the army will take control of the country, with Haftar acting as head of the army which would leave him sitting at the top of the political and power pyramid.

The fact that Haftar has sent his forces to control oil fields and ports in the oil crescent region further challenges his narrative of only fighting terrorism, and gives credence to his opponent's arguments that he is seeking to control Libya's power and wealth.

This notion is backed up by the events that took place on 14 February 2014, where Haftar did indeed attempt a coup d'etat in Libya when in a televised statement he called for the freezing of the interim constitution and the suspension of the interim parliament (GNC) and the formation of a supreme military council to be headed by himself.

For the last two years Libyan oil exports have been at their lowest levels averaging less than 200,000 (bpd) from a peak of around 1.5 million bpd in 2012. Crude oil prices have also more than halved on the global market since, which meant a greatly reduced revenue for Libya. This has put a major strain on the country's financial reserves and forced the Libyan Central Bank to only pay for essentials such as state salaries and subsidies, with spending on all other aspects of development virtually at a freeze.

Jadhran claims that his PFG is made up of some 22,800 men, who have not been paid salaries for over two years

The value of the Libyan dinar against major currencies has also recently fallen sharply to around five dinars to a dollar from a rate of 1.3 to one dollar. The recent World Bank economic outlook report for Libya stated that "Overall, the budget deficit rose from 43% of GDP in 2014 to 75% of GDP in 2015". This deficit is expected to be even higher in 2016, and the remaining reserves of the Central Bank are expected to run out unless replenished by resuming oil exports in large quantities very soon. 

The new Government of National Accord (GNA) had hoped that in resuming oil exports in large quantities, fresh, vital, foreign-currency-accrued revenue would help ease the socio-economic suffering of the Libyan people, in turn boosting the chances of the Libyan Political Agreement (LPA) signed in Morocco last December.

Most recently in July, the GNA struck a deal with the Petroleum Facilities Guard (PFG) and its leader Ibrahim Jadhran, to end the blockade of the four oil ports under his control. Jadhran, who at one stage was aligned with Haftar and then turned against him, is not a popular figure and is perceived by Libyans as just another militia leader seeking to accumulate power and wealth through the control of the oil facilities.

Jadhran claims that his PFG is made up of some 22,800 men, who have not been paid salaries for over two years and that is why he is asking the GNA to pay some 200 million Libyan dinars towards that, before he can lift the blockade on the oil ports.

However, some critics of Jadhran, including chairman of the state National Oil Corporation (NOC), Mustafa Sanallah, say that the number of PFG men is highly inflated and put it at around 1,000 men only, suggesting that Jadhran is in effect simply blackmailing the GNA for money in return for lifting his blockade.

The GNA may now be left with no choice but to negotiate and reconcile with Haftar on a deal that would allow a resumption of oil exports

The fact that Haftar's forces were able to overrun Jadhran's PFG with mighty ease on 11 September, suggests that the PFG's force has indeed been highly exaggerated in strength and numbers. This in turn indicates that the GNA made a strategic mistake in striking a deal with the head of the PFG.

The GNA is now also faced with the dilemma of where and who to turn to in the near future for the guarding of oil installations, after the deal with the PFG has been left in tatters by Haftar's forces' latest move. The GNA may now be left with no choice but to negotiate and reconcile with Haftar on a deal that would allow a resumption of oil exports. This could essentially be the aim Haftar had in mind when he decided to move on the oil ports.

The position of the international community on Haftar's move on the oil ports last Sunday is also somewhat ambivalent, to say the least. How could western countries like France, the US and the UK not see the Haftar forces advancing on the ports and not have issued a stern warning against the move, or applied political pressure on Haftar to discourage him?

However, the USA, along with France, Italy, UK, Spain and Germany did issue a joint statement the day after on Monday 12 September condemning the attacks on the four oil ports, and reiterating that the GNA and forces loyal to it are the only side that should be in charge of the oil installations. The statement also went on to say "we call for all military forces that have moved into the oil crescent to withdraw immediately, without preconditions". 

Now, partly controlling the vital oil card, Haftar will find himself in an even stronger position to exert more pressure on his opponents in his quest for power

Haftar, however, is unlikely to heed international community calls for withdrawal unless the Security Council takes a stronger position on the matter and utilise its resolution 2259 (2015), which stipulates imposing sanctions on those who obstruct implementing the political agreement in Libya.

Strong action by the UN against Haftar is also unlikely, though, as long as both France and Russia are continuing to covertly support him, even though they claim publicly that they only recognise and support the GNA as the sole legitimate government in Libya.

Haftar has so far, with some success, used the narrative and emotive issue of fighting terrorism to pursue and build support for his political ambitions. Now, partly controlling the vital oil card he will find himself in an even stronger position to exert more pressure on his opponents in his quest for power.

The Libyan conflict, and the suffering of ordinary Libyans along with it, is likely to continue unless the question of what to do with Haftar is answered.

Potential solutions may involve him being accommodated in a political arrangement where he can still play a military role under the GNA, which does not allow him to jeopardise the vision of building a democratic state based on state institutions and rule of law.

Alternatively, a deal with his regional backers, of whom Egypt is clearly the main one, may be sought, in which they are persuaded that their medium and long-term interests are in a stable united Libya. This would see 75-year old Haftar play less of such a divisive and disruptive role.

Guma El-Gamaty is a Libyan academic and politician who heads the Taghyeer Party in Libya and a member of the UN-backed Libyan political dialogue process.

Follow him on Twitter: @Guma_el_gamaty

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.