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World Bank: Libya Near Collapse

Democratic Arab Center

The World Bank issued a report last month, warning that Libya is on the verge of collapse, with the recent Tripoli coup attempt driving down oil production once again, and with hard currency reserves plunging as a result. According to the latest data released by the Libyan National Oil Company (LNOC), production is back down to 551,000 barrels a day. The Chairman of the LNOC, Mustafa Suna’a-Allah, had optimistically projected that production could reach a steady 900,000 barrels a day by the end of 2016. That was after General Khalifa Haftar’s Libyan National Army seized control of three key oil ports and vowed to honor the Libyan Political Agreement, which specified that the LNOC would manage all oil production and the funds would be managed by the Central Bank of Libya.

After initial oil transactions with Italy and France were conducted on that basis, the former Libyan Prime Minister Khalifa al-Ghwell carried out a coup attempt last month against the Government of National Accord (GNA), headed by acting prime minister al-Sarraj, throwing the entire situation back into chaos and uncertainty.

Now, the World Bank warns that it will take until 2020 before Libya can restore oil production to 1.6 million barrels a day, which was the level prior to the 2011 revolt and overthrow of the Qaddafi government. While Libya’s hard currency reserves were at $107.6 billion in 2013, the loss of an estimated $100 billion in oil revenue has burned through more than half of the reserves, which are now reduced to $43 billion. If the projections of low oil production (and low global oil prices) prove accurate, Libya will run out of cash very rapidly.

While the international community continues to recognize the Libyan Political Agreement and the Government of National Accord as the legitimate government of the country, the situation inside Libya is radically different. The GNA was forced to leave Tripoli, and is now operating out of a hotel in Tunisia. The House of Representatives, based in Tobruk, refuses to recognize the GNA or the al-Ghwell self-proclaimed Government of National Salvation (GNS). Now, the Misurata militias have formed a political assembly, which claims to seek to forge a unity agreement with all the actual power holders in the country. The Misurata militias are in the final phase of military operations to drive the Islamic State (ISIL) forces completely out of their coastal enclave at Sirte.

There are now an estimated 100-200 ISIL fighters still holed up in an area of Sirte that is less than one square kilometer.  After initially halting air operations in support of the Misurata militias, the United States has now resumed limited bombing operations against Sirte, under the name Operation Odyssey Lightening. This came at the request of the GNA. Since the US launched the air support actions in August, the Americans have conducted 360 air strikes against the ISIL targets in Sirte.

This month, the International Crisis Group (ICG) produced a report, calling for an overhaul of the now-failed Libyan Political Agreement, taking into account the emergence of the military forces that were not involved in the Morocco talks leading to the LPA, but which are now major players in the ongoing struggle.

On October 31, US Secretary of State John Kerry and British Foreign Secretary Boris Johnson convened an emergency summit in London, aimed at forging an agreement among the major foreign actors in Libya on how to bolster the GNA and move the situation forward. The meeting was attended by officials from France, Italy, the UAE, and Saudi Arabia. Acting prime minister al-Sarraj met with the delegates.

After the meeting, al-Sarraj gave an interview to the Libyan Herald, in which he cast a broad net of criticism. He charged that the international coalition, supposedly backing the GNA, was operating off of its own agenda, particularly the United States and European participants. They, he argued, are almost exclusively focused on the counter-terrorism and refugee issues. He also attacked major Libyan actors, including the head of the House of Representatives Aqueela Saleh, who has refused to recognize the legitimacy of the GNA; General Haftar; Central Bank of Libya Governor Al-Seddiq Al-Kabeer; and Grand Mufti Al-Sadeq Al-Gheriani.  He accused all of them of undermining the legitimacy of the GNA.

Al-Sarraj’s criticism of the foreign players is not without merit.  For Washington, Paris, and London, the intervention into Libya has always been about preventing the Islamic State from establishing a beachhead in North Africa, where the ISIL leadership could regroup, following the eventual fall of Mosul and Raqqa. And for Europe, particularly for Italy, Greece, Spain, and France, the threat of a new surge of refugees, fleeing new ISIL atrocities in Libya, Tunisia, and Algeria, is paramount.

Once the siege of Sirte has ended and the ISIL fighters have either been killed or have escaped, the immediate question is: Will the Misurata militia force move eastward to attack General Haftar’s forces, which have wiped out most of the rival militias in the Benghazi area? Or, will General Haftar march his forces west, to attempt to take over Tripoli?  In recent weeks, the United Nations Special Envoy for Libya Martin Kobler and human rights groups have assailed General Haftar for carrying out assassinations, including revenge killings of rival militia leaders in Benghazi.

 The London meeting aimed at putting international pressure on all of the key internal factions in order to resume efforts at achieving some kind of national unity agreement. On November 7, an African Union summit on Libya took place in Addis Ababa, attended by representatives from Libya, Congo, Uganda, Egypt, Sudan, Chad, Algeria, Niger, and Tunisia.

What is so far lacking, from both the international community and the major warring factions inside Libya, is a genuine commitment to actually forge a ruling coalition with representation from all of the regional and tribal factions. None of the military leaders, including General Haftar, are capable of governing the country in any effective fashion. In the absence of a genuine power-sharing deal, forged by the real players on the ground, representing both the east and the west of the country, the chaos is likely to continue, and the World Bank warnings will prove accurate.

Source : Middle East Briefing

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