NARCO Analysis May 2014

Wednesday, May 28, 2014

It’s taken me longer than I hoped to get out a Libya note, but travel and tending to clients took priority. Just a couple of quick thoughts on Libyan politics, the hydrocarbons sector, and regional ramifications.

It’s well known by now that on 16 May retired general Khalifa Haftar launched a campaign with a coalition of members of the Libyan military (such as it is) that allegedly intends to eliminate terrorism and restore stability in Libya. Simultaneously, but separately, a militia from Zintan attacked the General National Congress (GNC) and declared it defunct. Since then, Libyan nights have been marred with violence. Days see volleys of accusations from different groups – the erstwhile government in Tripoli, regional militias, political parties including the Muslim Brotherhood-affiliated Justice and Construction Party, and extremist groups like Ansar al-Sharia – each trying to portray themselves as having been wronged and as the real voice of Libyans’ aspirations.

Leaving aside the political dimension for the moment, there are tactical and strategic problems with the current confrontation. On the tactical level, the disparate parties attacking one another are roughly evenly armed. And even if one side is capable of winning a conventional campaign, its antagonists’ ability to retaliate asymmetrically will remain intact. In other words, even if Haftar achieves an overt victory, a covert conflict will continue to destabilize Libya for the foreseeable future.

On the strategic level, Haftar’s goals are too general: combating terrorism (if that is in fact what he is doing) is more than superior firepower; it means shaping the environment to make turning to terrorism unappealing. While there is genuine frustration in Libya with the current insecurity, it is unlikely that enough Libyans will rally behind Haftar or the junta he intends to install in order to allow them to implement the political and economic policies Libya requires to shift the environment from one that accommodates terrorism to one that is hostile to it.

On the political front, it is almost silly to think much about the newly installed government of Prime Minister Ahmad Maitiq. The prime minister’s office lost any meaning two prime ministers ago, and on top of that, the process whereby Maitiq was elected illustrated perversion of parliamentary procedures rather than respect for them. It is equally silly to invest much analysis in upcoming parliamentary elections that would bring a new roster of GNC members to Tripoli or in the goings on of the stillborn constitutional committee. None of these transitional institutions has the legitimacy or capacity to function as a vehicle of popular political participation and thereby as the mechanism for restoring Libya’s political stability.

The implications for the hydrocarbons sector are plain. For explorers, there is no delta. They curtailed their activities long ago and the current situation only reinforces their decision to have done so. For producers, however, Haftar’s campaign and Maitiq’s shotgun election is likely to result in renewed disruption of upstream activity and closure of export terminals. In fact, federalist leader Ibrahim al-Jadhran, who had negotiated an agreement with former prime minister Abdallah al-Thinni to reopen terminals he had blockaded, has already hinted that he will reneg on the deal and close two of the terminals that he had reopened (Zueitina and Hariqa). There is now very little prospect of him reopening Ras Lanuf and Es-Sider. Over the long term, if Haftar emerges victorious, al-Jadhran may reopen the four terminals under his control if he is able to negotiate a satisfactory agreement with Haftar’s government, but other oil and gas installations would be vulnerable to disruption by Haftar’s opponents. Additionally, sector leadership is in flux. Omar Shakmak is currently Acting Minister of Oil and Gas and Mustafa Sanallah has taken over from Nouri Berouin as Chairman of the National Oil Corporation. In short, the restoration of Libyan production and exports is now much further off than it was two weeks ago.

As for regional ramifications, I’ll leave the implications for Egypt to the Egypt experts. On the Algerian side, Algeria has once again officially invoked its principal of non-interference, but to be sure Algiers is watching the situation closely. For the moment, however, the likelihood of spillover into Algeria is low. The current conflict in Libya is about Libya – it is about control of the state and does not include a cross-border component. There is a remote possibility that groups being targeted by Haftar could retreat beyond Libya’s borders, but even then Egypt would be a more likely candidate than Algeria, at least for the time being. Over the longer term, though, protracted instability in Libya will pose real challenges for Algeria – Libya could become training ground for jihadi organizations that are intent on targeting governments they deem to be insufficiently Islamic, including Algeria. Such a threat is not imminent, but it is more than possible, especially if fears about North African foreign fighters in Syria eventually returning home are borne out.


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