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The Geopolitics of Natural Resources in Libya in the post-Gaddafi era.

Geopolitics of Natural Resource Disputes

The Geopolitics of Natural Resources in Libya in the post-Gaddafi era.

Author: Matteo Natalucci 

Date: 02/05/2016

The fall of Gadhafi regime in 2011 provoked a prolonged standoff between government-aligned forces and local militias and tribes for the control of the territory. Indeed, until recent days, multiple competing forces have been disputing its land and hydrocarbons resources. Arguably, in the post-Gaddafi era, Libya has come back to pre-colonial regional structure. Hence, to understand the geopolitics of its natural resource, the paper will first analyze the origins of the three Libyan regions highlighting the roots of current regional political fragmentation. Then, the research will provide a detailed analysis of Libyan contemporary history identifying the key stakeholders involved in the dispute. Lastly, the research will provide an evaluation of Libyan hydrocarbons resources focusing on the evolution and the geographical distribution of oil and gas in the region. Overall, the paper will provide a geopolitical assessment of hydrocarbons resources dispute in Libya in the post-Gaddafi era.

Geographically, Libya is set in the Maghreb region of North Africa bordered by the Mediterranean Sea to the north, Sudan to the southeast, Algeria and Tunisia to the west, Egypt to the east, and Chad and Niger to the south. Libya is the fourth largest country in Africa, with an area of 680.000 square miles (UN, 2003). About 95% of its extensive territory consists of desert and pre-desert steppe (Wright, 2012). The remaining 5% of the land is suitable for cultivation, yet barely 0.5% is farmed because of both climate restrictions and water scarcity in the region (Wright, 2012). As a result, farming activity is restricted to the coastal area of northern Cyrenaica and Tripolitania (FAO,2011).

In order to understand the geopolitics of its natural resource, it is first critical to assess the development of the regional divisions in the area.  Indeed, the modern state of Libya is a political form imposed upon indigenous North African social structure of tribes and clans. Wright sustained: “History has been imposed on Libya” meaning that since its very origin Libya has always been perceived has a blank space or ‘cultural void’ between the more prosperous Egypt and the Maghreb (2012,p.1). Today’s geographical ‘concept’ of Libya is rather a modern idea. For instance, for centuries, the ancient Greeks labeled 'Libyie' the entire regions posed on the west of Egypt (Wright,2012). It was not until 1934, with the Italian colonization of Tripolitania and Cyrenaica, that the two regions were united in a unique colony of Libya (Wright,2012). Finally, in 1951, the independent United Kingdom of Libya was established comprising all the actual regions of Tripolitania, Cyrenaica, and Fezzan. Hence, to understand the regional political fragmentation of post-Gaddafi Libya, it is first critical to comprehend the different origins of the three Libyan regions.

The original populations inhabiting Fezzan were ethnic Garamantes (Berber). Garamantes migrated into the Fezzan from the Middle East in the 1000 BC and were a local power in the Sahara area until the 700AD (Dupree, 1958). In the 5th century BC, Herodotus described them as “a very great nation” of farmer and merchants (440BC,p.182). However, water resources depletion caused the decline of the Garamantian nation (Beaumont,2011). Indeed, as the Garamantian were mostly relying on fossil water for irrigation, once this non-renewable resource was depleted, the kingdom imploded creating low-level regional conflicts with Arab tribes (Wright, 2012).  Hence, Berber populations were forced to settle in more prosperous regions in the North and East of Libya and become passive survivors of the passage of foreign people rather than active hegemonic force in the region (Wright,2012).

The earliest foreign powers to settle in Libya were the Phoenicians in the first Millennium BC.  The Phoenicians established three major cities Oea (today’s Tripoli), Labdah and Sabratah on the North West coast of Libya (Halsall,1998). This region then took the name of Tri-Polis and later Tripolitania from the Greek terms τρείς (three) and πόλις (cities).  In the seventh century BC, the Ancient Greeks colonized the Eastern coasts of Libya and founded the city of Cyrene (from which later the region would derive its name: Cyrenaica) (Boardman,1966). Indeed, while the Tripoli region was always oriented toward the wealthy civilization of Carthage in Tunisia, Cyrenaica was closer to Alexandria in Egypt (Kaplam,2012). Arguably, the historical legacies of this original colonial division between these two hegemonic powers constituted a substantial obstacle for Libyan political unity creating secular fragmentation and conflicts. Also, geography played a significant role in creating division between Tripolitania and Cyrenaica. In fact, the desert of Sirtica functioned for centuries as an impervious natural barrier that hindered cultural interaction between the two regions (Török,2012 and Appendix 2).

The history of Libya could be considered, even by Middle Eastern standards, an ‘extraordinary odyssey’ (Vandewalle,2006). Indeed, Libya’s ancient history was characterized by an endless succession of military occupations by foreign powers namely the Phoenician, Greek, Roman, Egyptian, Arabic and Persian. Foreign rulers always treated Libyan regions as separate entities. Indeed, for centuries, both Cyrenaica and Tripolitania were more closely linked with neighboring territories than with each other. For instance, the Ottomans recognized Tripolitania and Cyrenaica as separate provinces of the Empire. Only in 1934, under the Italian colonization, the regions were first unified to form a single colony, which then in 1951 became the independent United Kingdom of Libya lead by King Idris I. Few years later, secular nationalist military officers quickly replaced the Kingship put in place by colonial authorities in Libya (Fukuyama,2011). Indeed, in 1969, a military coup lead by Colonel Gaddafi overthrew King Idris I, beginning the ‘Al Fateh Revolution’ (Vandewalle,2006).

Once ascended to power, Gaddafi centralized the authority executive authority and introduced state socialism by nationalizing most of the economic sectors such as the oil and gas industry (Fukuyama, 2011). Also, to overcome Libyan regional division Gaddafi imposed the Jamahiriya system of governance (Myers, 2013). The Jamahiriya system, based on Gaddafi's theories outlined in The Green Book, attempted to integrate regional stakeholders in his decision-making process through active consultation of about 2,000 local ‘people's committees’ (Myers, 2013). These committees had the power to raise local-level political issues to the attention of the centralized authority executive and influence the outcomes of national decisions (Myers, 2013). Since February 2011, on the boost of the Arab Spring, a full-scale revolt break out in Benghazi, spreading across Libya and leading to escalating clashes between anti-Gaddafi rebels and Government security forces (Prashad, 2012). In March 2011, the United Nations Security Council (UNSC) authorized NATO to enforce a ‘no-fly zone’ over Libya to protect civilians. On 20 October 2011, rebel forces, supported by NATO’s air power, occupied Sirte capturing and murdering Colonel Gadhafi (Kuperman, 2013). Three days later, the National Transitional Council (NTC) proclaimed the official ‘liberation’ of Libya and announced their plans to hold democratic elections within eight months (Chivvis, 2012).

On 7 July 2012, the National Transitional Council organized parliamentary elections to elect the 200 interim members of the General National Congress (CNG) (Pack, 2013). The election was won by the National Forces Alliance (NFA) with 48.1% of the vote, followed by the Justice and Construction Party (JCP) with just 10.3% (Pack, 2013). On 8 August, the NTC handed out power to the General National Congress (CNG), which elected its chairman Mohammed Magarief of the liberal National Front Party as interim Head of State. In October, after long discussions, the CNG appointed the Liberal Ali Zeidan as Prime Minister. However, the GNG government struggled to control local armed militias affiliated with distinct regions, cities and tribes, which felt not represented by the Central Government and continued to exercise their authority over the regions (Pack, 2013). Indeed, the 24th of April NTC amendment to the Libyan electoral law, which excluded former Gadhafi officials, tribal and religious affiliated parties from the election, triggered regional hostility against the GNC all across the Nation (Engel, 2015). Arguably, excluding key tribal and local stakeholders from the election process substantially undermined the democratization process and GNC government legitimacy.

In June 2014, the Council of Deputies, a new legislative body, intended to replace the GNC, hold controversial elections characterized by a low turnout (about 18%) and deadly violence (Engel, 2015). The Nationalist and liberals came out victorious from the election, significantly defeating Islamist parties. However, the GNC unilaterally did not recognize the new Council of Deputies and refused to disband after its mandate expired. Also, armed militias supporting the GNC occupied Tripoli, forcing the newly elected Council to escape to Tobruk (Engel, 2015). As a result, tensions radically escalated all over the country with protests against the General National Congress (Engel, 2015).

Since then, the conflict between the two rival parliaments made Libya descends back in a de facto civil war. Indeed, more than 2 million Libyans (1/3 of the total population) were affected by the escalation in fighting, with over 454,000 Libyans internally displaced since November 2014 (IDMC, 2015). Also, Tribal militias and jihadist took advantage of the vacuum of power and seized control over Libyan territory. For instance, the Islamic State (IS) occupied roughly 180 miles of coastline around Sirte, becoming the third ‘contender’ in Libya (Economist, 2016). The situation was such to be described by the British special envoy to Libya, Jonathan Powell, as “a honey pot for VEOs such as al-Qaeda in the Islamic State and even Boko Haram” (Engel, 2015, p.1).

During 2015, the UN attempted to find a peaceful agreement between the rival parties in Libya. However, only in December 2015, the imminent threat of a IS advance hastened the creation of a fourth ‘contender’ to power in Libya: the Government of National Accord (GNA) (Economist, 2016). The GNA, sponsored by the UN, is the result of a political accord signed in Skhirat, Morocco, by a part of the warring parties. Under this agreement, members of the old Islamist-tinged parliament in Tripoli can now join an advisory body labeled the State Council. Arguably, this body resemble some similarities with Gadhafi’s Jamahiriya ‘people's committees’ system of governance. While this State Council could potentially reconcile forces in Tripolitania, it is creating tension in Cyrenaica. Indeed, the internationally recognized House of Representative in Tobruk lacked the super-majority required for the approval of the Skhirat agreements (Economist, 2016). As a result, European Sanctions were imposed on Libyan foot-dragging leaders to speed up the process (Economist, 2016). Whether these sanctions will be effective is not sure, but they show western strong commitment to support Skhirat agreements. However, despite the UNSC recognized the GNA as the sole legitimate government of Libya; they still lack widespread support over the region. An evidence of this is the fact that, on 30 March, when the GNA leaders left Tunisia for Tripoli they traveled by boat for fear of being shot-down in Tripolitania airspace by local militias (Economist, 2016).

The GNA could now rely on both its international recognition and Sovereign Wealth Fund financial assets to spark its campaign. In fact, the GNA, lead by the Prime Minister Al-Serraj, now control the few remaining State’s functioning intuitions such as the National Oil Firm, Libya’s Central Bank, and Sovereign Wealth Fund, which held about US$56 billion in assets around the world (Washington Post, 2016). Certainly, this substantial capitals injection will allow the GNA government partially to decrease the economic tension and to tackle the rampant unemployment. However, these assets may not be enough to recover Libyan economy. The IMF estimated that, on the current trajectory, Libya would deplete its finances by 2019(IMF, 2016). In fact, hydrocarbons exports, which account for than 70% of Libyan GDP and 95% of total exports, have fallen to less than ¼ of pre-revolution outputs (IMF, 2016). The future of Libya is closely linked to its hydrocarbons industry outlook. Hence, it is now critical to assess the geopolitics of Libyan hydrocarbons resources.

Natural resources such as oil and natural gas play a crucial role in shaping Libyan internal dynamics. Indeed, Libya holds the largest amount of proved crude oil reserves (about 48.4 billion barrels) and the fifth-largest amount of proved natural gas reserves in Africa (EIA, 2015). In particular, Libyan oil, like that of Saudi Arabia, is light-sweet crude oil with less than 0.42% of sulfur chemical components (Fattouh, 2010). Because sulfur is corrosive, light-sweet crude oil is cheaper to extract, and easier to transport and refine (Fattouh, 2010). For instance, the cost of producing one barrel of oil is $23.80 in Libya against $52.50 in the United Kingdom (CNN Money, 2015). Consequently, because of its high-profit margins, Libyan oil has been particularly appealing to international oil companies.

In 1961, Libya began exporting oil mostly to European Markets (EIA, 2015). The following year, Libya joined the Organization of the Petroleum Exporting Countries (OPEC) and for almost half a century was a significant contributor to the global supply of light sweet crude oil (EIA, 2015). For instance, in 2010, Libya was producing about 1.65 million barrels per day (b/d) of crude oil and 594 billion cubic feet (bcf) of natural gas (EIA, 2015).  However, during the 2011 conflict, Libya’s hydrocarbon exports suffered a near-total disruption, and the marginal residual production was mostly consumed domestically (EIA, 2015).

In 2011, after Gadhafi regime capitalized, Libyan hydrocarbon production and exports rebounded rapidly returning to near pre-war levels by mid-2012 (IMF, 2012). The post-conflict euphoria and confidence in a quick recovery lead the new Libyan authorities to spend heavily on post-war reconstruction, welfare subsidies and to inflate the security sector (IMF, 2012). Indeed, Libyan government’s operational budget doubled in the first three-quarters following the Gadhafi fall (IMF, 2012). However, optimism about a rapid post-war recovery was brief. In fact, by the end of July 2013, both internal turmoil and hydrocarbon management disputes provoked numerous oil and gas facilities forced shutdowns. As a result, in 2014, Libya exported an average of 375,000 barrel per day (b/d) of crude oil, about 28% of 2012 level of production, and a similar amount of the 400,000 b/d produced during the civil war (EIA, 2015). Meaning that the internal struggle for the control of the region did not end with the overthrown of Gadhafi, yet it escalated into fragmented micro-conflicts that since mid-2013 have been substantial curtailing Libyan oil production. In fact, the absence lack of a cohesive government and loyal armed forces, exposed to attacks and stoppages about 10,000km of oil and gas pipelines and dozens of production facilities all across Libya (OPEC, 2013).

Since the Gadhafi regime fall in 2011, the prolonged standoff between government-aligned forces and local stakeholders has significantly impacted Libyan oil and gas exports. In particular, militias have been organizing labor strikes and armed takeovers of oil and gas facilities seeking  ‘usufructuary’ rents from the fledging central government (International Crisis Group, 2015). For instance, since mid-2013, the Petroleum Facilities Guard (PFG), a militia that was previously responsible for defending key energy infrastructures, has been gaining national political influence and income from the control of critical oil and gas installations and pipelines (International Crisis Group, 2015). For instance, in May 2013, the PFG, to get funding from the Oil Minister Abdelbari al-Arusi, blocked the pipeline crossing from the Sharara field to the coast, stopping the flow of some 400,000 b/d of crude oil (International Crisis Group, 2015). Interestingly, this kind of ‘usufructuary’ oil rents claims, which developed in the post-Gadhafi era, seems to have origins in African tribal concept of kinship and private property. Indeed, Fukuyama sustained that in pre-colonial Africa property was held not by individuals but by lineages or kin groups (2011). As a kind of modern 'trust', property rights were generally considered ‘usufructuary’ meaning that the beneficiary of the revenue generating from the land needed to pay tributes to the Tribe (Fukuyama, 2011). Arguably, the lack of a strong central authority meant the return of tribal property rights practices over large parts of Libya.

In order to understand the geopolitics of natural resource dispute in Libya, it is critical to assess the geographical distribution of oil and gas resources in the region. Indeed, as Kaplan sustained: “Geography (…) is not synonymous with Fatalism. But it is, (…), a major constraint on-and instigator of-the action of States” (Kaplan, 2012, p.29). Indeed, two-thirds of Libyan hydrocarbon production derives from the East (Cyrenaica), a quarter from the South-West (Fezzan) and the residue from offshore facilities in Tripolitania (International Crisis Group, 2015). Also, 80% of refineries and five of six export terminals are set in the Cyrenaica region (International Crisis Group, 2015). Moreover, while Tripolitania hydrocarbons are mostly extracted from offshore drilling facilities and exported via underwater pipelines that armed groups or protesters can not reach, Eastern terminals are a key geopolitical chock point for Libyan hydrocarbon national production. In fact, eastern terminals closures triggered by self-proclaimed “federalist” Cyrenaica groups, seeking a share of oil revenue, have been causing disastrous repercussion on Libyan oil exports (Lachera, 2016).

The federalist movement, revived in Cyrenaica after the 2011 revolution, wants Libya to become a federal state with strong regional autonomies (Sengupta, 2012). Interestingly, a report issued by the International Foundation for Electoral Systems (IFES) in 2013, discovered that Benghazi voters largely rejected a centralized system of governance preferring an administrative federalism system (IFES, 2013). As about two-thirds of Libyan hydrocarbon production derives from the East, Cyrenaica would have much to gain from a federal State with a strong regional based fiscal autonomy. While a Federalist solutions could probably solve ethnic tensions, it is highly unlikely both Tripolitania and Fezzan region would approve such agreement as it would drastically reduce their public funding revenues.

In conclusion, the future of Libya is closely linked to its hydrocarbons industry outlook. Indeed, tribal militias and jihadist took advantage of the post-revolution vacuum of power and seized control over key Libyan oil and gas assets.  Both the GNA and Libyan future depends upon the government ability to regain control of critical hydrocarbons production and distribution facilities. However, the GNA still lacks wide support over the region and has a number multiple competing forces disputing its authority. All in all, to bring stability in the area, it is crucial that Libya will unify in a single entity able both to exercise authority over its territory and safeguard regional interests.

 

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