By Rauf Mammadov
Moscow and Ankara are vying for influence in Libya, but their competing economic interests could collide.
The Libyan civil war has become a battlefield where many regional and external players have taken sides. It is also the second conflict zone after Syria where Turkey and Russia’s interests have collided.
As Moscow and Ankara pursue their strategic interests in Libya it is important not to underestimate the economic incentives, especially since their objectives overlap.
Russia and Turkey have sunk billions into pre-and post-Gaddafi Libya, and both are hoping to recoup these investments by becoming major players in the conflict’s political resolution.
Turkey has historically been active in Libya’s business sector throughout former dictator Muammar Gaddafi’s rule, with the construction sector the most attractive area for Ankara’s investments. Libya was the first foreign country that Turkey’s Contractor’s Union, the TMB, invested in back in 1972.
From then until 2020, major Turkish construction companies such as Dogus, Enka and others have undertaken projects valued at $29 billion, making Libya the third country in Turkish construction investments following Russia and Turkmenistan.
Turkish companies are aiming to return to Libya when the political environment is conducive to do so. According to the Mustafa Karanfil, chairman of the Turkey-Libya Council of the Foreign Economic Relations Board of Turkey (DEIK), Turkish investors aim to harness $120 billion worth of investments.
Karanfil also noted around $19 billion worth of unfinished projects in Libya and a total of $4 billion in receivables due to losses, including collateral, machinery and equipment.
Russia’s economic engagement in Libya, on the other hand, has mainly been in the energy sector. Russian companies such as Gazprom, Lukoil, and Tatneft were active in the country before Gaddafi’s demise. Tatneft and Gazprom signed exploration and development deals in the country in the 2000s.
In 2008, Putin became the first Russian president to visit Tripoli, where he signed numerous contracts for economic, technical, and military cooperation reportedly worth $10 billion.
In the post-Gaddafi period, Russian companies have tried to return to Libya. In 2017, Russian oil giant Rosneft signed a deal to purchase oil from Libya’s National Oil Corporation (NOC) using a long-term prepayment model similar to transactions made in Venezuela and Iraqi Kurdistan.
Moscow is also looking for ways to compensate for the losses it faced following the overthrow of Gaddafi. Russia expects to make $150 million from construction projects, $3 billion from railway construction, $4 billion from arms sales, and up to $3.5 billion from energy deals in Libya.
Turkey’s more active engagement in Libya’s oil and gas industry could spoil Russia’s plans, both on the ground and tactically. For instance, last December, Tatneft announced that it was resuming exploration activities in the Hamada basin. Since then the territory has come under full control of the Turkey-backed Government of National Accord (GNA).
Although Tatneft agreed its return to Libya with Libya’s National Oil Corporation (NOC), whose legitimacy the Tripoli-based government supports, it will be difficult to blame the GNA if the latter decides to inhibit the Russian company’s engagement in its territories, given reports about the presence of Russian mercenaries in the oil and gas fields controlled by the Libyan National Army (LNA).
Ankara’s active engagement in Libya’s territorial waters could also derail Moscow’s plans to strengthen its positions in the Mediterranean basin. By hoping to gain ground in a future Libyan government, Moscow was aiming to expand its influence over southern Europe – a significant customer for North African oil exports, and also an increasingly competitive market.
Turkey’s maritime agreement with Libya and its interest in developing oil and gas fields in Libya’s territorial waters pose a threat to Moscow’s plans.
Turkey’s maritime agreement with the internationally recognised Tripoli-based government, followed by military successes against General Khalifa Haftar’s LNA,will undoubtedly enhance Ankara’s position in getting more business opportunities in the country, including in the oil and gas sectors.
Russian energy companies’ agreements with Libya’s NOC will still preserve their legitimacy. However, reports on Russian private military companies (PMC) in Libyan oil fields could impact Moscow’s relations with the NOC and challenge the return of Russian companies to Libya.
Rauf Mammadov is resident scholar on energy policy at The Middle East Institute and senior adviser at the Gulf State Analytics. He focuses on issues of energy security, global energy industry trends, as well as energy relations between the Middle East, Central Asia and South Caucasus.
Russia moves to secure its investment in Libya
By Judah Waxelbaum
Mercenaries with ties to Kremlin seize oil fields, complicating a wide variety of conflicts.
In a move that illustrates new levels of boldness, Russian fighters have seized one of the largest oil fields in Libya.
The Es Sider oil field was one of the main economic pipelines for the Government of National Accord. Over the last seven months, the Libyan National Army (LNA) has held a stranglehold on oil exports.
The LNA, led by Field Marshal Khalifa Haftar, has struggled militarily as of late, suffering defeat after defeat since June. Now the LNA is looking to negotiate using the oil fields for leverage, effectively keeping the economy hostage. Libyan oil exports have been reduced to around a tenth of their original production.
Over the last month, Haftar’s allies have taken further steps to save their investment from failure. Egypt’s parliament approved the deployment of troops into eastern Libya, making Egyptian President Abdel Fattah el-Sisi’s threat of violence all the more real. Egypt’s involvement is political; it holds a deep resentment toward the GNA’s Muslim Brotherhood roots.
Russia, on the other hand, is looking for influence and oil. Russia’s increasing involvement in Libya complicates a wide variety of conflicts. Turkey is the primary backer of the GNA. Russia sells arms to Turkey and is already supporting the Syrian government, which has regularly been at odds with Turkey over Northern Syria. Russia’s support of the LNA puts them in direct conflict with Turkey on another front.
While this move benefits Haftar and the LNA, Russia is protecting itself. Securing the oil fields ensures that Russia can push for access no matter who wins the civil war.
The United States is well aware of these actions, moving to sanction the group responsible for the seizure. The Wagner Group is responsible for taking over the Es Sider oil field and port, and reports indicate it has set up camp to monitor its new asset. The Kremlin has not taken credit or commented on these actions thus far.
It should be noted that Es Sider is responsible and influences the oil production for the US-based Hess Corporation and ConocoPhillips along with one of the largest energy producers in Spain, Repsol.
Haftar’s economic strategy has been successful thus far. He seeks to deprive the UN-recognized government of critical funds and make eastern Libya the financial capital. Where he is overstepping is by taking actions that will eventually force an international response.
Countries will continue to look on as the UN arms embargo is violated, and foreign interference only increases. It is the financial impact that will lead to sanctions and demand nations that have avoided the fray to pick sides.
The US has considered sanctioning Haftar personally. The US has drawn down its presence in Libya since the fall of longtime dictator Muammar Gaddafi. The Russians threaten that reduced presence, as the US would be unlikely to support increased Russian influence in Libya. It is unclear if threats of sanctions will result in a reconsideration of actions by the LNA or drive them further into Russian arms.
Haftar surrounded himself with allies who are more invested in siding with the winner than him. That is a dangerous position to be in if you are Khalifa Haftar.
Typically, partners of the GNA or LNA would supply resources for their armies to carry out attacks. By Russian forces taking the oil field by their own volition, Moscow conclusively has proven it is not in Libya to prop up a Haftar presidency. The Russians are in Libya for oil, the French to eliminate terrorist groups, and Egypt to fight the Muslim Brotherhood. At the rate of recent escalations, this proxy war drifts toward a direct international conflict, and it is over resources, not love for Haftar.
Judah Waxelbaum is the western regional vice chair for the College Republican National Committee.
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