By Ethan Chorin and Monem Alyaser

Just as oil and gas wealth were the pillars of Col. Muammar Gaddafi’s brutal rentier state, they are at the heart of the civil conflict raging in Libya – demonstrated recently by an escalating battle over storage depots and lifting ports in the country’s oil-rich East, and rumors of an imminent siege of Libya’s former capital city of Tripoli, which threatens full-blown civil war.

Libya’s oil production, which was up to 800,000 bpd in October, has fallen in the last few days to (optimistically) 350,000 bpd, and will likely go much lower.

Since the 2011 revolution, oil wealth has perversely, and copiously, flowed through Libya’s Central Bank, to pay more than $10 billion annually to a myriad of militias, extremist brigades and criminal gangs, who consistently thwart the efforts of Libya’s popularly elected governments to impose central control.

Victims of Libya’s radiating chaos include other resource-rich countries like Algeria (the site of the In Amenas gas facility attack in 2013), Mali (which was nearly overrun by Al Qaeda-affiliates the same year, with weapons imported from Libya), Nigeria (where Boko Haram is undermining that oil-state’s stability), and Niger (home to significant uranium deposits). Libya’s instability radiates arms and ideology back to the rest of the Middle East.

Tunisia’s profile as perhaps the only ‘Arab Spring’ success story is endangered by the failure of what might have been a similar success in Libya, had the West applied sufficient resources and pressure to realize a UN-backed post-intervention stabilization effort.

In the country’s oil-rich East, Libya’s popularly elected and internationally sanctioned government, split between Tobruk (site of the House of Representatives, or Parliament) and Al Beida (seat of the Prime Minister and Cabinet), sits in the shadows of a war between Libya Dawn (a collection of militias of varying persuasions, some secular, some so-called ‘Islamists,’ most unified in their belief in a conspiracy to return elements of the former Gaddafi regime to power) and the Libyan Army, headed by Gen. Khalifa Haftar. The Libya Dawn-appointed pretender government, based in Tripoli and headed by Omar al Hasi, has formed a new body to consolidate command over militias in the West, while menacing refineries in the East, and seeking to control less important resources in Libya’s South.

Gen. Haftar, an ex-Gaddafi officer whose reincarnation dates to last May, has openly declared war on all extremist militias. Libya Dawn sees Haftar as a key conspirator; from Haftar’s perspective, Libya Dawn is an affront to his generation’s ‘Dignity,’ the title he’s given his campaign of national liberation, supported by key Western regional-tribal militias such as the Zintani and Warshafana.

The free-for-all engulfing the country has given movements formerly on the fringe in Libya, like ISIS and Al Qaeda, an opening to set up training camps, projecting arms and ideology into North and Sub-Saharan Africa.

Abdullah Al Thinni’s popularly elected government, which is in some disarray, Al Hasi’s group, and a separatist group headed by Ibrahim Jadran (formerly in charge protecting Libya’s eastern oil assets), are locked in a battle over control of Libya’s physical oil and gas resources, its National Oil Company, the Central Bank and Libya’s sovereign wealth funds.

Already there are signs of a possible split in the Central Bank’s leadership, with the Tripoli-based, deposed governor Sadik Kabir allegedly refusing to release funds to the Al Thinni government, and his House of Representatives-appointed replacement, Ali Hebri — not recognized by Tripoli – prompting the House of Representatives to try to divert revenues from Eastern oil sales from the Tripoli-based Central Bank., The $60 billion state sovereign wealth fund, the Libyan Investment Authority, has its office in Libya Dawn-controlled Tripoli, while its management committee reports to Prime Minister Al Thinni in Tobruk.

Amid this chaos, harried Washington policy makers have floated ideas ranging from freezing Libya’s foreign assets to initiating an outright embargo of Libyan oil. Prominent Libyan businessmen argue that an oil embargo would starve everyday Libyans before it made any dent in the militia or extremist problem. On the other hand, making sure that Libya’s foreign exchange reserves and its sovereign wealth funds are off-limits to finance Libya’s growing budget deficit, is a fundamental precautionary measure. Even some of Haftar’s fiercest detractors admit he could play a positive role in bringing order back to the country — but only if he is willing formally to give up any political aspirations, and is held accountable to the House of Representatives. Currently, Haftar’s supporters appear to be agitating for his promotion to the non-existent (and unconstitutional) position of “General Military Commander”, which seems to sit fine with the Egyptian leadership, as long as he continues to bombard its arch-enemy, the Muslim Brotherhood.

There have been numerous missed opportunities since the beginning of the conflict in 2011 but as time passes, the stakes get higher and the terrain becomes more complex.

What can the outside world, and the West, do to stop Libya’s disintegration and ward off potentially disastrous consequences? First, somehow the money tap that’s financing the fighting must be turned off.

Miraculously, a global fall in oil prices may be egging the various warring parties to do this all by themselves: The Western Libya Dawn militias, made good on threats to bomb Eastern oil-lifting ports by launching rockets at storage tanks at Es Sider the last week, making it official: Libya is now producing less oil than its current rate of consumption, and could soon be in desperate financial straits.

All of this speaks to why UN Special Representative for Libya Leon Bernadino was able, briefly, to muster a reluctant agreement by “all sides” to come to the negotiating table. Much more, and more targeted pressure will be required to produce results. The UN, while it can and is playing a productive role, has limited influence on its own.

The West and the UN can take advantage of this externally and internally-inflicted financial squeeze by urgently drawing a thick red line around Libya’s $113 billion in foreign currency reserves and $60+ billion in sovereign wealth — perhaps by transferring the bulk to a UN-appointed international trustee, threatening to refer the most egregious criminal offenders to the International Criminal Court if a process of reconciliation is not evident within the next few weeks, or by pressuring the House of Representatives to clarify the command structure over the Libyan Army, showing Gen. Haftar the door if he refuses to fall in line.

Under UN cover, the main militias must be instructed to disband, or face both sanction and military action. Those forces who decamp outside the main city perimeters, would be given protection and preferential access to national employment opportunities, such as paid positions and systematic, stepped-up selection and training for a widely-representative national guard. Large-scale industrial projects should be undertaken simultaneously, as joint Libyan-foreign-ventures, and scholarships offered for study inside (and outside) Libya, provided recipients can credibly commit to return to help rebuild the country. These may be the only projects for which Libya’s sovereign wealth could be applied.


Ethan Chorin – spent more than 20 years working in Africa and the Middle East as an energy and port executive, a U.S. diplomat , Served as US ambassador to Libya (2004-2005). Currently, CEO of Perim Associates LLC, and Editor of AR3 Magazine . Interested in post-conflict stabilization, and renewable energy. The author of two books on Libya, Exit the Colonel (Public Affairs, 2012), and Translating Libya (Darf, 2015).

Monem AlyaserMember of the General National Congress (Libya), Engineer, innovator and technology entrepreneur with more than 20 years of experience in thermal engineering, product development, sales and marketing.


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