By Jason Pack
For the last five years, the international community has tried a range of different approaches to mediating the Libyan civil war. All have failed.
A new approach is needed
For it to be successful any audit process must not be conducted as business as usual and delegated to giant corporations and regular functionaries at international institutions like the U.N., World Bank, or IMF.
For those interested in the details of how I would assemble a “Libya dream team,” please consult my previous report It’s the Economy Stupid: How Libya’s Civil War Is Rooted in Its Economic Structures, published with IAI in Rome.
Briefly put, only if led by real Libya experts, brought on exclusively for this mission, and conducted truly comprehensively do these audits stand a fighting chance of promoting genuine transparency and real structural reforms.
Otherwise the status quo powers will simply do what they have done to previous attempts: throw wrenches in the works and prevent progress by using the bureaucratic procedures and structures of those institutions against the genuine goal of the mission.
Simultaneously to expert-led audits, Libya’s oil must be gotten flowing and the proceeds used to reform how wealth is distributed and how the entire economy is structured.
An American-led attempt to restart Libya’s oil production by arranging a mechanism whereby oil revenues could remain frozen (or more precisely “unreconciled”) in the NOC’s Libyan Foreign Bank account certainly represents a step toward addressing superficial technical aspects of Libya’s economic difficulties, but these discussions have not yet proposed genuine solutions to the root causes of conflict.
Similarly, pushing for reforms of the Presidential Council and a reshuffling of which political figures get to represent eastern or western Libya will amount to nothing if reforms of the CBL, the dinar rate, subsidies, and salaries are not fundamentally tied to any political deal.
From experience, I know that it is extremely unlikely that any of these suggestions will be implemented, but patriotic Libyans and those qualified experts passionately interested in Libya’s future should still demand them.
We should all unite in a push for “economic transparency and structural reform” to be the clarion call for civic, international, and humanitarian engagement in Libya’s conflict.
Libya’s civil war is extremely complex but only economic transparency followed by fundamental reforms to the opaque, counterproductive, and corrupt structures of the economy can yield genuine results in removing the causes of fighting and militia recruitment.
Some forward-looking statesmen at the U.N. and various Western countries have taken this issue to heart and pushed for an economic track to go alongside the disarmament and political tracks of the 2020 Berlin process.
Nonetheless, the economic track is still treated like an unwanted stepchild. It is not publicly lauded, nor are its workings and findings shared transparently. However, now is the time to move the economic track to the foreground and give potential reformers the limelight and kudos they deserve.
One possible way to do so is presented in my January 2020 report, “An International Financial Commission is Libya’s Last Hope,” now being re-released in Arabic translation alongside this new preface.
Libya’s macroeconomic position and overall infrastructure is the worst it has been since the end of the sanctions period of the 1990s.
Libyans of all political persuasions are ready to unite behind genuine reforms even if they impose short-term pain, potential medium-term uncertainties, and even long-term economic externalities for certain sectors or communities.
Back in January 2020, I called for the main heads of Libya’s political bodies and semi-sovereign economic institutions to request international help in convening a technocratic commission to:
(a) Firstly, make transparent to the Libyan people where their money is being spent, where their subsidized products are being transported, and where the billions are actually kept; and
(b) Secondly, rewrite the rules of Libya’s economy in a transparent way, taking into consideration genuine expert advice and the will of the Libyan people. This can now be done as a follow up to the Deloitte audit of the CBL.
Also in this now re-released paper originally published in January 2020, I explained that enforcing the arms embargo and boxing out international spoilers was crucial, but only the first step to achieving a mutually hurting stalemate.
This has now largely been achieved. The current military stalemate is partially useful as it ends needless suffering and allows improvements in the security situation so civilians, technocrats, and businesspeople can return to Tripoli and communities across the country. Yet on its own, the military stalemate will not end Libya’s Wars of Post-Gadhafi Succession.
No lasting political deal can emerge if the underlying causes of violence remain unaddressed — the semi-sovereign prerogatives of Libya’s new breed of oligarchs who have overstayed their legitimate mandates, the unfettered access to secret funds, and the corrupt distortions of the market mechanism that are embedded in Libya’s current economic institutions.
No matter how many power plants and mobile electricity generation units are added to the Libyan power grid, load-shedding will still be necessary every summer if electricity remains subsidized and demand growth is unchecked by the functioning of a rational market.
No matter how much oil revenue flows into Libya, fights to control key institutions in Tripoli will continue until transparency mechanisms are created to showcase how funds flow to and from Libya’s communities and institutions.
No matter how peaceful Libya becomes, there will always be an incentive to join a militia if doing so can provide preferential access to subsidized goods (including foreign exchange).
Intelligent and civically-minded Libyan patriots, especially those of the younger generation, are willing to put the past behind them and forget old grievances about whose cousin, and which tribe, started which war.
They need the help of their genuine allies abroad to provide the protection, technocratic expertise, and political cover to actualize their visions of reform and renewal. The plan contained in “An International Financial Commission is Libya’s Last Hope” is one way forward.
Hopefully, it will be enough to start a discussion and spur policymakers to consider bolder actions than the business-as-usual, 20th century approach to mediating civil wars that has remained dominant.
Part 1: Mastering the Problem Set
Diagnosing the Crux of the Problem: In Bullet Points
A New International Approach is Needed
- As Libya’s post-Gadhafi chaos has failed to offer up any legitimate social contract to the Libyan people, a perversion of the pre-existing Gadhafian social contract has emerged. Each Libyan region, locality, tribe, ideological grouping, and individual feels that they are as entitled as anyone else to the money and power vested in Libya’s semi-sovereign institutions.3 Communal leaders do not care that the rationales for those institutions no longer exist, they simply want their piece of the pie.
- This truth has gradually dawned on most Western policymakers concerned with Libya: the root of the country’s stymied transition and its post-2014 War of Post-Gadhafi Succession4 is primarily economic — not political or ideological.
- Future peacemaking efforts, national conferences, or even direct elections are doomed to failure if they do not address the root causes of Libya’s malaise: bad economic incentives and flawed institutions.
- The Berlin conference is already poised for failure if it does not provide a coherent approach to treating the economic issues. Yes, there are signs that things are moving in the right direction as a distinct economic track will be included. But this is not sufficient. The economic track must give rise to institutions with permanent engagement in Libya’s economy rather than sporadic engagement via occasional summitry.
The Military and International Lay of the Land
- General Khalifa Hifter’s April assault on Tripoli has morphed from a spontaneous attack by a rogue general into the world’s first extraterritorial drone war of attrition. It is non-Western powers that provide the weapons and technical know-how to keep their clients afloat. The aerial component of the war is being primarily contested between the United Arab Emirates (UAE) and Turkey, while the mercenary and training components of that war pit Russia, Egypt, and Sudan against Turkey and Chad.
- Turkey has become the backstop of the Government of National Accord (GNA), as the U.S., UK, Italy, and Algeria have apparently rebuffed Prime Minister Fayez al-Serraj’s requests for the necessary military assistance to prevent Tripoli from falling. It now appears that if Tripoli is in danger of being taken by Russian-backed mercenaries that Turkey will rush sufficient ground troops to prevent that outcome.
- As the war has evolved, European nations have been eclipsed as the most involved international players in the “Libya file,” and hence, German and European attempts to mediate must be backed-up with hard power gambits or they will be brushed off by competitions with military leverage on the ground. In short, too-little too-late re-engagement from Europe without application of uniquely Western forms of leverage will merely showcase the extent to which non-Western countries are the ones now able to project power into Libya, as they can flout UN arms embargoes to provide drones and mercenaries or flout international norms by providing direct injections of cash or illicitly printed dinars.
- Western nations, especially if acting in concert, would have a stranglehold on the licit economic tools that are needed to compel both sides to work together and to provide the levers and technical expertise to eliminate the economic drivers of the conflict in Libya.
Why Libya Matters and Why Now?
- Of the world’s five major conflicts — Ukraine, Syria/Iraq, North Korea, Yemen, and Libya — Libya is the only one whose solution can pay for itself. Solving the Libya conflict would result in an extra million barrels a day of sweet crude, over a hundred billion dollars of yearly spending on mega-projects, employment for a million guest workers, and back-payments in the hundreds of billions.
- Moreover, Libya’s continuing cycle of violence and statelessness has created one of the most important hubs for jihadi actors outside of the Levant, while also facilitating arms proliferation, migrant trafficking, and major international crime networks. At present Libya is a major exporter of instability into the Mediterranean and Sahel regional systems. If it were stable with a functional economy, it would be a primary pillar of stability for both.7
- For all these reasons, the time has come for America and its closest allies to pivot toward an economic-focused approach to peacemaking in Libya. It is the only avenue which might provide the incentive structures for peace and undercut those for violence. It can be done at either the international community level or by some like-minded countries at the bi- and multi-lateral levels. Britain, Italy, and European institutions must be key to any process.
- The upcoming Berlin conference needs to propose a way out of the current impasse which effectuates more than a momentary cease-fire or signing ceremony, but deals with the core of the problem that led to the current war in the first place.
Jason Pack is a consultant, author, and commentator with over two decades of experience living in, and working on, the Middle East. He created “Libya-Analysis LLC” and founded “Eye on ISIS” in Libya. He is the Senior Libya Analyst at CRCM North Africa, a German strategy firm. He served as Executive Director of the U.S.-Libya Business Association for 2 years.