Petroleum profits, control and fragility in Libya
Matt Herbert and Emadeddin Badi
Libya’s hydrocarbon economy is essential for the state and for society, with profits from the sale of oil and natural gas allowing for the provision of state services, and the continuation of economic activity, even during the current period of prolonged instability.
The importance of the sector, however, also leaves Libya in a vulnerable position when oil and gas production, transportation or exports are disrupted. Unlike other key challenges facing the country, such a terrorist attacks, which are frequently bloody but unlikely to affect the broader functioning of state, any sustained interruption of the petroleum product economy poses considerable challenges to the viability of the Libyan government.
This vulnerability is well understood within Libya and has led a number of different actors to instrumentalize the interruption of oil and gas production and export to achieve personal or group interests. Communities in oil and gas producing areas or regions, such as the Cyrenaica and the Fezzan, have pressed for jobs and the equitable sharing of profits from the petroleum economy.
Perhaps most problematically, political entrepreneurs such as Khalifa Haftar have transformed the control of oil and gas infrastructure into an economic weapon. The official entity tasked with protecting infrastructure and ensuring production, the PFG, has demonstrated limited functionality.
While in many cases the organization has secured oil and gas facilities against terrorist or armed-group attacks, the hybridity and localization of the entity in the wake of the 2011 revolution have left it ill-suited to address the most probable threats to oil and gas production and export. Repeatedly, the field units of the PFG have been involved in oil blockades, including as a means to press demands for late salaries.
Functionally, the incorporation of local armed groups into the PFG, without reform, has created a challenge around interest alignment between communities in oilproducing or -shipping areas, from whom the PFG field units are drawn, and the national government(s).
When interests align, there can be an illusion of functioning command and control and a unitary force. However, as soon as interests diverge – either on oil or on other issues – the mirage dissipates, and the field units return to operating largely according to local focus.
This also brings to the fore a broader challenge, which is that of resource allocation. An impetus towards building a nationally responsive force responsible for the protection of oil infrastructure is necessary for opening up a space for discussions around equitable resource allocation, and for these discussions to bear fruit.
In Libya, the current status quo is predicated on fear that resources could be taken away. While community-linked groups may assuage the fear within their communities, they exacerbate it for other groups, especially communities or tribes that are rivals.
Moreover, the status quo also allows a minority of political spoilers to leverage territorial control over oil facilities to hijack the discussion around resource allocation and distribution, forcing solutions that are ad-hoc and generally meant to serve personal agendas.
At the time of writing, the contemporary solutions considered – namely, a freeze on oil revenues and a resource-sharing committee – in response to the blockade implemented by the LAAF, constitute a bandaid solution.
It is likely that moving forward, outlining a viable plan to transition to a national-level force is the only way to begin to move away from reactive solutions, remove communal measures of fear, and engage in UN convened conversations around resource allocation.
Addressing vulnerabilities in the oil and gas sector
Addressing the vulnerabilities in Libya’s petroleum product sector is complicated precisely because it is not one single area or dynamic that fuels weakness and risk. Rather, it is a confluence of separate, though often reinforcing, dynamics, including poor economic and employment prospects in petroleum product-producing areas; fears and concerns around adequate profit sharing in the Cyrenaica and the Fezzan; and the extremely weak, divided and hybrid nature of the PFG.
Nonetheless, it is likely that these challenges, though numerous, are more readily addressable than some of the other major dynamics driving Libya’s fragility, such as the struggle for political control (at the local, regional, and national levels) and the empowerment of non-state armed groups via illicit economies.
Further, successful efforts to address issues around Libya’s petroleum product industry could potentially deflate tensions preventing the resolution of other points of fragility. For example, lessening antagonism between regions over resource sharing and economic opportunity may reduce sectarian fears that currently impede agreement on issues of political control, security, and identity.
Addressing the different dynamics fuelling Libya’s hydrocarbon fragility would necessarily need to be long-term (with initiatives likely to need to conceptualize duration in years, if not a decade), would need to tackle multiple different levels at the same time, and would likely benefit substantially from international support.
A basic interlinked strategy could include the following:
1) To lessen localized tension and the risk of communities in the Fezzan and the Cyrenaica blockading hydrocarbon infrastructure, focus targeted economic development efforts in communities in and around key oil- and gas producing areas.
This could include a mix of projects supported by donor states as well as initiatives by international oil producers operating in the different fields. In addition to broader economic development and employment promotion, a commitment could be made to increase job options for local residents within the fields themselves (most workers there now are not recruited locally).
2) Develop comprehensive Security Sector Reform (SSR) and Disarmament, Demobilization and Reintegration (DDR) plans for the PFG.
The goal should not simply be to create a unitary entity, bringing together the Tripoli and Benghazi factions (such as what the NOC and 5+5 negotiations envision), as this would have only a limited impact on the major weaknesses and deficiencies of the force.
Rather, the goal should be to address hierarchic weaknesses within the force, aiming to transform it from its current federation of field units into a hierarchical, national force. While some of the challenge in the reform involves training, equipment and promotion, a substantial aspect is catering to concerns and fears by local communities about the risk of giving up control, and the impact on economic opportunity and power.
3) Target similar SSR and DDR efforts at other armed groups operating in oil- and gas-production areas.
The PFG does not functionally operate as siloed force; it was designed to operate as part of a constellation of security forces. Initiatives should be created that widen efforts to reform these secondary security providers, ideally with an eye towards providing more robust security to citizens in remote areas. This may provide a further entry point to broader SSR and DDR processes, and trustbuilding initiatives, throughout the country.
4) Finally, develop an ongoing Track-II national reconciliation and dialogue process specifically around equitable resource sharing.
As one Libyan analyst noted, ‘The issues and fears on resource sharing are known, but nobody has ever even tried to sit down and calculate the amounts, how they can be divided, and how much everyone would get.’ Aiming reconciliation and dialogue around the hydrocarbon issue would be an emotive issue, but one that offers more opportunity for quantitative analysis, discussion and perhaps resolution when compared to political dialogue and reconciliation.
If positive results and guarantees can be gleaned from such dialogue, it may offer an opening to tackle more contentious political or security issues that need resolution as part of a social contract to ease fear within Libya’s tribal, ethnic, and regional divisions.
Dr Matt Herbert is a Senior Expert at the Global Initiative Against Transnational Organized Crime (GITOC), managing research activities for the North Africa and Sahel Observatory (NAS-Obs). He specializes in transnational organized crime, fragility, stabilization, and security-sector reform and governance. He holds a PhD in International Relations from The Fletcher School of Law and Diplomacy, Tufts University.
Emadeddin Badi is a Senior Analyst at the GI-TOC, focusing on the Special Projects Portfolio of the NASObs. He specializes in governance, post-conflict stabilization, hybrid security structures, security-sector reform and peacebuilding. He holds an MSc in Violence, Conflict and Development from the School of Oriental and African Studies (SOAS), University of London.