The thaw in US-Libyan relations came in 2003, when Qaddafi abandoned his WMD program, renounced terrorism, opened up the oil sector to Big Oil, and compensated the victims of the 1986 Berlin disco attack and the 1988 Lockerbie bombing. George Bush rewarded him by waiving the sanctions on Libya in 2004. Qaddafi was happily shipping off Libyan oil to European ports. He was buying their weapons. He had invested in the US’s private equity firms and big banks. He shared crucial intelligence with the West on Al Qaeda. Then why did he come in the line of fire? Was it for his ruthless crackdown on violent protesters? There’s definitely more than what meets the eye.
Tripoli was a reluctant ally, not a firm ally, in America’s war on terror. A 2007 West Point study based on Al Qaeda files retrieved from Sinjar in Iraq confirmed that Libyan fighters crossing the Syrian border into Iraq under the banner of ‘Al Qaeda in Mesopotamia’ consisted of a far larger percentage on a per capita basis than any other nationality in the 2006-07 timeframe. Turning his back on jihadis fleeing Libya was Qaddafi’s way to purge his country of potential troublemakers. ‘Operation Odyssey Dawn’ was launched to impede Tripoli from exploiting the power vacuum during the transition in Cairo and Tunis. The assault came even before the UN special envoy to Libya had tabled his report. Regime change in Tripoli costs the US relatively little. Qaddafi did not have an ‘oil for protection’ arrangement with the US like the Saudis. Nor was he pivotal to the US like the Bahrainis who host the US’ Fifth Fleet and have an FTA with the Americans. Bahrain is strategic because it is separated from Saudi Arabia by a narrow seaway through which 18% of the world’s oil passes.
Qaddafi was wedded to the idea of floating a ‘gold dinar’ in conducting international oil trade. He urged the OPEC members to re-price their oil in the gold dinar, instead of dollars. His view resonated well with the African petro-economies. Such a bold move could have had ‘ground-shifting’ implications for the world economic order. A country’s economic strength would depend on the gold reserves and not on its dollar assets. In 2000, Saddam Hussein announced that Iraqi oil would be traded in euros, not dollars. Some say that the sanctions and the invasion followed because the US was desperate to deter other OPEC members from toeing a similar line.
The ocean of fossil water reserves that lie under Libya’s deserts have the potential for more lucrative profits than the fossil fuel reserves. There are 3 major aquifers that lie beneath the Sahara. The largest among is the Nubian Sandstone Aquifer System (NSAS), which spans through 4 African nations—Chad, Egypt, Sudan, and Libya—and is called the world’s largest fossil water system, which could transform lives, lands, and economies. Libya’s ‘Great Man-made River’ project, a large underground network of pipes and aqueducts, was conceived in the late ’60’s. Funded by Qaddafi without foreign loans, construction began in 1984, costing $20 billion so far and supplying water to the populated coastal settlements. With the completion of the project, water shortage throughout Libya would have been a distant thought. In a post-Qaddafi era, the project may fall in corporate hands whose interest may lie in ‘commercializing’ water.
Qaddafi was a champion of African unity. His rallying cry—African resources for African development—had a mass appeal. He demanded greater representation for the AU States in international forums. His well-known contribution to the struggle for African emancipation were anathema to the West. A few years back, Qaddafi had fallen out with the Arab League on ideological principles, worldview and geopolitical interests. He had backed most of the liberation forces on the continent like the ANC of South Africa, SWAPO of Nambia, MPLA of Angola, SPLM of Sudan, Polisario Front of Morocco and RUF of Sierra Leone. He invested huge sums in the infrastructure development of sub-Saharan Africa. A US lackey in Tripoli would instead funnel the aid money to the tanking Western economies.
Money is the lifeblood of all economies. One who controls it, controls everything. Qaddafi did not open up the banking sector to Western multi-national banks. The Libyan economy was not integrated to the world economy, leaving no scope for banking sharks to manipulate the economy. It remained unscathed by the pitfalls of liberalization. Besides the Central bank of Libya (CBL), only a handful of Gulf-based Islamic banks were allowed to operate. The CBL issues Libyan dinars, interest-free, for the productive development of the nation and its citizenry. Since the CBL is not a member of the Bank for International Settlements'(BIS)—an inter-governmental organization that serves as a bank for all Central banks—the BIS could not ‘regulate’ the Libyan economy and advise Tripoli on economic matters and monetary reforms. In this backdrop, the Libyan rebels had to set up their Central Bank in Benghazi to begin transactions with the outside world. Further, the Libyan Investment Authority—a Sovereign Wealth Fund—manages an estimated $70 billion in fixed assets, reserves, and foreign investments. $30 billion invested in the West was frozen by Obama, but a part of it has been released to aid the rebels.
Oil was discovered in Libya in 1956. The prized sweet crude, low in sulfur, is much sought after. Moreover, Libya’s oil and gas reserves are produced onshore, unlike the other African states. This reduces development costs. Though it contributes 2% of the world’s oil output, its untapped potential is said to be much higher. There are huge stakes over who develops, produces, and receives in what amounts. China has expanded its energy footprints in Libya and that has come at an unacceptable cost to the Western oil giants. The African Oil Policy Initiative Group (AOPIG) was behind the US AFRICOM (USAC) project because a US National Intelligence Council report had stated that 25% of America’s oil will come from Africa by 2015. A US Naval Post-Graduate school report of 2007 identified 3 priority areas for the US in Africa: international terrorism, oil and gas, and the lurking Chinese challenge. The main aim of the USAC is to set up military bases to advance the American agenda and safeguard its interests. Qaddafi had opted out of USAC, one of the 9 global Pentagon commands, to control Africa and the Mediterranean Basin, including the strategic energy transit routes and choke points, crucial for the world economy. Of all the African states, only Sudan, Zimbabwe, Eritrea, Ivory Coast and Libya are not a part of the USAC. Now pause a while to pore on the socio-political conditions prevailing in these 5 countries.
Libya had become a battleground of Sino-US rivalry. China has expressed its interests in trading oil through a basket of currencies that could likely include the gold dinar. Last year, China had $6.6 billion worth of trade with Libya, most of it in oil. Qaddafi has favored Chinese companies to win stakes in some of Libya’s most prospective oil blocks. China has extensive energy and construction investments in Libya. 30,000 Chinese were employed in these projects before the evacuation. The US wants to deny the Chinese the oil produced from their own investments. Then why did Beijing abstain rather than voting against U.N. Security Council Resolution 1973 to safeguard its interests? Simply because it is still not in a position to face off with the US/NATO. It would be ludicrous for China to throw its weight behind a doomed strongman. But Beijing has provided weapons and intelligence to Tripoli, and it hopes to work with whoever holds power in future.
Libya’s geographical location and terrain has the potential to play a key role in US-led operations in the region, as evident from the historic role of the Wheelus airbase during the Cold War. Libya’s vast desert expanses and good weather are ideal for setting up gunnery and target ranges. It has the largest southern Mediterranean coastline. The major highway runs in close proximity to the coast offering easy access to the sea. The Green Mountain overlooks Europe’s busy shipping lanes. The Mediterranean is home to the US’ Sixth Fleet, numerous US/NATO bases and important oil terminals. It is central to the US’ ‘Phased Adaptive Approach’ plan which involves deploying a land and sea based BMD (ballistic missile defense) shield of radars and interceptor missiles. The BMD system includes the SM-3 anti-ballistic missiles on board the USS Monterey and the Aegis class warships. Air and Naval bases can contribute in projecting power far beyond the Mediterranean shores, apart from the back-up to the sea-based assets. Ports in the Gulf of Sidra can provide fuelling and servicing facilities.
The French and the British have their sights on lucrative oil contracts and big-ticket defense deals. The French government was outraged when Qaddafi din not opt for Dassault’s Rafale fighter jets and Areva’s nuclear reactors. BP’s oil deal with Libya, approved by Qaddafi after the disputed release of Al Meghrahi, was mired in bureaucratic delays. Whitehall saw the unrest as an opportunity to pounce on Qaddafi for dilly-dallying on the project. Sarkozy’s hawkish advocacy for intervention in Libya was with the motive to renew his popularity for a re-election gambit, after he came under fire for France’s discredited diplomacy in Tunisia, Paris was furious over Tripoli for cutting mega arms deals with Ukraine and Russia. Then what held back Russia from vetoing the resolution on Libya? Moscow could not afford to derail the ‘reset’ with the US. The Libyan turmoil jacked up oil prices and that brought a windfall for Russian oil. It leaves the door open for Russia to ‘intervene’ in the conflict zones in its sphere of influence under the rubric of ‘humanitarian intervention’.