The Arab Spring has shattered the illusion of impunity that surrounded heads of state of various dictatorial regimes. After Ben Ali in Tunisia and Hosni Mubarak in Egypt, it was Muammar Gaddafi’s turn to violently leave the stage, covered in blood. On October 20, after 42 years of dictatorship and eight months of furious fighting on the ground, which was supported by NATO air strikes, Libya has somehow turned a page on its recent past. It is now able to look forward to a brighter and freer future. Although all parts of the country are now securely in rebel hands, it is still premature to celebrate and proclaim that difficulties are finished in Libya. The country must remain united and move toward reconciliation and renewal, proclaim world leaders almost in unison. However, there are many and significant uncertainties and obstacles on the road to political normalization. The multi tribal and ethnic composition of the insurgent coalition constitutes a serious hindrance in reaching consensus on the political level. Moreover, it is doubtful that the proposed roadmap, which includes a new interim government within a month and holding national elections within a year and a half, will be easily implemented in traveling the rough road to democracy. Nonetheless, the plans as outlined by the National Transitional Council (NTC) can be accomplished to the tentative schedule for democratic development.
Although it is now beginning to slip from center stage in the international press, Libya has possibly just started a new chapter in yet another very long journey, characterized by internal tensions and external pressures which threaten the country’s very future. As for the Western powers, victory has been achieved – which means in simple terms relatively easy access to Libya’s vast natural resources.
The rush to divvy up Libyan resources seems to have been underway even before the fog of war had disappeared. In September, with large swaths of the country still not under rebel control, Western powers wasted no time in jump starting negotiations with the country’s new and fledgling leadership. It appears that gas and oil exploration is now placed high on the agenda. Current political uncertainties are underpinning various forces as they have hedged their bets on the transitioning post-Gaddafi Libya. Any decision must be carefully considered since the Libyan energy sector is a topic with many layers. It is then necessary to explore in utmost detail the varying and often competing interests involved, the positions held by the various stakeholder, their motivation, and how they hope to fit into the new Libya.
The Paris Conference and France’s role
On September 1, immediately after the fall of Tripoli, a Conference of the Friends of Libya was held in Paris (since renamed the Contact Group, a body comprising approximately 60 countries and international organizations). The Conference almost unanimously declared that the NTC is the sole legitimate representative institution of the Libyan people. This acknowledgment was further strengthened by Russia’s recognition of the new government, which took place during the conference, and the overcoming of China’s ambiguities. Indeed, China had previously denied that the regime in Benghazi had any legality. Even Venezuela, whose President, Hugo Chavez, maintained a strong friendship with Gaddafi, and Algeria were both ready to acknowledge the new government. With expression of open support, the NTC must now evolve into a government of national unity representing all areas and regions of Libya. Perhaps of paramount importance during the conference was the setting of the conditions for the immediate unfreezing of a part of the 50 billion euros of Libyan assets frozen soon after the start of the hostilities. Out of this sum, 15 billion will be targeted for the immediate reconstruction of the country and bringing back into operation the infrastructure and services necessary to meet the basic needs of the population. About 500 million euros has already been released from Italy, whose foreign minister, Franco Frattini, said that it is ready to unfreeze a further 2.5 billion euros. For its part, France said that it will immediately unlock 1.5 billion euros, but on the proviso that it receives clearance from the United Nations. The majority of frozen Libyan assets are still in the hands of the United States, which controls about $30 billion following the seizure of these funds at the end of February 2011.
Meanwhile, the institutional aspects of the new Libya were also part of the discussions in Paris. The NTC committed itself to electing a representative constituent assembly within eight months from the recognized conclusion of hostilities and to organizing the first legislative elections within 20 months once arms have been laid down. In addition, the NTC has already drafted a new constitution, which, it says, provides for proper democratic representation in the new Libya. This guiding document will fully respect the traditions and Islamic values of the country. Article 1 of the circulating draft apparently confirms that Islam is the state religion and that Sharia law is the main source of legislation. This position has naturally caused concerns in some western quarters. There is a real fear among many that Libya could substitute a dictatorial regime, which had recently reached a modus vivendi of mutual interests with the West, for an Islamic state, however soft, on the shores of the Mediterranean as a result of the so-called “Arab Spring.” This is an ongoing process, however. It would thus be premature – and a clumsy strategy – to spread out warnings of such an outcome in the case of Libya.
Ostensibly, the Paris Conference has served to confirm the primacy of French interests in Libya in the aftermath of the conflict. On the day of the Paris conference the French newspaper Libération published a “scoop” about an agreement between France and the NTC dating back to April. According to the newspaper, the NTC gave Paris the right to exploit 35% of Libya’s oil resources in exchange for total support during the conflict. The French authorities and the NTC have both denied the existence of such an agreement, but admitted that decisions on the exploitation of oil resources would reflect the new Libyan government’s appreciation of the support provided to the rebels. France, based on this line of reasoning, will undoubtedly be well positioned to achieve a position of primacy, as it was the main promoter of the Western intervention in Libya along with Great Britain. It led the Western coalition’s military operations until NATO took over this responsibility. Admittedly, the French President, Nicolas Sarkozy, had humanitarian concerns when he took the decision to involve French air forces. However, his reasoning was also rooted in the electoral misfortune of his political party, Union pour un mouvement populaire (Union for a Popular Movement), which was almost wipe out in last year’s local elections. Before the outbreak of war the major French energy companies, including Total, were present in Libya and controlled14% of the oil and gas market. It is reasonable to expect that this share will increase in the short term in appreciation of the supportive role played by Paris during the military operation. According to OPEC estimates, Libya is the fourth largest oil producer in Africa after Nigeria, Algeria and Angola, with a daily production of 1.8 million barrels and reserves estimated at 46.4 billion barrels, while gas reserves are estimated at 55 trillion cubic feet.
Italy and the defense of its positions
Italy is another key player on the Libyan energy market. ENI, the Italian energy giant, has been present in the country since 1959 and it is by far the market leader in hydrocarbon extraction. On August 29, a few days before the Paris Conference, Paolo Scaroni, ENI’s CEO, signed in Benghazi the first contract for the supply of gas and oil to meet the needs of the Libyan people. Payment was to be made in future orders of various Libyan goods. This contract, which was signed a few days after the Milan Summit between Prime Minister Silvio Berlusconi and Prime Minister Mahmoud Jibril of the NTC, confirmed the new Libyan government’s intention to continue honoring past agreements signed by Italy with the Gaddafi regime, in particular the 2008 Agreement of Friendship and Cooperation, which covered all contracts signed with Italian companies at the time and stipulated an Italian investment of 5 billion Euros as compensation for the sins of its former colonial exploitation of Libyan soil and people.
Italy seemed to want to get a jump on the rest of the allies, as demonstrated by the quick appointment of a new diplomatic representative in Tripoli, Giuseppe Buccino Grimaldi. The Italian government’s main concern is losing out to the French in the exploitation of the vast energy resources of the country. But Rome certainly has some cards to play. First, it has a thorough and comprehensive knowledge of Libyan territory, being responsible for 29% of Libya’s exports of oil, or roughly 360,000 barrels per day. Second, the existing direct connection between Libya and Italy through Greenstream, which makes Italy the main market for Libyan natural gas (Italy imports 70 billion cubic feet of gas every year), is also a significant factor.
Much more problematic are political issues. Although Silvio Berlusconi’s government was among the main friends of the Gaddafi regime, many other countries have had close diplomatic ties and economic relations with Tripoli in recent years, including some which in recent months have become bitter enemies of the Libyan dictator. One also should not underestimate the strong presence within the NTC leadership of members of the old regime. The Chairman of the National Transitional Council of Libya, Mustafa Abdel Jalil, is a former Minister of Justice under the Gaddafi regime (2007-2011), and the new prime minister, Abdurrahim El-Keib, was a faculty member at the University in the electrical and computer engineering department from 1985-2005.
There are several other cases that could create problems behind such a revolutionary change of regime lies the possibility for the continuity of political and administrative personnel, something that Rome could take advantage of, at least until Libyan elections, which are to be held no later than 20 months from now.
The case of Great Britain
David Cameron’s conservative-led coalition government was among the main backers of the military intervention in Libya. Indeed, one can say that the joint Franco-British force was the main source of support to the rebels. Like Italy, Britain has economic interests in Libya, also principally in oil and gas extraction. For Libya, the main British oil company, British Petroleum (BP), appears to be the best bet for rebuilding the hydrocarbon processing industry. After the Deepwater Horizon disaster in the Gulf of Mexico in 2010 and the collapse of the deal – joint Arctic exploration – with the Russian company Rosneft earlier this year, Libya appears to be the last option for BP. But, again, many of the agreements between BP and the Libyan state on the extraction of Libyan oil were passed while Colonel Gaddafi was at the helm of power. Another problem is that these accords are currently under investigation: the 2007 agreement for drilling in the Gulf of Sidra was put into effect by Gaddafi only last year, when the Scottish government released Abdelbaset Al-Megrahi, a Libyan convicted in the 1988 Lockerbie bombing that killed 270. Also, an investigation initiated by the United States has found that undue pressure was put on Scotland by BP to hand over Al-Megrahi to the Libyan authorities. The fall of Gaddafi brings to the forefront the insistent demands made for the extradition of Al-Megrahi from Libya to face trial in Britain. However, his current health does seem to corroborate the official version that he was only returned to Libya on the basis of compassionate grounds, as he was a dying man.
UK’s economic interests are certainly also buttressed by electoral considerations, as David Cameron’s leadership seems to be faltering and the whole country is on the verge of a nervous breakdown, as the August riots showed. The war in Libya has offered both France and Britain a good opportunity to divert public attention from the internal problems that the financial storm is causing in these two countries.
Vested interests of other “friends”
The British presence in Libya is not as strong as that of Italy and France, but the same can also be said of that of many countries that have played different roles in the conflict. For political and historical reasons, the Unites States, which has only a negligible presence of multinational corporations in Libya, played a very marginal role in the conflict in comparison to other involved Western powers. For their part, Germany and Russia are in a tricky position: Germany refused to intervene against Gaddafi whatsoever, while Russia recognized the NTC only after the Paris Conference.
But in Russia (an energy provider) and Germany (supplied by Russia) potential problems of energy supply will not arise, and even should they, any supply side problem can be easily resolved. China, however, runs the risk of being ousted from future contracts due to its failure to support the rebels. Its “hands off” position could be a potential blow to the policy pursued by Beijing towards the African continent. Its reluctance to recognize the NTC and the discovery of an alleged agreement to supply Chinese-made weapons to pro-Gaddafi loyalist troops seem to have put the Beijing government in a bad light. The alleged agreement for the supply of arms would constitute a violation of the UN arms embargo under the Security Council and even call the role of Algeria, the supposed negotiating intermediary between the two parties, into question. China cannot afford to be seen as wavering in a country which exported to Beijing a tenth of its entire production of oil and housed about 36,000 Chinese workers and 75 Chinese companies. The most important of these was undoubtedly the state oil company CNPC, whose structures were bombed during the civil war.
The intermingling of business, political and economic interests in the new Libya described above seems rather intricate and complex. The competition between major energy companies, supported by their respective governments, appears to involve mainly France, Italy and Great Britain, with other countries having to take a back seat due to their failure to participate in operations or their provision of direct or indirect support to Colonel Gaddafi.
The resumption of business activities of corporations engaged in resource extraction is a first step in Libyan national reconstruction, but this must be done with a full measure of transparency and even-handedness, as doing otherwise would undermine the creation of new Libyan institutions at a time of extreme national weakness and strong Islamist temptations. In short, multinational energy companies’ strong hunger for Libya’s resources, which can only be appease at each others’ expense, could prove fatal for a nation trying to reconstruct itself both physically and institutionally and struggling to install democracy and respect for human rights as fundamental elements of its new state, blessings and basic entitlements that the Libyan people have for decades not been able to enjoy.