As negotiations fail to progress, one side tries to grab the oil revenue
|CAIRO
MORE blood was spilled in Libya’s civil war on April 5th, when a suicide-bomber from Islamic State (IS) killed at least six people in the coastal city of Misrata and when the internationally recognised government in Beida in the east struck its opponents near Tripoli in the west. But the boldest move of the weekend caused no bloodshed. On April 4th the Beida government made a grab for the country’s cash by directing the state-run oil company, the National Oil Corporation (NOC), to send its income not to the central bank in Tripoli but to the government’s own offshore account.
Libya’s oil output is down to some 500,000 barrels a day, from as much as 1.7m at its peak (see chart). Even so, its sales are the only thing keeping the country afloat. The revenue is being fought over by both sides in the conflict, which has split the country between two rival governments—the one in Beida, the other in Tripoli—and their allied militias. The NOC and the central bank, both in Tripoli, have somehow preserved their independence, but at a cost. The bank has used the oil money to pay consumer subsidies and the salaries of government workers across Libya, thereby funding each side’s war.
Few expect the NOC’s revenue to end up in the coffers of the Beida government, which has tried to get hold of the cash before by setting up a parallel outfit at Ras Lanuf, an oil hub it controls, and installing a rival chairman of the bank. Both efforts failed. Western companies buy the bulk of the country’s oil and have little interest in changing contracts that are paid into central-bank accounts. Moreover, the Beida government has little ability to pay salaries, as the database of government workers is in Tripoli. “Even if they do get the money, there’s no way to deliver it,” says Mattia Toaldo of the European Council on Foreign Relations, a think-tank in London.
More than anything, many think, the move is a sign of the Beida government’s increasing intransigence, which has soured efforts by the UN to negotiate an end to the conflict and focus the fight on IS. During peace talks last month Khalifa Haftar, a general allied to the Beida administration, ordered an air attack on Tripoli. General Haftar has received support from Egypt and the United Arab Emirates, which see Libya as a front in a war against Islamists (they are part of the alliance supporting the Tripoli government). But Western powers fear his war on “terrorists” is really an attempt to seize personal power. So although they recognise the Beida government, they have refused to enable its control of the country’s finances.
An interactive guide to the Middle East's tangled conflicts
The two sides appear to be fragmenting. General Haftar has fallen out with former allies. Mr Toaldo says the militias’ chains of command are loosening. With IS added to the mix it is no longer clear who is fighting whom. A peace settlement seems ever harder to reach.
Government workers, at least, are still being paid. But for how much longer? The deficit this year is expected to be about two-thirds of GDP, and the country’s reserves are running low. Winning control of Libya’s finances may not be worth the trouble.
This article appeared in the Middle East & Africa section of the print edition under the headline "An oily mess"
