Why Libya’s Oil Crisis Is Spilling Over Into Politics

Libya is running out of oil. This might seem counter-intuitive in a country that still boasts some of the world’s richest reserves of petroleum. But the real problem has less to do with what’s under the ground than what’s happening above it. Turmoil in the oil industry has been around for a while. Until recently ...


Libya is running out of oil. This might seem counter-intuitive in a country that still boasts some of the world’s richest reserves of petroleum. But the real problem has less to do with what’s under the ground than what’s happening above it.

Turmoil in the oil industry has been around for a while. Until recently most of the problems in the sector had to do with disgruntled workers striking for better working conditions. Now, however, the oil factor has become an object of the tug-of-war between regional and tribal groups and the central government. The fight over oil is pitting regional and tribal groups against Tripoli and starving the national budget of essential financial revenues from oil exports. (The crisis is also having a big effect on world oil prices, which are rising sharply due to the diminishing quantities of Libyan crude arriving on the market.)

On August 17, federalists in the eastern region announced that they were seizing Libya’s main oil terminals amid allegations of corruption in oil sales deals made by the National Oil Corporation (NOC). Their demands included a transparent investigation into the allegation charges. The federalists in eastern Libya have been calling for autonomy in their region by demanding the restoration of the decentralized government structure that existed under the pre-Qaddafi regime.

The announcement was followed by the deployment of armed groups loyal to the federalists in the Sirte Basin area, where Libya’s biggest oil terminals are located. The Libyan Prime Minister Ali Zeidan and his defense minister Abdullah al-Thani have both threatened to use force against any illegal crude oil shipments from ports in eastern Libya. This comes after international oil marketing companies notified the Libyan authorities that the federalists in control of the oil terminals are trying to secure their own oil sale deals. The government is vowing to use military action against any unauthorized vessel that docks at any of the oil terminals currently outside of its control.

Though the government blames the current shortages on workers’ complaints over pay and work condition issues, the crisis actually has much more to do with the broader political struggle for power and influence in post-revolution Libya. Most of the previous strikes had notably little to do with politics, focusing instead on demands for better work conditions or timely salary payments — issues the government was usually able to address quickly without major disruptions of output.

That is not the case this time around. While it might seem that the government is using its threats of force to intimidate the striking oil field workers, the real target is the federalists who have assembled in Ras Lanuf, the site of one of Libya’s biggest oil terminals. To this end, the easterners declared the formation of a regional government led by Ibrahim Jathran, who was one of the revolutionary commanders on the eastern front during the liberation war. The federalists claim to control the region’s oil facilities and the formation of a special "task force" to protect the region from what they call "the hijacked government and congress." That is a reference to the federalists’ belief that the central government and the General National Congress (GNC), the interim legislature, are under the influence of illegitimate Islamist groups.

Ironically, one of the leaders of the movement for more regional autonomy in the eastern province of Cyrenaica (or "Barqa" in Arabic) is a former Islamist named Sadiq Algaithy. Having served briefly as a deputy minister of defense in one of the post-revolutionary governments, Algaithy commanded the border control army, which he has since merged with the "Barqa Army," a conglomeration of local militias, to create a powerful regional military.

"We have the upper hand in Barqa and we are conducting the negotiations with the authorities in Tripoli," said Algaithy recently, who made a point of noting that the forces under his command (including the Petroleum Facilities Guards, which provide security for all oil-related installations) have full control over Libya’s main oil terminals. The governor of Libya’s Central Bank reaffirmed this gloomy picture when he commented that the government can cope for only about six months without oil revenues. Algaithy’s statement highlights the seriousness of the situation for the oil industry in Libya and casts a gloomy picture of the prospects for any potential solution to the oil crisis in Libya in the near future. "We have run out of options, and that is why we opted for the deployment of armed groups," Algaithy added.

Barqa’s tribes appear to share the federalists’ growing nervousness about the allegedly growing influence of the Muslim Brotherhood and its allies over the government and GNC in Tripoli. These recent developments represent a new twist in the political struggle for power in post-revolution Libya: the potential for a standoff between Muslim Brotherhood and its allies and the tribes in Barqa.

The oil crisis in Libya is moving west. Since allegations of corruption surfaced in connection with the big Sharara and El Feel fields in western Libya, the country’s oil production has plunged to less than 100,000 barrels per day. These allegations surfaced after the state-owned NOC broke its promises to deliver greater transparency in contrast to the opaque malfeasance of the Qaddafi regime. It comes as no surprise that both of the fields in question were closed by Petroleum Facilities Guards from the city of Zintan. The Zintanis are notoriously hostile to the Muslim Brotherhood, which they also suspect of pulling the strings behind the government in Tripoli.

As the oil crisis in Libya worsens, the central authorities in Tripoli are running out of options. It is not clear how much influence the government still commands in Barqa, but failing to consolidate local support, the government has no hope of ending this standoff with the armed groups in charge of Libya’s main oil terminals peacefully. Algaithy and Jathran appear to be succeeding where the government has failed in rallying support from powerful tribal leaders in Barqa. And in post-revolution Libya, it is local power that counts. "We’re always talking with the tribes and the tribal leaders in Barqa in order to make our position clear to them," says Algaithy.

The delay in launching a serious national dialogue in Libya, the failure to establish effective transitional justice mechanisms, and the adoption of the controversial political isolation law are deepening the polarization of Libyan society, leading to serious divisions and a widening gap of mistrust. The authorities urgently need to push ahead with the roadmap for political transition urgently to ensure they get their priorities right as the country moves ahead. Now more than ever Libya needs international help in navigating its transition to democracy. The United Nations must play a more proactive role. The U.N. Support Mission in Libya, for example, could mediate between the groups currently in control of the oil terminals and the central government. The current lack of dialogue could easily lead to a resumption of hostilities in post revolution Libya. Libyans have to find a way to unite different political groups and build bridges of trust. If they can’t, the fragmentation of Libyan society will be hard to stave off.

Mohamed Eljarh is the Libya blogger for Transitions. Read the rest of his blog posts here

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