The response to the latest cease-fire between the two warring factions in Libya has been generally enthusiastic, and the UN-brokered truce is undeniably a step in the right direction. However, it follows several agreements that did not last, including those reached in June and then August, and at the Berlin conference in January.
Libya has not enjoyed calm since Muammar Qaddafi was deposed nine years ago. Under the dictator’s rule it produced 1.8 million barrels per day of oil, which had dwindled to 1.2 million by the end of last year, with wide swings to the downside. Because of a blockade by eastern military strongman Khalifa Haftar, fewer and fewer barrels were produced, until production reached a low of 80,000 bpd in August.
The situation has changed since earlier in the year, particularly since June, when Haftar gave up his attempt to capture Tripoli and topple the Government of National Accord led by Fayez Al-Sarraj. Haftar is supported by some GCC countries, along with Egypt and France, and Russia, whose Wagner mercenaries bolstered his ranks. The GNA is recognized by the UN and supported by Turkey and Italy. This made for a classic proxy standoff, with mercenaries, arms shipments and all. Caught in the middle, like civilian populations in conflicts everywhere, were the Libyan people.
One sign that this cease-fire may be more enduring than its predecessors is that Haftar has reactivated oil infrastructure, producing up to 560,000 bpd this month. Once the oil terminals at Es Sider and Ras Lanuf open, Bloomberg expects production to exceed 1 million bpd. That is great news for Libya, but does not make the task of OPEC+ (the alliance of OPEC and 10 other producers led by Russia) in balancing oil markets any easier. An extra 1 million bpd constitutes an extra 13 percent of crude on the market as measured against the alliance’s production cuts of 7.7 million bpd.
OPEC’s woes may be a side show in Libya, but oil isn’t. Control of the National Oil Company of Libya, which. will be the major source of hard currency, will be crucial. So will authority over the central bank, which will manage the cash. The GNA currently runs both, but an equitable arrangement will require a different solution, which will be among the issues discussed in November at the next round of peace talks in Tunisia.
Another important factor is whether the international powers meddling on either side in Libya will be willing to cede influence. Withdrawing mercenaries and halting arms shipments is one thing, but what happens with the arsenals that have accrued over the years? The central powers of the Libyan state have been absent for a long time, and militias and particular interests have much influence. All of them will either gain or lose from peace arrangements, and that will influence their behavior — particularly when dollar proceeds from oil sales are trickling back.
The UN and the international community have a role to play in putting the right incentives in place for mercenaries to be withdrawn, and appropriate sanctions if arms embargoes are ignored. Libya is Europe’s near neighbor, so the EU should speak with one voice and do whatever it can to enable a lasting peace, or at least an enduring cease-fire.
Welcoming the latest truce, UN secretary general Antonio Guterres said it ought to be an example for all armed conflicts in which mediation efforts were under way, and he specified Yemen, Afghanistan and Nagorny-Karabakh. In reminding the world that we should be fighting the virus instead of each other, he could not have been more right.
- Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources
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