More Libyan war
The civil conflict will continue, sabotaging efforts to stabilise oil output
The Libyan civil war over the past 12 months has seen the continued ascendency of the counter-revolutionary camp led by its military commander Khalifa Hafter, based near Benghazi. Hafter's Libyan National Army (LNA)—which, since May 2014, has been conducting a military campaign against a range of political opponents, including jihadi Islamist groups—notched up many victories in 2017. Hafter himself also bolstered his diplomatic image abroad.
Progress will continue during 2018 on the military and diplomatic fronts. The LNA will slowly seize more territory in western Libya. On the international stage, Hafter will be embraced by more foreign states. He'll also receive increased military support from the UAE, Egypt, France and Russia. Hafter will pursue his gradual transformation from rogue warlord relying on violence into a civilian statesman with political legitimacy. During the September 2017 battle that saw the western city of Sabratha come under the LNA's control, a Salafi armed group called the Al-Wadi Brigade played a pivotal role. A similar dynamic will be repeated elsewhere in 2018. Salafi groups in many other parts of Libya—including Tripoli and Misrata—may emerge as key tactical partners for the LNA.
This doesn't imply that Hafter will enjoy a smooth ride through 2018. The siege of Derna on the eastern littoral will continue for many months. In the west, several bastions, which are both militarily powerful and politically opposed to Hafter, continue to exist within cities such as Tripoli, Misrata, Zawiya, Nalut and Sebha. The LNA won't be able to take over those cities easily.
Moreover, the Islamic State (IS) group will grow in strength. After the LNA forced the withdrawal of Misrata's Third Force from the Jufra District in June 2017, IS enjoyed a resurgence in central Libya. Expect further IS successes in 2018 because combatting it isn't a top priority for any of the main factions. In contrast with the 2014-16 period, when IS focused on controlling and administering territory, the jihadi group now will likely aim for a diffuse, nimble presence. It will also carry out suicide attacks in urban centres, as it did in Misrata in October.
Hafter's path to victory in 2018 could also be complicated by divisions inside his own camp. Prominent figures who might become rivals include Faraj Qaeem of the powerful Awaqir tribe; Saif al-Islam Qaddafi, the son of Muammar; Aref Ali Nayed; and Mahmoud Jibril.
As for the economy, Libya's National Oil Company (NOC), led by Mustafa Sanalla, has increased oil production from 0.528m barrels a day in October 2016 to approximately 1m b/d, a remarkable feat. Since September 2016, Sanalla has benefited from Hafter's quiet yet crucial backing. Sanalla also conducted shuttle diplomacy with various tribal and local groups, seeking to minimise protests and blockades.
Despite notable successes over the past year, the Tripoli-based NOC will encounter substantial difficulty exceeding the 1m-b/d crude oil output level during 2018. Blockades by local armed groups will periodically dent production. Moreover, major repair and maintenance projects, which Libya's aging hydrocarbon facilities need, will be delayed, mainly owing to lack of financing by Tripoli.
The larger oil income delivered by NOC in recent months hasn't eased Libya's serious monetary crisis. The economy, throughout 2017, suffered from the weakness of the dinar against the dollar in the black market. It was also affected by shortages of banknotes. The monetary crisis is partly attributable to the leadership of the Central Bank in Tripoli, which, de facto, has acted as Libya's public treasury since 2014. Only a combination of increased transparency, firmer coordination, persuasive communication and impeccable technocratic credibility might resolve the dinar crisis.
Contrary to widespread belief, a devaluation of the dinar, alone, won't fix anything, unless it comes with a Central Bank commitment to inject substantial quantities of hard currency at the new official exchange rate. Such an assertive monetary policy will remain elusive in 2018. As long as the current governor of the Central Bank, al-Seddiq al-Kabir, whose term officially expired in November 2016, stays on, and as long as Bayda-based Ali Hibri (pro-Hafter) keeps challenging the Tripoli-based governor's authority, Libya's dinar predicament will persist. In its essence, the crisis is one of political confidence.
Jalel Harchaoui is a PhD candidate, focusing on Libyan politics, at Université de Paris 8
This article is part of Outlook 2018, our annual book looking at energy market trends for the year ahead. To purchase a copy, click here