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Libya in limbo as fighting concentrates on oil infrastructure

“Nato: do it right or leave the fight!” reads a sign in Benghazi, heart of the rebellion against Libya’s Muammar Qadhafi

BUT LEAVING the rebels to their own devices – inadequate, poorly maintained and often ammunition-less devices – is no longer a strategy that the coalition of willing Nato powers can countenance.

Dozens of burnt-out tanks on the road between Ajdabiya and Benghazi attest to a simple fact: the rebellion has survived thanks to the no-fly zone agreed by the UN on 17 March and enforced since then with Western aerial might. Bombardment from the air, not the rebels’ rusty Kalashnikovs, protected Benghazi from those tanks.

UN Resolution 1973 authorises “all necessary measures” to prevent civilian deaths. It was agreed as Qadhafi’s forces bore down on Benghazi. But after a lull in Nato activity, the military strategy has widened. On 25 April, bombs demolished buildings within Qadhafi’s Tripoli compound – an attempt to “cut the head off the snake”, in US Senator John McCain’s words. Assassinating Qadhafi, argue some, is the only way to end a war that is becoming a bloody stalemate.

On the surface, there are inescapable commercial reasons why the coalition of willing countries is fighting this war. Benghazi’s fledgling rebel government, the Transitional National Council (TNC), says it will “remember its friends”. Finance minister Ali Tarhouni told Petroleum Economist that Qadhafi-era agreements would be respected – but other senior rebel officials are clear that firms from countries that haven’t supported the rebellion will not be welcome when new contracts are dished out. The need for investment will be great, especially if the TNC is serious about a near-doubling in oil output from a “liberated Libya” to 3m barrels a day.

On the ground, this is a war for Libya’s oil. Fighting between rebels and loyalists has been concentrated on oil-export installations along the coast. Preventing access to fuel is tactical: the side that runs out first will lose the war.

But the suspicion persists that Nato’s might is being used in a war for Libya’s riches. Western firms are circling. Italy’s Eni has opened negotiations with the rebels. The US, UK and France all have diplomatic representation in Benghazi. Qatar is supplying fuel to the east as a “gift to the Libyan people”, says the TNC and will also manage the rebels’ oil sales. The TNC has briefed foreign governments about its oil plans.

But Western firms should beware. Qadhafi-era investors such as BP signed contracts with a harsh regime – but in a peaceful country. Qadhafi’s oppression impoverished large parts of Libya, especially in the east, and the rebels insist their fight is not a civil war, but a popular uprising. Yet the colonel’s brutality may also have held Libya together. Tribalism has played little part in the conflict so far, but could ravage the country if Qadhafi falls. Leadership of the inchoate, ill-equipped rebel army is unclear and the TNC’s authority is questionable. Foment is building on the streets of Benghazi. Chaos could wreck the best-laid plans of the TNC and its foreign sponsors.

And even if the war ended now, Libya’s oil industry – and, therefore, its economy – will struggle to recover. Oil infrastructure in Zuetina, Brega, Ras Lanuf and elsewhere has been heavily damaged. The TNC is already in conflict with Arabian Gulf Oil, its only hope for resuming output in the east, where it hopes limited exports from Sarir and Misla will resume “within weeks”. And how the National Oil Company, still under government control, fits into a post-Qadhafi Libya is unclear.

When the conflict started, Qadhafi promised to wreck Libya’s oil industry. For the most part, he’s kept his word. If Libya survives as a country, it will be years before it regains its status as an important oil producer. Supply disruption risks becoming supply destruction.

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