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Libya's rebels struggle to secure cash and recognition

Oil remains at the heart of an increasingly bitter war of words between the government in Tripoli and Benghazi-based insurgents

At three o'clock in the morning on 6 January two gunshots rang out above the Maltese-registered oil tanker, Baku, as it cruised the Mediterranean just outside Libyan waters. The warning shots were fired by a Libyan navy vessel. Responding to them, the Baku turned, changing course for Malta. Later that day, Libya’s beleaguered prime minister Ali Zeidan announced on national television that the navy had engaged a tanker trying to smuggle stolen crude out of the rebel-held port, Es-Sider, and threatened severe repercussions if other tankers attempted a similar journey. “Any country or company or gang trying to send a tanker to take oil from the seized ports without coordinating with the [National Oil Corporation (NOC)], we will deal with them, even if we are forced to destroy or sink them,” Zeidan said. “There will be no leniency.”

The confrontation between the navy vessel and Baku was a rare triumph for Zeidan in a conflict that has cost the central government an estimated $10 billion in lost oil revenue and significantly damaged Libyans’ faith in the country’s political leaders. The cause of Libya’s lost revenues and Zeidan’s loss of face is Ibrahim Jathran – the charismatic leader of a rebel movement that is pushing for a bigger share of the country's mineral wealth and autonomy for Cyrenaica, the country’s oil-rich eastern region.

In the six months since the rebellion against Tripoli started, the eastern rebels have become increasingly organised and entrenched. In July and August last year they took control of three of Libya's biggest terminals with a combined export capacity of 600,000 barrels a day (b/d). The rebels then went on to create their own parliament, built strong relationships with regional tribes, and unveiled a formal army -- all while the central government has struggled, ineffectually, to take back control of the ports.

Hobbled by an army that has yet to reach full strength, the central government fears any attempt to use force to reopen the oil terminals could spark a wider conflict. The rebels are also reluctant to spill Libyan blood, concerned that it could turn the public against them. This has meant that the battle between the two sides has mainly been fought on Libyan television, with each side trying to win over public opinion and get the better of their opponents in press conferences. The rebels have shown an aptitude for a war waged by media. Their leadership frequently bests its government rivals with carefully stage-managed public appearances and have even launched their own 24-hour cable TV channel, A'Ruaya, to champion their cause.

Money and respect

Throughout their media war, the rebels have proven themselves wily political operators, adept at promoting their ideas and making trouble for the government, but the Libyan navy's recent confrontation with the Baku has highlighted significant obstacles that could potentially tip the rebels into crisis. The most crucial of these is a lack of funds to fuel their political machine. The obvious answer is to export oil from the rebel-controlled ports – but this is proving problematic.

Since the beginning of the blockades, Libya's navy has turned away two tankers that attempted to dock at rebel controlled ports. The first was the A Whale, which approached Es-Sider in September last year. The Baku was second. Both were chased away by the Libyan navy. Officially, the rebels have denied having anything to do with the tankers, but insiders admit the two incidents were thwarted attempts to export oil. According to those with links to the rebels, the issue of exporting oil is becoming ever more divisive among the group's leadership, which is running increasingly low on funds.

Speaking in a CNN interview broadcast from the A'Ruaya studio on 14 January, Jathran said his men haven't been paid for a loyalty-testing five months. “We are determined to export oil in order to secure finance for the military the police and the administration, particularly the troops that protect the oil facilities,” he said. “We will do that in the near future.” Jathran claims his army and navy can protect any tanker that needs to dock as part of an oil deal. Letters sent to potential oil customers by the rebel’s own oil company, Oil and Gas Corporation, promise to provide a security escort for tankers from “entry into Libyan territorial waters until exit of Libyan territorial waters”.

But recent events leave analysts sceptical. “In the short to medium term, any similar – illegal – attempts to lift crude at the blocked terminals are likely to fail,” says John Hamilton, contributing editor at Africa Energy. According to Hamilton, oil exports from the occupied ports may be possible in the long term, but success hinges on legitimising oil sales by gaining international recognition for the rebel government, something Jathran has yet to achieve.

Seeking recognition

In their pursuit of international recognition, the rebels have made some risky moves, some of which have done more harm than good. Late last year the rebels employed the services of political lobbyist and former employee of the Israeli Military Intelligence Directorate, Ari Ben-Menashe. Speaking in November, Ben-Manashe said he had met up with rebel spokesman and member of the Cyrenaica Council, Osama Buera, promising that he could win the rebels public recognition from the Russian government in return for $2m. 

This statement is backed up by a document, published on the website of the US Justice Department, which bears the signatures of both Buera and Ben-Manashe. The document registers Ben-Menashe's firm, Dickens and Madson, as the official lobbyist for the rebels in the US. On it Ben-Menashe pledges to “strive to... gain political recognition... from the Russian Federation”. It also says that Dickens and Madson will try to solicit oil deals for the rebels and strengthen their military forces by securing grants for military equipment and training from overseas governments.

So far, this lobbying has not borne fruit overseas, but it has caused a stir in Libya. When the documents revealing the deal between the two parties surfaced, it sparked a public backlash against the rebels with many Libyans taking to social media to express concern about Ben-Menashe's ties to Israel and accusing Jathran of trying to “buy” Cyrenaica's sovereignty.

Common ground

The Baku incident rattled the oil markets, with traders expressing concern that the confrontation could mark the beginning of a descent into all-out military conflict between the two sides, further disrupting oil supplies. This hasn’t happened yet and on 14 January Zeidan said he was renewing efforts to make a deal with rebels using mediators to try to find common ground. “We have two solutions: through force or peaceful means. We prefer the peaceful way. We have found some people who say they can do this, and we will give them the chance,” he said.

The mediators have their work cut out for them. Both Zeidan and Jathran are adamant that they will not compromise on key issues. Jathran says the people of eastern Libya won't get a fair deal until Cyrenaica has autonomy and the power to administer its own oil deals. Zeidan says the majority of Libyans reject federalism.

Though their views are seemingly irreconcilable, the circumstances surrounding the stand-off are putting both sides under increasing pressure to make a deal. Lacking a strong army and support from the powerful tribes that dominate Libya's east, Zeidan's options are limited. But so are Jathran's. His continued failure to successfully export oil has undermined his claims of being able to field a military force that can take on the Libyan navy and cut him off from vital funds. As the stalemate grinds on the two sides are increasingly losing out – both on funds and public support. Finding common ground could eventually become the least painful option for both parties.

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