How to Save Libya From Itself? Protect Its Oil From Its Politics

A member of the eastern-based Libyan National Army outside an oil terminal in Zueitina, Libya, last year. Credit Esam Al-Fetori/Reuters

For years now, opportunists of all stripes, local and international, have tried to profit from Libya’s seemingly endless instability by disrupting its oil production.

The latest incident was triggered by the recent, sudden souring of relations between Qatar on the one hand and Saudi Arabia, the United Arab Emirates, Egypt and Bahrain on the other. One of the several groups that purport to be Libya’s rightful government is using that dispute as a pretext to seize control of the country’s oil and gas exports: It has accused the National Oil Corporation, the internationally recognized body responsible for managing these resources, of working in the service of Qatar by diverting oil revenues to it via an N.O.C. customer.

I am the N.O.C.’s chairman, and these allegations are false. But they shine a bright light on Libya’s current tragedy. Since the revolution of 2011, the country’s oil and gas resources have been held hostage to both its fractious politics and power struggles in the Middle East.

State institutions have been devastated since 2011. Two camps claim to constitute the country’s legitimate leadership. One, based in Tripoli, is backed by Western governments, Turkey and Qatar; the other, based in the eastern city of Tobruk, is backed by Saudi Arabia, Egypt and Russia.

Representatives of both camps reached an agreement in December 2015, acknowledging the House of Representatives, in Tobruk, as the country’s official legislature; giving a strong consultative role to the previous parliament, the Tripoli-based General National Council; and creating an interim Government of National Accord to mediate between the two. But the deal has failed to bring much stability.

The political turmoil has had a calamitous impact on the economy. The World Bank estimates that gross domestic product per capita in 2016 had fallen by almost two-thirds from its pre-2011 level. Most of Libya’s headline problems — internal conflict, terrorism, piracy, the trafficking of drugs and people — have their roots in this combination of economic and political collapse.

Under Col. Muammar el-Qaddafi, Libya was a classic petrostate, and it remains that today. Absolute dependence on oil and gas, which account for 95 percent of export revenues, has helped turn political infighting into a winner-take-all contest.

The Petroleum Facilities Guard, which is charged with protecting Libya’s oil infrastructure, has devolved into local fiefs. Between 2013 and last September, these blockaded nearly all of Libya’s main oil ports and tried to leverage that chokehold into ransom money and political power. That cost the country over $120 billion in lost revenues and most of its financial reserves. The guard’s rivals and the Islamic State have attacked the ports, causing billions in damage.

The N.O.C. has also had to contend with assaults on its independence as a decision-making body. This spring the United Nations-backed Presidency Council, which oversees the Government of National Accord, issued a decree transferring to itself the N.O.C.’s most important functions, such as the right to negotiate concession agreements with foreign companies or set the sale price of Libya’s oil. The move was blocked by an appeals court in Benghazi, but we cannot discount the possibility of similar attempts in the future.

The camp based in the east — a loose affiliation of federalists, the last elected parliament and the Libyan National Army — controls almost all the oil ports. Yet it cannot legally export oil because resolutions of the United Nations Security Council reserve that right to the Government of National Accord, based in Tripoli.

Caught between those rivals, we at the N.O.C. intend to remain neutral until there is a single legitimate government we can submit to. In the meantime, the integrity of the N.O.C. — arguably the only institution today that can still function across the entire country — must be protected. The organization must not be split up. Its monopoly on oil and gas exports must not be broken.

The mandate of Operation Sophia, the European Union’s anti-smuggling mission, was recently extended for another year. Currently focused on the smuggling of people and arms in Libyan waters, the mission should be expanded to also cover oil smuggling and liaise with the N.O.C. to interdict rogue tankers.

Another useful measure would be to amend the Libyan Political Agreement, the United Nations-sponsored deal from 2015. Its main parties are considering changing the current government’s structure. But the agreement should also be revised to reinforce the N.O.C.’s authority and neutrality.

The N.O.C.’s board, which comprises technocrats appointed by recognized governments soon after the 2011 revolution, should be insulated from arbitrary changes. Its investment and maintenance budgets must be guaranteed. It should be granted the power to negotiate new foreign investments so that it can reach its revenue goals and help stimulate the domestic economy.

The N.O.C. must operate with the highest degree of transparency, and I am happy to open our books to scrutiny. The Central Bank and Ministry of Finance should also make public their expenditures, since it is they, not the N.O.C., that control Libya’s oil revenues and distribute them — or not — according to a controversial interim budget produced by the Government of National Accord. All this money ultimately belongs to the Libyan people, and they have the right to know how it is spent.

The N.O.C. expects that very soon oil production will reach one million barrels per day for the first time since 2013. With this milestone, we have the opportunity to build up our financial reserves and restart the economy, including by using oil-sector investment to help develop local industry.

Ring-fencing Libya’s oil sector from local and international rivalries would have an enormous impact on the country’s prospects, both economic and political. It would de-escalate the current internal conflict. It would unlock the potential of oil as a driver of national regeneration. It would, in short, allow the country’s resources to be put to work for their rightful beneficiaries: the people of Libya.

Mustafa Sanalla is the chairman of the Libyan National Oil Corporation.

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