Oct 3, 2013 | 10:55 GMT

7 mins read

Libya: Oil Declines as Regional Power Structures Crumble

Libya: Oil Declines as Regional Power Structures Crumble

With Libya's top legislative body struggling to reach agreements with its counterparts in regional power centers such as Zintan, Misurata and Benghazi, the country is suffering from a sustained drop in oil production and a deteriorating security environment. Part of the problem relates to further fragmentation of Libya's political landscape, and the central government is hoping that local council elections across the country will help stabilize its political and security environment enough to revive Libyan oil production.

Recently, Tripoli announced that it would extend registration deadlines for nearly 100 local council elections that have been delayed for months due to weak voter interest. The central government's urgency about holding local elections reflects its growing reliance on a widening pool of disparate rural authorities — a departure from its post-revolutionary model of working with larger regional power centers to maintain a fragile peace. Just as Tripoli has been struggling with the limits of its own weakened authority, regional governments are having similar difficulties maintaining control of their own militias and tribal groups, making a sustainable return to stability in Libyan politics or oil production unlikely for the foreseeable future.  

Tripoli's weakened hold over Libyan security and power became evident soon after the ouster of former leader Moammar Gadhafi in October 2011. The interim authority that replaced him, the National Transitional Council, was tasked with holding together a country that is naturally fractured by geography and regional differences, without the strong security and political tools of the Gadhafi regime. The result has been a complicated system of interdependence between the central government and Libya's various urban centers and their respective environs, held together by the distribution of the country's oil revenues.

Initially, the Tripoli-based National Transitional Council, though unelected and inherently temporary in nature, was free to focus on distributing oil revenues and holding the country together until elections could be held for a representative transitional authority, the General National Congress. The interim council largely left power centers such as Zintan, Misurata, and Benghazi to their own devices, relying on cash handouts to fighters and local councils in exchange for a shaky peace. This approach became increasingly tenuous as the National Transitional Council struggled to decide how representation and power would be distributed between Libya's historically semi-autonomous regions — Tripolitania in the west, Cyrenaica in the east and Fezzan in the south.

The Limits of Tripoli's Authority

After taking power in August 2012, the General National Congress faced the daunting task of creating a legal framework to manage the age-old competition between Libya's geographic regions. The constitutional process must balance Tripoli's desire for a strong central government with the reality that powerful regional centers will likely be unwilling to submit to another central authority following their successful revolt against the Gadhafi regime. Western governments are also pushing Tripoli to reassert its authority and mitigate Libya's serious security issues.

Libya: Oil Declines as Regional Power Structures Crumble

Libyan Power Centers

Much of the relative stability Libya enjoyed in 2012 and early 2013 was due to the congress' inability to exert influence or authority far outside the capital and some of its suburbs, largely a result of political infighting. Unlike regional oil-producing centers such as Benghazi, the central government has retained the ability to strike deals with foreign oil companies and to collect and distribute revenues through accounts controlled by the oil ministry in Tripoli. It also pays production and service fees to foreign oil companies. However, it has lacked enforcement mechanisms to protect and ensure oil production and exports. The government has continued to rely on local groups, which in turn have been able to leverage Tripoli's dependence to their advantage.

After Gadhafi fell, Tripoli began coordinating with regional councils in larger urban areas to extend basic social, safety and security services, especially around the country's energy infrastructure. To foster regional dependence on the central government, the ruling council has continued distributing oil revenues to local councils, their militias and regional tribal elements across Libya, and it pays regional militias and local councils to protect oil installations and workers, with many foreign oil companies doing the same on their own.

This system of payoffs and patronage has not been so much a proactive stabilization plan, but rather an acceptance of the challenges the central government is facing — primarily well-armed, well-organized regional and local governments that in many cases can match or even exceed the firepower of the weaker national security forces. Other regional power centers in Libya have been unwilling to empower Benghazi by purchasing oil from the regional government without Tripoli's oversight and authority, especially considering the persistent security concerns in eastern Libya. This dynamic has allowed the central government to retain its key economic supremacy over regional governments. Nonetheless, the limits of Tripoli's authority have been made clear.

Lacking strong enforcement capabilities and wanting to prevent an armed conflict that it would likely lose, Tripoli has been forced to adopt policies of appeasement. Strikes and forced shutoffs of the country's energy infrastructure, once rare but now increasing in frequency and duration, have proved to be an effective way for powerful regional councils and local tribal and militia groups to exact concessions from the General National Congress. Most of the protests have focused on regional autonomy and the distribution of oil revenues, though other issues have emerged as well. For example, a contentious political debate over whether Gadhafi-era officials should be allowed to participate in future governments was decided by a show of force by Libya's regional militias, which besieged government offices with guns in April and May. The incident highlighted the militias' ability to intimidate the congress and influence national policy.

Conflicts Inside Tripoli and Out

Since the General National Congress announced in July plans to move forward with the constitutional drafting process, the Libyan political scene has moved toward stalemate. Conflicts between current Prime Minister Ali Zeidan, a defector from the Gadhafi regime and former human rights lawyer in Europe, and new Islamist-backed President Nuri Ali Abusahmain have exposed a rift within the government. Abusahmain and his Islamist backers in the congress oppose the Western-backed Zeidan, and the president has tried to exploit the poorly defined executive powers in Libya's transitional council to assume more authority. Abusahmain has also been appealing to state military and intelligence leaders to undermine Zeidan's authority.

But the most significant challenges to Libyan stability lie outside Tripoli. As regional power centers have moved away from the central government's sphere of influence, so too have regional tribal authorities and militias become more independent from authorities in Zintan, Misurata and Benghazi. As a result, the number of players Tripoli has to simultaneously appease and threaten to maintain a minimal level of authority has proliferated, exacerbating the central government's challenge of managing the fractured political and tribal landscape. Tripoli's traditional methods of working through regional power centers to rein in protesting oil workers or to ensure security along roads or energy production sites has become less reliable, since local groups are increasingly breaking from regional leaders. In other words, water and power disruptions, along with cuts to oil production, reflect the degradation of Libya's post-revolutionary power structures.

This fractious environment explains Tripoli's strategy to push for local and regional council elections, despite the country's political and economic stagnation. The central government needs to replace or at least augment its traditional group of interlocutors in order to develop ways of managing authorities in smaller, more disparate towns and villages. This will complicate Tripoli's efforts to reach negotiated settlements with regional authorities and militias. Already, the steady degradation of regional council authority has led to more than half of Libya's energy production going offline since August. As a result, the central government has spent most of its reserves and liquidity earned through oil exports since the end of the revolution. On Sept. 30, the International Monetary Fund warned that Tripoli's current levels of spending will place the country at risk if oil production does not return to its post-war average of roughly 1.3 million barrels per day.

Both issues — the crumbling power structures and the possible liquidity crisis — are further undermining Tripoli's already-weak position, and there are no easy solutions in sight. Zeidan held meetings with NATO officials in Tripoli and on the sidelines of the U.N. General Assembly to discuss his country's deteriorating security situation, but foreign involvement in Libyan security would likely create more problems than it would solve. For the foreseeable future, Libya will continue to be plagued with domestic instability, and oil production and exports will continue to fluctuate. Even if Tripoli can strike financial and limited political deals with regional authorities, there is little it can do to prevent future protests and production shut-offs. Tripoli's policies of appeasement have almost certainly ensured that challenges from local groups will continue.

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