Libya: Oil Bandits Make Off With $30 Million Worth

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March 12, 2014: The North Korean registered ship that fled Es Sider with $30 million worth of oil is actually owned by a Saudi company and the owners will now try to sell the oil on the black market and share the proceeds with the rebel militia that controls Es Sider. That militia was originally the security guards hired to protect the port. But a local militia leader persuaded the guards to seize control of the port last August. The government stopped paying the rebel guards and their leader has been trying to sell the oil stored at the port ever since to keep his scam going. The government threatened to use force to stop that and after three months of success has failed. Parliament then fired the prime minister, began investigating him for corruption and appointed the defense minister as temporary prime minister. The new prime minister, at the urging of parliament, ordered the military to move on the ports within a week and this may fail as well. This latest chapter in the Libyan Follies should be played out by April 1 st .

Meanwhile the oil exports continue to decline. A permanent replacement for the deposed prime minister will be selected by parliament by the end of the month and he will face a growing mess. Parliament is still divided with about half the members supporting the establishment of a religious dictatorship while the other half backs an ongoing democracy. Neither group has had sufficient clout to make their version of Libya work. The pro-religion block is divided into many factions, most of them armed and many willing to kill to get their way. The democrats argue more than they act and have more problems with corruption. While the religious groups are less corrupt they are also less willing to accept orders from anyone who does not agree with their particular version of Islam.

The basic problem is that Libyans have proved unable to agree on how to handle their oil wealth. The tribes living where the oil comes from want a larger share. Actually, everyone wants more, for one reason or another. In the last year various local militias near the oil fields and export terminals have seized these facilities halted most (over 70 percent by the end of 2013 and over 80 percent now) oil exports. All this was largely unexpected because at the start of 2013 oil production was at 1.4 million barrels a day and nearly back to normal. Then greed got the best of many factions who decided their loyalties were more to themselves than to Libya as a whole. It’s been downhill since then.

Before the 2011 revolution oil accounted for over 90 percent of government revenue and over 70 percent of GDP. With over $14 billion in oil revenue lost so far the government is running out of credit and will soon have no way to pay for essential imports, like food. These shortages have begun to appear and that is driving many people to either back the government or use more desperate measures to grab whatever they can.

Because the refineries that provide fuel for Libyans are also shut down the government has to spend scarce cash to import fuel. That won’t last long because the government will have run out of cash and credit sometime in 2014. After that the economy will collapse and with that food and other essentials will not be available for most Libyans. Before that happens, force will be the only option, as starvation is the last thing anyone wants. The economy is already in decline because many payments have not been made for things that can be delayed (infrastructure and replacements for old or destroyed equipment). The government ordering the troops in does not sound so crazy in light of the dire financial situation. The absence of law in most of the country is crippling the economy, which is still trying to recover from the 2011 revolution. Kaddafi tightly controlled the economy and his overthrow was supposed to allow economic activity to flourish. But the widespread presence of armed men taking what they want and kidnapping for ransom has made entrepreneurs and investors unwilling to do much.

In most parts of the country there is no law other than what the local militia provides. This isn’t a lot different from what Libya has been used to for thousands of years. Even under four decades of Kaddafi the country was feudal, with Kaddafi giving control of parts of the country to trusted subordinates who could do what they liked as long as there was no unrest and no defiance of the national government. The monarchy before that operated the same way as did the Italian colonial government before that and a long series of feudal and warlord rulers stretching back into antiquity. Democracy is something new for Libya and the voting is done more with guns rather than ballots. The election results are ignored by the militia, tribal and terrorist and gang leaders. While many Libyans seem to understand that they must either act together or endure endless armed chaos it is unclear if this majority will, or can, act together and restore peace and prosperity. If Libya does slide into complete chaos the international community will find itself with another Somalia, but one with oil. Turning that oil into cash is difficult because the oil production and export facilities are vulnerable to attack and difficult to rebuild in a combat zone.

Sporadic fighting continues in many parts of the country, especially outside the capital (Tripoli) where pro-Kaddafi militias are still active and along the southern border where pro-Kaddafi tribes resent the loss of cash and goods Kaddafi would regularly send them. In the east (Benghazi) Islamic terrorist groups often fight with each other and anyone else who openly disagrees with them.

The UN accused recently Libya of being a major source of illegal weapons exports. Various criminal gangs, Islamic terrorist groups and militias are shipping out small arms and other portable weapons stolen from government warehouses during the 2011 civil war. UN investigators have found Libyan weapons illegally exported to at least 14 countries, mostly in Africa and the Middle East.

March 11, 2014: Parliament dismissed the prime minister because the government failed to stop a North Korean tanker from loading $30 million worth of oil at the militia held oil export port of Es Sider and escaping to international waters despite the presence of a navy gunboat. The parliament also ordered the new prime minister (the former defense minister) to send a military force, within a week, to the three oil export port militias have seized and restore government control. The government has resisted taking this approach because of a shortage of troops, fear of damaging the ports and uncertainty that such an effort would even work.

March 9, 2014: A North Korean tanker docked at the militia held oil export of Es Sider and has begun loading oil. The government sent a gunboat and threatened to fire on the North Korean ship if it tried to leave with the oil.

March 5, 2014: A 37,000 ton oil tanker flying the flag of North Korea approached the oil export port of Es Sider. The government warned this ship to go away, as the rebels holding Es Sider have been trying to sell the oil stored at the port all year and a government gunboat chased away a Maltese tanker in January. The North Korean ship did not dock because the workers at the port are still loyal to the government and refused to assist in loading oil. The rebels required several days to find someone who would take care of doing the loading for them.  

March 4, 2014: In the capital a militia attacked the state controlled TV station. The culprit was believed to be a militia that had been driven out of another TV facility recently by government forces. In the east (Benghazi) an air force colonel was assassinated.

March 2, 2014:  In the capital armed protestors broke into the parliament building and beat some members of parliament. The protestors want new elections. In the east (Benghazi) a French engineer was found shot dead. Much of Libya is lawless and robberies and murders, especially of government employees or foreigners, is increasingly common.

March 1, 2014: In the capital armed belong to a pro-government militia dispersed protestors holding a sit-in protest outside parliament. The large crowd was there to try and force parliament to make the country work. No one seems able to do that, but protesting and using force to get your way are very popular.

February 26, 2014: In the east (Benghazi) gunmen murdered two policemen.

February 25, 2014: In the east (Benghazi) gunmen murdered a policeman. In the south (Sarir) days of fighting between rival pro-government militias damaged a power plant and put it out of action. The government wants to make repairs but has no money for that. This means there will probably be a severe lack of electricity in the region around Sarir until the plant can be fixed.

February 24, 2014: Seven Christians were found dead on a beach after being kidnapped from their homes in Benghazi by an Islamic militia. This is the second such incident in Benghazi this year.   

February 22, 2014: In the east (Benghazi) someone planted a bomb in the car of an army commando and that killed the soldier when he got in the vehicle.

 

 

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