Libya Tribune

By Wolfram Lacher

The 17th February Revolution has fundamentally reshaped Libya’s political landscape.

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An Emerging Area of Conflict: The Economy and Public Sector

The economy is beginning to emerge as another area of conflict, principally over state expenditure and the public sector, property rights and control of smuggling. The latter is already the subject of armed conflict.

Libya’s economy depends almost entirely on state spending funded by oil revenues. Distributive policies take a variety of forms: subsidies on food, fuel, electricity and water; investment in infrastructure and housing; employment in the public and parastatal sectors; pensions and social benefits. While investment in infrastructure has been largely suspended since the civil war and – as of May 2013 – has yet to resume, other expenditure items have risen sharply.

After Gaddafi doubled public sector salaries in March 2011 and local councils and local branches of government ministries temporarily recruited new staff after the revolution, the salary budget rose to 19 billion dinars (u11 billion) in 2012, from 8 billion dinars in 2010. 126

This figure does not include payments to the new units under the umbrella of the defence and interior ministries, which added around 200,000 salary recipients. The NTC sought to enhance its popularity with one-off payments to the entire population to mark public holidays. 127

The GNC has followed the NTC’s example on several occasions. It has also massively increased social allowances that are paid out to the whole population, like child benefit, women’s and housing allowances. 128

While real or supposed revolutionaries expect to receive financial benefits for demobilising, the Warrior’s Affairs Commission has further raised such expectations. 129

Representatives of revolutionary war invalids occupied the GNC for weeks in February and March 2013, with a highly successful result, 130 and veterans of the Chad war have also mobilised to demand benefits. 131

The current institutional chaos offers diverse opportunities for manipulating or embezzling such payments. Local demands are beginning to produce distributive conflicts. Local councils negotiate their budgets with the government on a case-by-case basis, thereby entering into competition with each other. The oil workers’ union and other pressure groups in Benghazi are negotiating with the government about moving the headquarters of the National Oil Corporation (NOC) to Benghazi, and they can rely on broad political support in the city. 132

Armed protests to press material demands are becoming ever more frequent, with groups claiming to represent the interests of particular cities, tribes or brigades occupying oil fields, refineries or export terminals and bringing production to a halt. 133

Some of the units that have deployed to protect oil-producing areas have begun extorting protection money, and at times have clashed with each other over the lucrative business of securing individual oilfields. 134

The government is highly vulnerable to such demands; a harsh response would only risk escalation. Overall, there is a trend towards a massive expansion in state expenditure and the public sector. The government’s increasing generosity underlines its weakness.

The fault lines of the revolution also come to fore in public-sector distributive conflicts. The purges of the former elites from state-owned enterprises are still ongoing, and expanding into second-tier management. Some dismissals have occurred at the initiative of government and the Integrity Commission, others under pressure from employees or the public. The first generation of executives appointed during or after the revolution is now also coming in for public criticism.

Employees have demanded managerial resignations for reasons ranging from incompetence to personal rivalry, but many accusations revolve around involvement with the former regime. 135

Power struggles between rival networks over appointments to vacated posts are only just beginning, with individuals associated with Mahmoud Jibril’s networks, who were given lucrative posts after the revolution, coming under pressure. 136

Kib’s ministers also appointed their allies to positions in companies they were responsible for, and these individuals now find themselves exposed to similar ambitions on the part of their successors under Zeidan. Misratan business networks, which are strongly represented in the large state-owned enterprises, are facing Integrity Commission decisions to remove some of their prominent representatives from key posts. 137

The giant conglomerates that manage state investments in infrastructure and housing were at a standstill until early 2013, and as they resume operations the appointment of new executives is likely to provoke struggles among political elites. But the big corporations cannot recommence normal operations until the corrupt structures in which many of their contracts are mired have been cleaned up. Investigating committees have been to do this, but have yet to present results. 138

In addition, conflicts over property rights are emerging, and these too run along the fault lines of the revolution. In the late 1970s and early 1980s Gaddafi nationalised and redistributed private property on a grand scale. This policy destroyed the power base of the traditional elite and bourgeoisie, which fled abroad to form a large part of the exile opposition. The former owners have returned with the revolution, often in leading political or military roles, and are exerting strong pressure. While a committee is examining the problem, many former owners have begun repossessing their land or buildings by force. 139

Given that the current occupants are often socially disadvantaged families who had benefited from Gaddafi’s measures, the handling of this problem will decide whether the group of losers (and potential opponents) of the revolution grows still larger. Conflicts over economic resources are already acute in the field of illicit activities, with competition for control of smuggling routes one cause of clashes between Toubou and Zuwayya in Kufra, between Awlad Suleiman and Gaddadfa in Sabha, and between Zuwara and Nawail on the Libyan-Tunisian border. 140

Subsidised products (food and fuel), as well as vehicles – for which import duties were abolished with the revolution – make up the bulk of goods smuggled out of Libya. 141

Arms and drug smuggling have also increased enormously since the fall of the regime, and members of the security forces risk their lives combating heavily armed smuggling gangs. 142

Conclusions

The matrix of a power struggle between Islamist and secular/liberal forces, into which some observers try to squeeze the political dynamics of the new Libya, is misleading. First, because local interest groups dominate the political landscape; second, because the dominant fault line is that of the revolution and civil war. The divide runs between a camp seeking to monopolise the uprising’s gains, and the actual or potential losers of a continuing revolution. It runs right through Libya’s elites, and threatens to separate cities and tribes into winners and losers.

The balance of power is still in the making, but the rifts opened up by the civil wars could define the political dynamic for years and become a lasting source of tension. They are also likely to dominate the upcoming constitutional process. The distribution of power among local actors is set to be among the most controversial issues, entwining questions of decentralisation, federalism and ethnic minority rights.

Questions concerning Islam and its role in legislation are much less conflict-laden, as secular political forces play no role in Libya, and conservative interpretations of Islam enjoy wide support.

External actors are of secondary importance in the political dynamics unfolding in this complex situation – although the way they are perceived in Libya is very different. Many suspect the machinations of foreign governments behind the new political forces. Representatives of individual cities, ethnic minorities, federalists, parties, and militias are all regarded by their respective opponents as the agents of various external powers.

International actors were well advised to tread a cautious path after the NATO intervention, and the UN support mission (UNSMIL) still operates above all in an advisory capacity. A still unresolved balance of forces, institutional chaos and a fragmented political landscape also present obstacles to stronger external engagement. Outside support for the security sector is hampered by the politicisation of individual units and institutions.

Despite these difficulties, foreign governments, the European Union and UNSMIL are already competing for the favour of the Libyan government in their offers to reform the security sector or train and equip individual units. In some cases this has instead worsened confusion in the security sector.

In view of the acute conflicts in the country, support in rebuilding the security sector should remain a priority of bilateral and European cooperation. But such assistance must take account of politicisation and tensions within the sector. In this context, supporting individual units and institutions is associated with risks; assistance in establishing structures for control and accountability in the security sector could be more appropriate in the current situation. Bilateral initiatives should be closely coordinated with the European Union and UNSMIL, to avoid overtaxing the complex structures on the Libyan side. Generally, external support should not be addressed to individual actors, but designed to create structures and forums that contribute to resolving the conflicts between the political forces of the new Libya.

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Wolfram Lacher is an Associate in SWP’s Middle East and Africa Division

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NOTES:

126- “Kib Government Spent Five Billion Dinars on Furniture”, Quryna, 7 January 2013, www.qurynanew.com/47187.

127- Law 10/2012 of National Transitional Council, “On Payment of a Sum of Money to Libya’s Families on the Occasion of the First Anniversary of the 17th February Revolution”, Tripoli, 15 February 2012.

128- “Following Proposal from Justice and Construction: National Congress Amends Family and Housing Benefit For Libyan Citizens”, al-Manara, 6 November 2012, tinyurl.com/bburz5d.

129- “LD 500 Million Project Being Prepared” (see note 91).

130- The war-wounded were promised monthly payments of LD2000 for life and also provided with vehicles and homes. “Cabinet Makes Concessions to War Invalids”, Quryna, 22 February 2013, www.qurynanew.com/49258.

131- “Tripoli Receives Plan for Payments to Chad War Veterans”, al-Tadhamon, 1 November 2012, tinyurl.com/a5chbtv.

132- “Benghazi Union Rejects Minister and Demands NOC Headquarters”, Libya Herald, 12 December 2012.

133- The occupation of the Zueitina Terminal near Ajdabiya in December 2012 and January 2013 by a small group of armed demonstrators caused losses of about $25 million. “Al-Aroussi: Protests at Zueitina Oil Port Causing Daily Loss of $1.3 Million”, Quryna, 8 January 2013, www.qurynanew.com/47240. Another example is the protests at Ubari. “Tebu Say Obari Oil Field Protest Over after Meeting with Minister”, Libya Herald, 19 December 2012.

134- Many units deployed around oil and gas facilities since the revolution have been recruited from civilians, and are officially part of the Guard Force for Borders and Vital Facilities (the border guard). While also receiving payments from the defence ministry, they have generally established much more profitable arrangements with oil companies, which can border on protection rackets. Discussions with oil executives and former members of revolutionary brigades, Tripoli, November 2012 to March 2013. “Armed Men from Zintan Prevent AGOCO Aircraft Landing at Hamada Oil Field”, Quryna, 7 December 2012, www.qurynanew.com/45911; “Work at Ghani and Dahra Oilfields Suspended Due to Security Problems”, al-Tadhamon, 21 March 2013, tinyurl.com/cewqoh2.

135- Sharp controversies flared around the steering committees appointed by the NTC to run the major state investment funds. There were vociferous protests against Mahmoud Jibril’s re-appointment of Rafik al-Nayed as chief executive of the Libyan Investment Authority (LIA). Nayed had already held the post since late 2010, and has close family ties to Jibril. His successor Mohsen Derija, who cannot be accused of connections to the old regime, quickly alienated the remaining LIA staff. Derija was dismissed by Zeidan in February 2013, but for almost two months defied the decision and continued to visit his office with an armed group from his home city of Misrata, before giving in. The new chief executive of the Libyan African Investment Portfolio, Ahmed Kashada, who had made his career at the LIA, is criticised for his family ties to Gaddafi confidant Mustafa Kharroubi. “After Gaddafi: A Spent Force”, Financial Times, 8 September 2011; “LIA Staff Demonstrate for Protection of Libyan People’s Funds”, al-Watan al-Libiya, 1 July 2012, tinyurl.com/aqnlaeb; “Zeidan: I Have Decided to Dismiss the Chief Executives of the LIA and the Social Solidarity Fund”, al-Tadhamon, 1 March 2013,tinyurl.com/ccva25v.

136- Alongside al-Nayed, for example, Faraj al-Sayeh, chief executive of the Social Solidarity Fund since late 2011, also belongs to Jibril’s network, with whom he served on the Economic Development Board during the Gaddafi era. He faces tenacious resistance among Fund staff. During the revolution al-Sayeh was one of Jibril’s closest confidants in the executive committee of the Transitional Council. Al-Sayeh’s brother Jum’a was elected to the GNC as an independent with the support of Jibril’s Alliance. Another example is Wafiq al-Shater, who Jibril appointed to the stabilisation committee during the revolution member and is now chief executive of LAP Green, the state telecommunications investment fund. Al-Shater’s father Abderrahman belonged to the Alliance for a time with his party, and was also elected to the GNC as an independent. In April 2013, Abderrahman Shater’s GNC membership was suspended by the Integrity Commission. “Staff of Social Solidarity Fund Demonstrate Against Corruption and Aberrations”, Quryna, 4 October 2012, www.qurynanew.com/15015.

137- In December 2012, the Integrity Commission ordered the suspension of Mahmoud Badi, Chairman of the Economic and Social Development Fund (ESDF), and in April 2013, the suspension of Abdelhamid Dabeiba, General Manager of Libyan Investment and Development Holding Co. (LIDCO). Dabeiba already held his post during the Gaddafi era, while Badi held other senior positions. During the revolution, both funded revolutionary brigades in their home city, Misrata. Dabeiba and Badi have remained in their posts and are appealing the decisions.

138- “Libya Probing Oil Firms’ Contracts under Gaddafi”, Reuters, 9 April 2012; “Transitional Government Sets Up Committee to Investigate Existing State Contracts”, al-Tadhamon, 24 June 2012, tinyurl.com/b8utpft.

139- “First Session of Committee to Investigate Proposal to Annul Law 4/1978”, al-Watan al-Libiya, 15 March 2012, tinyurl.com/beew6fn; “Thousands of Libyans Struggle with Recovery of Property Confiscated by Qaddafi”, New York Times, 13 May 2012; “Federation of Property Owners: We Demand Restoration of Law Amended by Gaddafi”, al-Tadhamon, 14 November 2012, tinyurl.com/a5qsbkf.

140- Cole, Borderline Chaos? (see note 69).

141- Libya’s budget for explicit subsidies was 14 billion dinars (u8.2 billion) in 2012. Libya’s National Planning Institute estimates that one third of all subsidised products are smuggled abroad.

142- “Libya Closes Umm Saad Border Crossing After Numerous Attacks on Security Forces by Smugglers”, Quryna, 1 July 2012, www.qurynanew.com/37513; “Border Security Officer Assassinated in Benghazi”, Libya Herald, 5 July 2012; “Members of Border Force 71 Demand Intervention by Authorities to Protect Them”, al-Tadhamon, 1 October 2012, tinyurl.com/baavhw4; “Commander of Border Guard Visits Those Injured in Attack on Tamanhant Base”, Quryna, 2 April 2013, www.qurynanew.com/50617.

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