Libya Briefing Overview of Discussion 150711

LIBYA BRIEFING JULY 2011

LIBYA BRIEFING: OVERVIEW OF DISCUSSION

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LIBYA BRIEFING JULY 2011

LIBYA: PREPARING FOR LIFE AFTER QADDAFI

Richard Ayton, director at Aegis Advisory, travelled to Benghazi in April and May 2011 to examine the situation in the rebel-held east of Libya at first hand. Here is his assessment of the strengths and weaknesses of the National Transitional Council, the role of the revolutionary militias, the international presence in the region and the prospects for a post-Qaddafi government.

Summary

• The National Transitional Council (NTC) is the only serious political entity in Benghazi. That does not make it a government-in-waiting; indeed, many officials in the NTC are unlikely to become key players in an eventual national government. It faces real problems in maintaining unity, paying salaries and sustaining popular support.

• In a country where corruption has been endemic for so long there is a great deal of suspicion towards foreign business entities seeking to do business with officials in the east. Trying to establish commercial relationships with the NTC and its de facto cabinet, the Executive Office, will therefore be difficult and must be built with extreme caution.

• The transitional phase when Colonel Qaddafi is eventually ousted will be extremely unpredictable at best, chaotic and violent at worst. The country faces huge challenges in building institutions from scratch and holding viable, inclusive elections before factionalism and popular unrest spread.

• The time for a corporate return to Libya has not yet arrived and thus it would be highly unwise to make long-term plans at this stage, given the suspicion of foreigners seeking contracts and of Libyan officials on the take. If a friendly business climate does emerge and the new government recognises the importance of getting the oil sector back on its feet as quickly as possible, Libya will be a market to watch – but the timescale for this is far from certain.

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Detail

The National Transitional Council

1. In terms of identifying a ‘rebel government’ in Benghazi the National Transitional Council (NTC) is the only show in town. However, it faces tremendous challenges in paying salaries to the majority of the population, maintaining unity in its cabinet, or Executive Office, and sustaining popular support. It does not enjoy strength in depth and many of its ministries consist of very few staff. Security concerns mean that it is unable to benefit from oil revenue as forces loyal to Colonel Qaddafi, which can still move freely in large areas of desert, would potentially be able to attack any oil infrastructure that resumed operations. Mahmoud Jebreel, the NTC's prime minister, remains abroad and appears increasingly out of touch (an internal scandal over a secretly planned conference in Rome, organised by Jebreel but without consultation in Benghazi, is a prime example of this).

2. Furthermore, a lack of firm financial support from foreign countries means the NTC is desperately short of cash. If and when it is no longer able to pay salaries and subsidies, the NTC will struggle to maintain social solidarity, stability and public order – key factors in the rebels’ ability to sustain the military battle. The NTC is certainly not a government-in-waiting; most of its officials will not play a part in any eventual post-Qaddafi government.

The militias

3. At present the February 17 th militias are united by a common cause: the removal of Qaddafi and the unification of the country. There is, therefore, little factionalism in evidence thanks to this sense of solidarity. The survival of Misrata and Benghazi kept the dream of a unified Libya alive and the opening of a second front in the western mountains has sustained the popular perception of military progress, however slow. However, once Qaddafi has gone – and the rebels have spilt too much blood to countenance a deal that would involve his maintaining any political role – this unity will be threatened. The gap between the collapse of central authority and the establishment of a legitimate replacement is the point at which armed groups may seek to seize economic assets and/or create areas of control – a prospect made all the more likely in a country now awash with arms. Disarming and demobilising the militias will be high on the wish-list of any new government, yet it is far from certain that this can be achieved quickly.

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The transition

4. Given these dangers, and adding them to the challenge of creating a democracy from a standing start, the transitional phase after Qaddafi has been ousted – itself subject to an entirely unpredictable timeframe – is full of uncertainty. The list of concerns is a long one: it will be imperative to arrange national elections as soon as possible, but the experience of Egypt and Tunisia suggest strongly that this will be extremely difficult and dependent upon an acceptable ‘caretaker’ government able to maintain order while a vote is organized and a new constitution drawn up. Qaddafi destroyed or undermined many if not most of the institutions usually identified with democracy and these will need to be built from scratch. For 40 years there has been no freedom of speech, no free press and no political opposition. The land registries were destroyed in the 1970s and sorting out land ownership will be incredibly complex.

5. There is a clear need to retain senior professionals in government and commerce, in particular the oil sector, from which the country derives over 90% of its GDP. However, there will be a number of competing claims on civil service jobs: those in the west who are nominally in existing posts; those in the east who are mirroring their functions in the rebel government; western defectors who once filled important positions; exiles who will lay claim to top posts in a new government despite not having been to the country for 40 years. From the foreign business point of view this transitional period will be a muddle, to say the least, and there will be considerable tensions arising from the process.

Qaddafi, his family and his associates

6. The Qaddafi regime has proved to be remarkably tenacious. The man himself is highly unpredictable and it is difficult to say when he might leave. He has managed to maintain a rule of repression in Tripoli and other western cities by keeping the support of the intelligence agencies and the loyalty of those who feel they have their backs to the wall and have nothing to lose by fighting on. This level of support should not be underestimated – hence the lack of significant defections in recent weeks – and it potentially enables him to cling on long enough to engender 'war-weariness' in the West. Then again, he could fly into an arranged exile tomorrow.

7. The key question will be which, if any, of his closest associates will be allowed to remain, and how far down the removal of his loyalists 'with blood on their hands' should go. One Russian proposal – Qaddafi's departure, but the participation of his son Saif in subsequent elections – has already proved very difficult to sell in Benghazi. Despite public denials the rebel leadership is in constant contact with figures in the west of Libya on this issue; but if there is no exit strategy or window of

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opportunity for them to leave – no firm policy on this question, in other words – Qaddafi loyalists will be reluctant to come to any peace deal. Resolving this issue is the key to any lasting settlement.

The international presence

8. Without NATO intervention the rebels would have lost Misrata and Benghazi. Despite this, the alliance is the subject of widespread suspicion and frustration in Benghazi, with pledged funds not arriving and the West's ultimate aims and commitment under question. This has morphed into a popular suspicion of a conspiracy against the revolution. Promises of money from both the West and the Gulf have not materialised, leaving the NTC critically short of cash.

9. Despite this, Qatar and the UAE have established a strong presence on the ground, providing tactical assistance at all levels, weapons, and recognition. Such is Qatar's status in Benghazi that the Qatari flag can frequently be seen flying (or painted) next to the revolutionary one. Qatar's motivation is unclear but can at least be guessed at: access to the European gas markets, long-term diplomatic and political aspirations, and potentially US support to act as its proxy.

10. Two powers who have kept their powder dry thus far are China and Russia, both of which are key to any change in the sanctions regime that might benefit the rebels – but both of which have an interest in seeing an already deeply committed NATO wriggle on the end of a hook for a while longer as the conflict drags on. Russia, in particular, is in close contact with both sides, and has historic ties with the old regime.

Other players

11. Despite reports of pockets of jihadist elements the presence of Islamic extremism has so far been low-key – not least a function of Qaddafi's rule, during which fundamentalism was kept on a very short leash. Psychologically, Libya is a Mediterranean, mercantile country with little appetite for Sharia; however, Islamism cannot be completely discounted given the potential for populist elements to gain traction in the event of a chaotic transitional period. Any major breakdown in economic and social stability could provide a window for extremists to gain the ear of the people.

12. Similarly, Qaddafi has kept tribes and tribalism under his thumb while incorporating them into the state system – an aspect of the regime that particularly jars in cosmopolitan areas such as Benghazi. Undoubtedly, the revolution emerged from the cities and as a result is strongly anti-tribalist. However, the role of tribal or other traditional structures is stronger in the hinterland. The existence of the

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tribes, and of distinct ethnic groups in the deserts and mountains, cannot be ignored and their concerns and aspirations will have to be considered in the new construct.

Conclusion

13. The time for a corporate return to Libya has not yet arrived. It is impossible to say who will appear in leading governmental roles, the transitional phase from the Qaddafi regime to a new administration could be prolonged, chaotic and violent, and it would be rash to take any commitments from the NTC as reliable in the long term, or to pin one's allegiances to any group or individual in the Benghazi administration. It is worth going in and talking to officials, establishing relationships, trying to build a consensus over business aspirations and relationships. But it would be highly unwise to make long- term plans at this stage, given the suspicion of 'fifth-columnist' foreigners (and of Libyan officialdom in a country dominated by a corrupt elite for so long). To a large extent the country will be a blank sheet for investors. If a friendly business climate does emerge and the new government recognises the importance of getting the oil sector back on its feet as quickly as possible, Libya will be a market to watch – but the timescale for such a normalisation of commerce is far from certain.

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