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Members of the Libyan army stand after a fire broke out at a car tyre disposal plant during clashes against Islamist gunmen in the eastern Libyan city of Benghazi on 23 December 2014. AFP/Abdullah Doma
Report 157 / Middle East & North Africa

Libya: Getting Geneva Right

After six months of worsening clashes, Libya is on the brink of all-out civil war and catastrophic state collapse. All parties must press the two rival authorities to join a national unity government, resolutely uphold the UN arms embargo, and persuade regional actors to stop fuelling the conflict.

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Executive Summary

Libya’s deteriorating internal conflict may be nearing a dramatic turning point. Over six months of fighting between two parliaments, their respective governments and allied militias have led to the brink of all-out war. On the current trajectory, the most likely medium-term prospect is not one side’s triumph, but that rival local warlords and radical groups will proliferate, what remains of state institutions will collapse, financial reserves (based on oil and gas revenues and spent on food and refined fuel imports) will be depleted, and hardship for ordinary Libyans will increase exponentially. Radical groups, already on the rise as the beheading of 21 Egyptians and deadly bombings by the Libyan franchise of the Islamic State (IS) attest, will find fertile ground, while regional involvement – evidenced by retaliatory Egyptian airstrikes – will increase. Actors with a stake in Libya’s future should seize on the UN’s January diplomatic breakthrough in Geneva that points to a possible peaceful way out; but to get a deal between Libyan factions – the best base from which to counter jihadis – they must take more decisive and focused supportive action than they yet have.

Since mid-2014, fighting has spread and intensified. Aerial bombardment and attacks on civilian infrastructure have increased; at least 1,000 Libyans have died (some estimates are as high as 2,500), many of them non-combatants; and internally displaced persons (IDPs) and refugees have increased from 100,000 to 400,000. The fledging post-Qadhafi state is beginning to buckle: basic goods and fuel are in short supply; in some urban areas people no longer have reliable access to communications or electricity and are using firewood for cooking. The likelihood of major militia offensives in cities like Benghazi raises the spectre of humanitarian disaster. Moreover, Libya faces the prospect of insolvency within the next few years as a result of falling oil revenue and faltering economic governance, as militias battle for the ultimate prize: its oil infrastructure and financial institutions.

As the crisis has deepened, the positions of the rival camps have hardened, and their rhetoric has become more incendiary. Libyans, who united to overthrow Qadhafi in 2011, now vie for support from regional patrons by casting their dispute in terms of Islamism and anti-Islamism or revolution and counter-revolution. The conflict’s reality, however, is a much more complex, multilayered struggle over the nation’s political and economic structure that has no military solution. A negotiated resolution is the only way forward, but the window is closing fast.

The two rounds of talks the UN hosted in Geneva on 14-15 and 26-27 January 2015 mark a minor breakthrough: for the first time since September 2014, representatives of some of the factions comprising the two main rival blocs met and tentatively agreed to a new framework that will at least extend the talks. This is testimony to the tenacity and relentless shuttle diplomacy of Bernardino León, the UN Secretary-General’s Special Representative. The road is long, and there will be setbacks, for example if parties refuse to participate or pull out; the General National Council (GNC) in Tripoli only belatedly agreed to participate in the talks, while the Tobruk-based House of Representative (HoR) announced it was suspending its participation in them on 23 February. Yet, this is the only political game in town and the only hope that a breakdown into open warfare can be avoided. To build on León’s initiative and ensure that ongoing discussion produces an agreement with nationwide support, however, members of the international community supporting a negotiated outcome must reframe their approach and do more to support him.

The way in which they have tended to frame the conflict should be modified first. The dominant approach to the parties has been to assess their legitimacy. The question, however, should no longer be which parliament, the HoR or the GNC, is more legitimate or what legal argument can be deployed to buttress that legitimacy. Chaos on the ground and the exclusionary behaviour of both camps have made that moot. An international approach that is premised on the notion the HoR is more legitimate because elected but does not take into account how representative it really is encourages it to pursue a military solution. Conversely, it feeds GNC suspicion that the international community seeks to marginalise or even eradicate the forces that see themselves as “revolutionary” (among them, notably, Islamists), as has happened elsewhere in the region.

Libya needs a negotiated political bargain and an international effort that channels efforts toward that goal. Outside actors will have to offer both sides incentives for participation and make clear that there will be consequences for those who escalate the conflict. Immediate steps should be taken to reduce the arms flow into the country and prevent either camp from taking over its wealth. The alternative would only lead to catastrophe and should not be an option.

In sum, the UN Security Council and others supportive of a negotiated political solution should:

  • de-emphasise “legitimacy” in public statements and instead put the onus on participation in the UN-led negotiations and on behaviour on the ground, notably adherence to ceasefires and calls to de-escalate. Rather than interpreting the legal and constitutional consequences of the Supreme Court’s ambiguous ruling on this question, they should indicate that those consequences are best negotiated as part of a wider roadmap toward a new constitution and permanent representative institutions;
     
  • be more forthright in confronting regional actors who contribute to the conflict by providing arms or other military or political support – notably Chad, Egypt, Qatar, Sudan, Turkey and the United Arab Emirates (UAE) – and encourage them to press their Libyan allies to negotiate in good faith in pursuit of a political settlement. Military intervention on counter-terrorism grounds, as requested by Egypt, would torpedo the political process, and for now should be opposed. Regional actors who attempt to support negotiations, notably Algeria and Tunisia, should be encouraged and helped;
     
  • devise, without prejudice to the UN’s efforts to achieve reconciliation, political and military strategies to fight terrorism in coordination with Libyan political forces from both camps but refrain from supporting outside military intervention to combat the IS. The GNC and its supporters should unambiguously condemn IS actions, and the HoR should refrain from politicising them.
     
  • keep in place the UN arms embargo, expressly reject its full or partial lifting and strengthen its implementation to the extent possible;
     
  • consider UN sanctions against individuals only if so advised by the Secretary-General and his representative. If enacted, they should be linked to the political process and applied or lifted according to transparent criteria for individuals on all sides, focusing on incitement to or participation in violence; and
     
  • protect the neutrality and independence of financial and petroleum institutions: the Central Bank of Libya (CBL), the National Oil Company (NOC) and the Libyan Investment Authority (LIA); and ensure that these manage the national wealth to address the basic needs of the people and contribute to a negotiated political solution.

Tripoli/Brussels, 26 February 2015

UN acting envoy to Libya Stephanie Williams speaks at the opening of the Libyan Political Dialogue Forum hosted in Gammarth on the outskirts of the Tunisian capital, with the attendance of Tunisian President Kais Saied (C), on 9 November 2020. FETHI BELAID / AFP

Crisis Group Libya Update #1

This Briefing Note provides up-to-the-minute analysis of attempts to end Libya’s almost decade-long civil war through talks focused on reunifying the country’s government, oil-based economy and security forces. It is the first in a series of twice-monthly updates.

Negotiations Run Aground, Threatening Political and Economic Stalemate

A fragile ceasefire signed in October is holding in Libya, and thus far renewed conflict has been averted. But tensions remain high, especially as the year is about to end with no substantial progress in political and economic negotiations that were supposed to pave the way for reunifying a country that has been divided in two, with rival governments and parallel financial and military institutions, since 2014. UN-mediated talks to appoint a unity government are faltering, as delegates have so far failed to agree on how to choose candidates for senior positions. A temporary deal on oil revenues in September enabled the resumption of production and exports and helped de-escalate military tensions in central Libya. But that agreement is unravelling, and new and even more serious financial troubles could ensue. As the window of opportunity for political and economic reconciliation appears to be closing, negotiations risk producing an unstable stalemate that could give rise to a new round of violence.

Political Talks Come to a Halt

More than a month has passed since the UN convened the Libyan Political Dialogue Forum, a gathering of 75 delegates comprising representatives of the country’s two rival assemblies and some UN-handpicked independents. The event was a positive step, aimed at forging consensus behind a new interim unity government and a roadmap to parliamentary and presidential elections. The forum set a date for those elections – December 2021 – and reached agreement on the need for a single three-person Presidency Council and a separately appointed prime minister. These are to replace the Presidency Council of the Tripoli-based Government of National Accord and Prime Minister Faiez Serraj, who is also the council’s head. But that is about as far as the forum went. It was unable to reach agreement on the process by which the 75 delegates would vote for candidates for these open positions.

A first round of in-person talks in Tunis between 9 and 15 November started on the right foot, producing a consensus document entitled “The Preparatory Phase for a Comprehensive Solution”. In the following two weeks, however, meetings – which moved online – got stuck on the question of what voting mechanism the forum should adopt to elect the Presidency Council members and prime minister. Delegates proposed twelve different options, which can be placed into three broad categories.

[The forum] was unable to reach agreement on the process by which the 75 delegates would vote for candidates for these open positions.

The first set of proposals, which appears to enjoy most support among forum participants, suggested splitting the delegates into three regional constituencies (eastern, western and southern Libya) and tasking each group with choosing its representative on the Presidency Council. The selection of the prime minister would be the whole forum’s remit, with two main permutations: one would have regional blocs vote on their preferred candidate first and open the vote to the plenary only at a final stage; the other would have the selection open to the plenary from the outset.

A second set of ideas proposed that forum members be divided along the lines of Libya’s thirteen electoral districts, with each being charged with selecting one candidate for the Presidency Council and then opening up the final vote to all delegates. Under these proposals, members of each electoral district would also be tasked with endorsing a candidate for prime minister from their district, leaving selection of the final winning candidate to a plenary vote.

The third set of options proposed a plenary vote on pre-constituted lists for the three Presidency Council members and the prime minister, each of which at least fifteen forum members would need to endorse before it could be put to a vote. All the proposals provided different mechanisms for determining which person from the three-member Presidency Council should take the title of president and for ensuring that the president and prime minister hail from different regions.  

The lack of consensus behind any of the above options illustrates the difficulties in moving this process forward. Moreover, spoilers appear to be lurking within the forum, keen to sabotage the appointment of a new executive body for different reasons: some  want Serraj to remain in place, because they benefit from the status quo; others believe that the appointment of a new interim government will delay, perhaps indefinitely, the elections scheduled for the end of 2021. As acting UN Special Representative Stephanie Williams, the forum’s chief architect, is due to leave her post at the end of December, the window of opportunity to select a new government could close with her departure, unless her successor opts to give the process another chance, which is far from assured. The failure of political talks could well give rise to a blame game between rival factions and perhaps jeopardise the fragile ceasefire.

Oil Production at Risk of Fresh Collapse

Optimism is also fading about Libya’s surprisingly rapid resumption of oil production since the September deal. Output reached 1.3 million barrels per day in early December. Fears are growing, however, that production could shut down again by the end of the year, should a dispute over the management of oil revenues remain unresolved.

The dispute centres on the controversial oil sales payment procedures that the Tripoli-based government and Libya’s state-owned National Oil Corporation put in place in September as part of the deal. These U.S.- and UN-backed arrangements, which became public only in recent weeks, aimed to end a countrywide oil sector blockade that Field Marshal Khalifa Haftar, head of the military coalition that in 2019 launched a war against the Tripoli-based government, had enforced since January 2020. Pursuant to this deal, the Tripoli government and National Oil Corporation modified how oil revenues are managed, deviating from the standard procedure under Muammar Qadhafi’s regime, by which international oil companies made payments to the Libyan Foreign Bank, which transferred the money automatically into the Central Bank of Libya’s coffers. Instead, the National Oil Corporation now is supposed to order export receipts to be kept “temporarily” in its own account with the Libyan Foreign Bank, pending formation of a new unity government and reunification of the Central Bank, divided since 2015 into an internationally recognised one in Tripoli and a parallel but not internationally recognised branch in the east allied with Tripoli’s rivals. Short of progress on these points, the money is supposed to accumulate untouched in the National Oil Corporation’s account. The deal was a concession to the Haftar camp and its foreign backers, who accused the Tripoli-based Central Bank of misusing public funds.

The new mechanism is controversial for a number of reasons. First, there is no presidential decree or legal document authorising the National Oil Corporation to change the payment mechanism. Secondly, this mechanism was meant to expire after 120 days, meaning at the end of December. But without substantial progress in political negotiations to form a new government or reunify the Central Bank, it is unclear whether the arrangement will be scrapped and the previous payment mechanism restored at the end of the year. The Central Bank in Tripoli wants the old mechanism back, but taking that step could trigger a new oil blockade by Haftar’s forces. Alternatively, the current payment arrangement could remain in place, as the National Oil Corporation prefers, as a way of ensuring uninterrupted oil production. But that would raise the problem of how, in the absence of revenues accruing to it, the Central Bank would cover its mandatory budget payments. In a third, more auspicious, scenario, the payment mechanism could be modified through a new compromise, but as yet no one has put forward a concrete proposal.

This conflict over oil revenues is set against the background of a dispute over control of the Libyan Foreign Bank, the country’s main offshore commercial and investment bank entirely owned by the Central Bank, which has no director at present. An internal feud over the bank’s leadership has been raging for years, but in November it entered a more dangerous phase when the bank’s former director, the Central Bank and the Tripoli government each claimed the right to head the bank. The impasse raises the prospect that international monetary institutions could terminate or restrict all business relations with this bank in a procedure known as “de-risking”. Such a move could have devastating consequences for Libya’s financial sector, since this institution is key to managing both Libya’s oil revenues and its import-export system.  

Settling the feud over control of the Libyan Foreign Bank is urgent, as is finding a compromise on how to manage Libya’s oil revenues. To achieve the latter, the two sides will need to reach a new agreement – one that strikes a balance between, on one hand, providing Haftar and his foreign backers with guarantees that incoming oil sales revenues are safeguarded, and, on the other, tapping oil revenues now to cover public expenditures throughout Libya.

Settling the feud over control of the Libyan Foreign Bank is urgent, as is finding a compromise on how to manage Libya’s oil revenues.

U.S. officials, who were the main brokers of the September deal, should help draft the contours of such an agreement in consultation with the U.S. Treasury Department and relevant foreign governments. The alternative would be either a new oil sector blockade or an escalation of the financial disputes. Both would worsen ordinary Libyans’ already dire living conditions and could trigger renewed fighting in oil-rich areas.