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Fight over oil offers opportunity to protect Libya's wealth

Gen. Khalifa Hifter’s Libyan National Army forces have retaken Libya's strategic oil crescent region and announced that the rogue Benghazi-based National Oil Corporation will now administer it.
Smoke and flame rise from an oil storage tank that was set on fire amid fighting between rival factions at Ras Lanuf terminal, Libya in this handout picture released on June 16, 2018. The National Oil Corporation/ Handout via Reuters ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. REUTERS IS UNABLE TO INDEPENDENTLY VERIFY THIS IMAGE. - RC1597B41120

p.p1 {margin: 0.0px 0.0px 0.0px 0.0px; font: 14.0px Times; color: #101010; -webkit-text-stroke: #101010} p.p2 {margin: 0.0px 0.0px 0.0px 0.0px; font: 14.0px Times; color: #101010; -webkit-text-stroke: #101010; min-height: 18.0px} p.p3 {margin: 0.0px 0.0px 10.0px 0.0px; font: 14.0px Times; color: #101010; -webkit-text-stroke: #101010} span.s1 {font-kerning: none} span.s2 {font-kerning: none; color: #347ab7; -webkit-text-stroke: 0px #347ab7} Recent clashes over control of Libya’s oil infrastructure could end up having long-lasting implications for the country’s institutions and political transition. Khalifa Hifter, the commander of the self-styled Libyan National Army (LNA), announced on June 25 that control of oil production in ports under his control would no longer be conducted by the internationally recognized National Oil Corporation (NOC). Resolving this dispute could provide an opportunity for the West to broker an agreement that would protect the country’s wealth and resolve the political impasse.

Due to quirks in Libya’s institutional legacy, those who control the oil fields, pipelines and terminals have never controlled the payments that Libya’s oil fetches on the open market. For the last 45 years, the NOC has been essentially the sole generator of Libya’s exports through its production of crude oil via a complex web of partnerships with foreign firms. Nonetheless, the money that foreign oil companies pay as taxes on their oil sales or shipping firms pay to lift NOC crude is always deposited in and later dispersed by the Central Bank of Libya (CBL). Since strongman Moammar Gadhafi’s ouster in 2011 and Libya’s ensuing transformation into a militia paradise, the militias who control the CBL building and the CBL governor’s ride to the airport have more leverage over how Libya’s oil money is spent than those militias that only control oil infrastructure.

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