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Hifter may be pushing his luck by manipulating Libya's oil

Libya’s Gen. Khalifa Hifter appears to be using his control of oil ports as a political bargaining chip, but his success seems doubtful.
A member of Libyan forces loyal to eastern commander Khalifa Haftar holds a weapon as he sits on a car in front of the gate at Zueitina oil terminal in Zueitina, west of Benghazi, Libya September 14, 2016. Picture taken September 14, 2016. REUTERS/Esam Omran Al-Fetori - D1BEUBKLFRAC

On June 28, Gen. Khalifa Hifter, commander of the Libyan National Army (LNA), declared full victory in Derna after a month of fighting to take back the northeastern city from a coalition of terror groups including al-Qaeda and the Islamic State (IS). By taking Derna, the historical springboard of all kinds of jihadis, Hifter is now the dominant, unchallenged military and political figure in the entire eastern region of Libya, as well as parts of the south.

He is definitely much stronger than he was just a month earlier. In light of these recent victories, it might seem time for Hifter to translate this military victory into some sort of political credit. But doing so isn't as straightforward as he might think.

Hifter once served under Libyan dictator Moammar Gadhafi, having participated in the 1969 coup that brought him to power. But Hifter also helped the United States and NATO overthrow Gadhafi in 2011, which left the country divided into two opposing authorities. Today, the UN-backed Government of National Accord resides in Tripoli in northwest Libya, while Hifter's LNA controls the east from Tobruk.

In 2016, Hifter made a serious strategic military error. The LNA took control of the oil ports of Es-Sidra and Ras Lanuf from an armed militia led by Ibrahim Jadran, who had held the ports and suspended oil exports from 2013 to 2016. Hifter returned control of the ports to National Oil Corp. (NOC) in Tripoli. But he left the region lightly defended, and Jadran recently took advantage of that weakness once again. On June 14, as Hifter's forces were busy fighting in Derna, Jadran's militia unexpectedly retook the ports very easily. It is true that the LNA managed to chase Jadran out again just one week later, but extensive damage was done.

Yet again, Hifter seems to be making another strategic error, but political this time. He appears to be in a rush to parlay his military gains into political credit to reinforce his political ambitions — whatever they might be. On June 25, he announced that this time, he will hand over control of the ports to a rival company in Benghazi, in eastern Libya, which also calls itself NOC. This, of course, raised the ire of the NOC in Tripoli — which is the only NOC that the world, particularly the oil industry, recognizes and deals with.

Chairman Mustafa Sanalla of NOC in Tripoli operates under the Government of National Accord. He was quick to declare that Hifter's move is illegal and that none of Libya’s oil partners will accept it. Sanalla, with international support, declared force majeure June 14, suspending oil operations in the region. By July 2, he had also suspended all operations in two other oil ports, Hariga in Tobruk and Zueitina in central Libya.

The US Embassy in Libya quickly issued a joint statement, which was also agreed to by the governments of the UK, Italy and France, expressing concerns about the Ras Lanuf and Sidra oil fields being transferred "to the control of an entity other than the legitimate National Oil Corp.”

The statement further stressed that oil facilities belong to the Libyan people and should therefore remain under “the exclusive control of the legitimate National Oil Corp.” and under the “sole oversight” of the Government of National Accord in Tripoli.

In justifying Hifter's decision, his spokesman, Ahmed al-Mismari, said in a press conference televised June 25, “Sanalla did not pay attention to LNA, which liberated the ports before and fully secured them.” Mismari indirectly accused the NOC, under Sanalla, of using oil to finance militias.

“We discovered that such militias get paid from the oil which we secure," Mismari said, though he offered no proof to support the claim. Mismari also implicitly accused the NOC of not sharing oil revenues with the LNA, pointing out that without the army's help, such revenues couldn't have been generated in the first place.

But such comments are misleading, as the NOC isn't responsible for allocating oil revenues. It is only responsible for signing contracts and producing and exporting oil, but the money goes straight to Libya’s central bank in Tripoli. Allocation of funding to each government department then takes place. Each year the parliament in Tripoli decides the annual state budget and the Ministry of Treasury allocates money accordingly. The NOC has no say whatsoever in the matter and itself must ask for a specific budget, just like every other government-funded entity, even though it brings in the most money.

It is very difficult to see how Hifter’s gamble is going to pay off since oil is different from any other commodity sold in international markets. Libya has American, French and Italian oil partner companies whose contracts, usually long-term ones, were secured years ago with the only NOC known to them and accepted in the industry. Besides, exporting oil by another entity, even if it is called the NOC, will be illegal under international law and will violate UN resolutions.

The creation of two NOCs in Libya came as a result of the political division plaguing the country. Neither of the two quarreling governments recognizes the other, which is why each created its own institutions.

None of this seems to deter Hifter and his supporters from pressing ahead with this controversial decision.

What seems apparent, though, is that Hifter is trying to use oil as a negotiating tool, perhaps to distribute oil revenues differently and provide stable funding for the LNA.

However, that step may already be backfiring with the public. By disrupting oil exports, Hifter increasingly looks like Jadran — a militiaman using force to illegally control what belongs to the entire nation, and holding its people at ransom in the process.

Such a position will slowly degrade Hifter’s public support, particularly in western Libya, and exacerbate political tensions in the country, which could jeopardize elections the UN expects to take place by Dec. 10.

Another serious ramification of Hifter’s decision is that it portrays him in the public eye as a supporter of a federal Libya, rather than the united country he always called for.

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