Hope, and delusion, in Libya’s new transition
- Middle East
- Investor Services
Hope, and delusion, in Libya’s new transition
Sherif El-Ashmawy | Associate Analyst
Alexander Werman | Researcher
After 15-months of devastating conflict over the capital Tripoli ended in mid-2020, a UN-brokered political process led to a ceasefire and the formation of the Government of National Unity (GNU), which has a mandate to hold general elections in December.
- Libya is at its most stable moment since 2014, when civil conflict escalated and the country’s political institutions split. Conflict has effectively de-escalated, and the reunification of state institutions is underway.
- However, key political, institutional and security challenges complicate the outlook for stability in the coming year and risk compromising progress made in recent months.
- The security environment will remain challenging and subject to setbacks over the coming year due to inter-militia fighting in urban centres and persistent enmity between eastern- and western-based security forces.
- Foreign businesses – particularly in strategic sectors such as oil and power generation – will still have to navigate complex and fluid security, political and regulatory environments.
The UN-formed Libyan Political Dialogue Forum (LPDF) – a series of intra-Libyan meetings that began in late 2020 – brokered the election of a new interim authority in February, ushering in a new transition period for Libya. This is the third such transition period since 2011. A National Transitional Council (2011-12) ruled Libya briefly after the overthrow of former leader Col Muammar Gaddafi (1969-2011), and the UN-backed Government of National Accord (GNA; 2016-21) failed to reunify the country or hold national elections. The current transition seeks to reunify the country’s split state institutions and hold general elections on 24 December.
Optimism among the diplomatic and business communities over Libya’s future spread with the formation of the GNU. Such optimism is based on UN-sponsored talks breaking the political impasse of the past seven years and the ongoing October 2020 ceasefire between the eastern-based self-styled Libyan National Army (LNA) and armed groups aligned with the former GNA in north-western Libya. Such optimism led many European and neighbouring countries to either reopen their embassies in Tripoli or pledge to reopen them soon and businesses to consider re-entering the country or expanding their presence there.
Bumpy road to elections
There are several ongoing contentious points between Libyan stakeholders that could threaten the political and security improvements of recent months. For example, the absence of an agreement over the constitutional basis for the December elections remains a lingering issue between eastern- and western-based stakeholders. The legal committee from the LPDF is holding regular meetings to agree on reconciling the plan for elections and the constitution, though the potential for an agreement is uncertain.
Furthermore, the government of Prime Minister Abdulhamid Dbeibah – whose electoral victory was based on his willingness to accommodate various political stakeholders from different regions – risks creating an overstaffed administration that profits from its access to state funds and develops a vested interest in staying in power beyond December, potentially jeopardising the planned elections. Such a scenario would push other players that were sidelined from the political process, such as the LNA commander Khalifa Haftar, to mobilise their constituencies against the GNU, thereby risking a resumption of conflict and political impasse.
There is a consensus between international stakeholders to give the GNU a chance to lead Libya’s transition while maintaining military de-escalation over the coming months. The outlook beyond that timeframe is, however, less certain. Prime Minister Dbeibah is close to Turkey but is maintaining a working relationship with all relevant countries, including those that are hostile to Turkey’s Libya policies such as France, the UAE and Egypt. Despite such consensus, any deviation from the elections timeline or attempts to extend the transition beyond December would prompt deep divisions among the international community to re-emerge, thereby compromising Libya’s stability.
The civil conflict between the LNA and militias based in north-western Libya is unlikely to escalate in the coming months. However, efforts to comprehensively end the conflict and unify the security sector are unlikely to advance significantly. The prospect of future escalation will therefore remain amid the ongoing military build-up along the conflict frontline around Sirte and the presence of foreign mercenaries (the number of whom the UN estimates at approximately 20,000).
Security threats in north-western Libya – particularly in Tripoli – stemming from inter-militia fighting and competition between different armed groups will contribute to the fractured security environment. Militias in Tripoli, including those that form part of the Stability Support Authority, will violently oppose efforts to disarm or integrate them into a wider government security architecture that would see such militias lose influence and access to state resources. This opposition will lead to sporadic clashes, ongoing insecurity and pose incidental security threats to businesses operating in the capital.
Sporadic fighting between armed groups affiliated with the LNA will also sustain security threats in eastern Libya, particularly in Benghazi. The GNU’s efforts to assert control over parallel state financial institutions in eastern Libya will reduce a major avenue that the LNA used to finance its affiliated forces. As resources become more limited, competition between LNA-affiliated forces will increase, leading to clashes between armed groups and businesses being targeted through requests for bribes and protection money.
The GNU has been relaying the message to the international community that Libya is open for business amid improvements in the security and political environments. Oil production has rebounded since September 2020 after the LNA lifted its eight-month blockade on production as the conflict de-escalated. Although the political and security environments have improved and allowed many foreign businesses to return to the country, those businesses will continue to have to navigate a complex set of risks. Such risks are linked to the political uncertainty associated with the transition period and scheduled elections as well as persistent insecurity stemming from the fractured security forces.
Foreign companies, particularly in the strategic oil and gas and electricity generation sectors, will continue to face a highly corrupt as well as an overstaffed and mostly inefficient bureaucracy. With the expected influx of foreign capital in the coming months, the authorities’ and the local communities’ expectations will increase. The government is therefore likely to impose conditions on foreign companies requiring them to contribute to the development of infrastructure and the welfare of local communities, thereby increasing regulatory and compliance burdens for foreign businesses. Furthermore, security provision remains fractured, and security concerns over crime and occasional protests by security guards over pay issues will persist and pose challenges to companies operating in the oil and electricity generation sectors.
The GNU in March restored the Ministry of Oil and Gas, which was annulled in 2017, led by Libya’s former governor for OPEC, Mohamed Oun. The exact remit of the new ministry is unclear, but there are indications that Oun’s relationship with National Oil Corporation (NOC) Chairman Mustafa Sanallah is uneasy. Oun’s appointment will affect how International Oil companies (IOCs) interact with the authorities in the future. IOCs in recent years have been working directly with the NOC on contractual and operational issues. The ministry’s restoration may result in additional regulatory burdens on those companies, though the exact nature of such burdens remain unclear.
In a nutshell, political and security developments in recent months offer a glimmer of hope that Libya can move on from the turbulent past decade. Nonetheless, numerous issues remain unresolved and could manifest as spoilers in the coming year, which calls for a cautious optimism.