The security trend in Libya remains negative since the General National Congress (GNC), which is based in Tripoli and contests power with the Tobruk-based House of Representatives, announced on January 21, that it would no longer participate in peace talks organised by the United Nations (UN). Its reason is that army forces (loyal to the House of Representatives and its prime minister, Abdullah Al-Thinni) had taken over the Benghazi branch of the central bank.
The army captured the bank after weeks of fighting against Islamist forces allied to the GNC. A GNC spokesman said the “storming of a sovereign institution […] the central bank in Benghazi, by troops of the war criminal Khalifa Haftar” represents an escalation of conflict and that it has suspended its participation in the talks accordingly. This most probably means that the war will continue to escalate as with the army’s capture of the central bank branch, with other government institutions as well as oil installations becoming military targets.
Most recently, accounts differ as to who was responsible for a murderous attack on Tripoli’s Corinthia hotel. On Tuesday, January 27, a car bomb exploded outside the luxury hotel, killing three security guards. Gunmen then entered the hotel and killed a further five people, all foreigners. One American and one Frenchman were among the dead. The two attackers then blew themselves up with a grenade, while security forces managed to arrest their accomplice outside the building.
According to SITE, a highly unreliable monitoring service, an Islamist militia that asserts ties with Islamic State (IS) claimed responsibility for the attack as revenge against the death of an Al-Qaeda member in the US this month. By contrast, the General National Congress (GNC), the government in control of Tripoli, says that the attack was aimed at its prime minister, Omar Al-Hassi, who was in the Corinthia at the time of the assault. The GNC says the attack was the work of “Qadhafi loyalists,” by which it means elements under the command of Khalifa Haftar, an officer fighting on behalf of the rival House of Representatives government. Mr Hassi escaped without injury.
It remains unclear who was behind the attack, although we think it was more likely to have been jihadists than soldiers under Mr Haftar’s command. Whoever was behind it, the attack is a sign of what was feared when the GNC abandoned the peace process – a further escalation of the war, with installations previously considered off-limits becoming targets for belligerents. On Thursday, January 29, the GNC announced that it was willing “in principle” to participate in talks again, but the conditions it set for its participation – especially an acknowledgement of the Supreme Court’s decision that the Tobruk government is unconstitutional – will probably make inclusive, good-faith negotiations impossible.
Libya’s crude production has been extremely erratic since mid-2013 when protests by security guards shut down several eastern export ports, which resulted in oil exports slumping by some 70%. Before the protests, Libya was producing around 1.6 million barrels of crude per day (bpd), but the security situation in the country has slashed production figures since then. According to the Organisation of the Petroleum Exporting Countries (OPEC), Libya’s crude production averaged 993,000 bpd in 2013.
However, fighting and protests resulted in Libyan output averaging only 228,000 bpd during the second quarter of 2014. Although there was moderate increase in production as the year progressed, building up to an average of 920,000 bpd during October, the country’s output again sagged during the rest of the fourth quarter. Overall, Libya’s crude oil output averaged 480,000 bpd during 2014, down nearly 52% y-o-y.
The United Nations Conference on Trade and Development (UNCTAD) reports in its latest Global Investment Trends Monitor report that foreign direct investment (FDI) into developing countries increased last year but that Africa recorded a small decline. Developing economies recorded a 4% increase in FDI to $700bn while the African continent registered at 3% decline to $55bn largely as a result of lower inflows into North African countries, “with continued civil unrest in Libya dragging down the region’s potential as an FDI host.”
Francois Conradie (Political Analyst) & Bart Stemmet (Economist)