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The Next Source of Instability, Pt. II-Libya, Oil and Democracy

2011 February 22

Libya is the latest country to come to a boil over the spreading revolutionary fervor that toppled Hosni Mubarak’s rule in Egypt and caused Tunisian President Zine al-Abedine Ben Ali to flee in January.  Sandwiched between the two newly liberated countries, Libya remains an autocratic dinosaur, an enemy to its people, and the next logical platform for insurrection in North Africa.

In the fallout of the end of the Mubarak regime, violence has spread in recent weeks to Djibouti, Yemen, and Bahrain as those governments struggle to quash opposition forces’ calls for reform.  Initial dispatches from Libya are reporting that 173 people have been killed in Benghazi, a city which is now under the control of opposition forces.

Saif al-Islam, son of Muammar al-Qaddafi, Libya’s President for 42 years running, emphasized the critical nature of the country’s plight in his speech on Libyan national television yesterday with the following remarks:

Today we are at a crossroads … We either tell ourselves, ‘We are Libyans, and this is our country. We want … freedom, democracy and real reform, this and that, and this has been planned and agreed upon and was supposed to be done at the forthcoming general congress assembly; [or] we will all seek the judgment of weapons. Instead of mourning 84, we will be mourning hundreds of thousands … And the oil will stop. We will not be eating a loaf of bread.

Although highly significant for its concessions, the efforts of the Libyan government to extend the olive branch by way of offering reforms is too little too late.  Sunday’s violence in the capital of Tripoli is a good indication that Qaddfi’s rule is failing.  The fall of Benghazi is the beginning of a domino effect that has already turned a number of important factions against the old Colonel.  University of Michigan professor Juan Cole elaborates on some critical turnabouts over at his blog Informed Comment:

In a highly significant development, the leadership of the large and powerful Warfala tribe announced that it was now siding with the opposition against Qaddafi. About a million Libyans belong to this extended kinship group. Since cultivating tribal loyalties was one of the ways Qaddafi had remained in power, this major tribal defection underlines his loss of authority. It was further underlined when Arab Warfala leaders managed to convince their Berber counterparts in the southern Tuareg tribe, who are 500,000 strong, to join in opposing Qaddafi.

Like the revolutions in Egypt and Tunisia, food is playing a major part in the growing unrest in Libya.  With the largest crude oil reserves in Africa, Libya has a $77bn. dollar a year GDP, which pushes its average per capita income to around $12,000 – more than that of Brazil or Chile or Poland.  But statistics are deceptive.  The oil wealth of Libya is concentrated in the western part of the country around the capital, leaving the south and the east (the area of Benghazi) desperately poor.  Surveying a number of Arabic news sites, Mr. Cole found that approximately one third of Libyans live below the poverty line, and 30% are unemployed.

According to a recent wikileaks document published in the Telegraph, prices are on the rise in Libya.  With a number of important market subsidies lifted in the past two years, prices have risen as much as 25% for goods like clothing and shoes, and as much as 85% for foodstuffs including sugar, rice, and flour.  The Libyan central bank has argued that international commodity inflation is to blame for price spikes, but analysts believe this to be a poor excuse for the country’s rapidly rising domestic money supply, which coincides with a spike in oil prices and government expenditures on infrastructure, which has rerouted money from central banks into the pockets of private firms.  As the Libyan government abandons stringent economic policies that restricted prices for many years, the middle class that depended on this regulation will suffer.  Again, these policies have been undergoing a process of privatization since government subsidies started to lift in 2008.  It seems that someone is running away with Libya’s money just as the dynasty Mubarak managed to escape from Egypt with one of the largest fortune’s in the world.

The situation in Libya is continuing to develop at an exciting pace.  The army is on the move, turmoil is spreading throughout Tripoli, and the tribes are turning on the old regime, joining forces with opposition leaders who are occupying cities in the east.  Qaddafi has threatened the EU with an end to immigration cooperation, but a greater concern is the oil held in Libyan reserves.  These democratic developments are long overdue, but what should happen if Saif al-Islam is right, and the country fractures, along with its crude stores?

Do you expect the Libyans, if partition occurs or if a civil war occurs … to reach an agreement on how to share oil within a week, a month, two or three years?”This oil will be burned by thugs, criminals, gangs and tribes, and there will be major and bloody conflicts over it; and in the end no Libyan will end up with this oil, because it is in the central and southern parts of Libya, in the middle of the desert. Three quarters of our population are based in the western area.

Your children tomorrow might not go to schools, nor universities. We will not be able to find flour to eat; you will not find money in the banks; your savings will be gone.

The Libyan people may see this threat as an eerie reminder that their problems cannot be solved overnight, but they must persevere.  It is time that democracy eclipsed the suffering that government policy has mandated in Libya for far too many years.