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Eritrea for mobile viewing A new international Conference on Libya

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Date: Thursday, 30 May 2019

Giancarlo Elia Valori

The current situation in Libya is far from simple.

 In April 2019, Khalifa Haftar received from the new Russian envoy, Lev Dengov, the polite order not to reach Tripoli, which – however – is already surrounded from the South by the forces of the Benghazi General.

 The conquest of Tripoli would not be the beginning of the unification of the two parts of the old unitary Libya of Gaddafi (and of Italo Balbo, who delayed – as much as possible – the implementation of racial laws in the Tripoli Governorate).

 Tripoli’s Government of National Accord (GNA), led by Al-Sarraj, is still the only one recognized by the UN and it has already budgeted 2 billion dinars, equivalent to 1.43 billion US dollars, to fund the war against Benghazi for the renewed control of the capital city by the GNA forces.

 Funds to be provided without resorting to foreign loans, as Tripoli made it clear.

 The funding for Tripoli’s government stemsabove all from the oil sale – currently 928,000 barrels a day – with 1.87 billion US dollars of net revenue, according to the latest data of April 2019.

 Furthermore, Al-Sarraj acquires other funds from zero-interest loans from local banks to the Central Bankand finally from a 183% tax on foreign transactions made at official rates, namely 1.4 dinars on the US dollar.

 The centralized collection of taxes, however, is decreasing ever more every day, even in the oil sector, and the leaders of the Libyan National Oil Corporation (NOC) constantly complain about thefts and numerous unlawful acts.

 As Hobbes used to say, if there is no fear, the “universal and legitimate condition of equality between men”, the clash between individuals leads to mutual aggression and results in bellum omnium contra omnes.

 Hence the need for a pact between “subjects” that puts an end to the war of everybody against everybody else.

 Indeed, we must apply Hobbes’ thinking to Libya.

 As well as Machiavelli’s, when he reminds us that “ruling means to make people believe” and that “there is no avoiding war, it can only be postponed to the advantage of others”. Hence we need to immediately find a Libyan leader who – unlike Gaddafi, who discovered the Italian intelligence services in a meeting in Abano Terme – can reunite the country by “taking advantage of the beast and the man”, just to put it again in Machiavelli’s words.

 This is the law of every “failed State”, due to the implosion of its central authority, which generates a crisis of confidence among all participants in the imaginative and yet real agreement to end the war of everybody against everybody else – which is exactly what is happening in Libya.

 The unitary Libyan State failed not for its territorial extension, but for its lack – or illegitimacy for its subjects – of recourse to the use of force. In Gaddafi’s case, the use of force was materially prevented by Westerners, who wanted to get rid of him, after having squeezed him like a lemon of the many trees in Tripoli’s promenade.

 As clearly stated in the Resolutions of the UN Security Council, however, General Haftar cannot sell the oil extracted from the territory under his control – although some trafficking has already taken place.

  As the Security Council itself has recently decided, these Resolutions will be extended until 2020, albeit with the abstention of Russia and China.

 General Haftar failed to conquer Tripoli, but instead hired a US political lobbying firm, Linden Government Solutions, for as many as 120,000 US dollars.

 The firm has already spoken to President Trump, who is very careful about this type of advisory services.

 General Haftar had already drafted an advisory contract with a Montreal-based consulting firm, Dickens & Madison, led by Ari Ben Menashe, a former Israeli military intelligence officer.

 Hence, considering that General Haftar cannot use his oil proceeds on his own, he must operate with an account opened with the Central Bank of Libya long time ago, but both NOC and the Central Bank are obviously linked to  Al-Sarraj’s government.

 General Haftar’s attempts to sell oil on his own were partly blocked directly by the United States.

 The conquest – albeit temporary – of the Fezzan tribes by Tobruk’s General and his rapid advance towards the areas of Al-Sarraj’s government were funded mainly by the dinars printed in Russia.

 As is well-known, the Central Bank in Al-Bayda, namely General Haftar’s monetary entity of reference, split from the Central Bank of Tripoli in 2014.

  As stated by Governor Al-Hibri, currently reserves amount to 800 million dinars, 60 million euros and 80 million US dollars.

 The dinars printed in Russia – those with Muammar al- Gaddafi’s profile – even with the consent of the House of Representatives- amounted to 9.7 billion over a period of three years.

 They amounted to 4 billion in 2016, 4 in 2017 and 1.7 in 2018.

For General Haftar, this money is mainly used to buy the Southern tribes and the mercenaries, from various parts of Africa and the Arab world, they use to fight GNA.

 On Al-Sarraj side, however, the resources are equally drained by the need to pay his own mercenaries, who act both as internal security forces and as military groups against General Haftar.

 Al-Bayda’s Libyan East sold its government bonds for a total amount of 35 billion dinars, but outside the official financial channels, considering that the Bank of Tripoli funds – in the East – only the wage bill of those who were civil servants before 2014.

 Conversely, the Tripoli government spends an annual amount of 48.6 billion dinars, especially for the public sector’s wages and the subsidies for gasoline purchase.

 The debt-to-GDP ratio of the GNA government in Tripoli is equal to 143%, with 70% of public spending going exactly on wages and salaries.

 With specific reference to the two Libyan Central Banks, it should also be recalled that the establishment of the Central Bank in Al-Bayda in 2014 caused the interruption of the automatic clearing system with the Central Bank of Tripoli, namely the Real Time Gross Settlement. Later, apart from a few money transfers from Tripoli, in the East they sustained themselves by simply printing banknotes – as in the Weimar Republic -to the tune of 7 billion US dollars, equivalent to 10 billion dinars.

 Does the global oil market need a producer like Libya undergoing an uncontrollable inflationary crisis? What would happen to OPEC and the other oil producers?

 Hence the need for a Dawes-style plan, like the one for Weimar’s Germany, rescuing us from the Libyan contagion. How? Taking the formal value of wells into account? Calculating the nominal value of current or future concessions and licenses?

 Certainly we could not draw up a budget by calculating the value of locomotives, as Dawes did for Weimar’s Germany.

 The debt allocated in securities by the East-Libyan government, issued between 2015 and 2018, is currently worth 35 billion dinars, equivalent to 25 billion US dollars- a50% of which is still used to fund General Haftar’s forces.

 Since 2017 the Tripoli government’s revenue deficit, concerning above all the fall in oil price and extraction, has reached approximately 15 billion US dollars a year.

 Hence, considering expenses and lost revenue, currently the Tripoli government’s deficit is supposed to be 62 billion dinars, equivalent to 44 billion US dollars.

 The Libyan East, however, signs checks from standard current accounts for its employees, that are changed and paid by the private banks where the employees have their own accounts.

 Hence a system has been created parallel to the RTGS system, which applies to the official relations with Tripoli, and another one, which links the Benghazi-Tobruk government to all the Libyan private banks, including those in the West.

 Hence the banks held their first guarantee system with the Central Bank of Tripoli and accumulated reserves and credits to support the operations ordered by the Central Bank in Al-Bayda.

 The problem lies in the fact that the international financial institutions recognize Tripoli’s debt, but not Al-Bayda’s.

 Currently commercial banks have 21 billion dinars of credits with East Benghazi banks, equivalent to 15 billion US dollars. This obviously leads to the fall in deposits.

 In mid-March 2019, bank deposits in the Central Bank of  Tripoli ranged between one and two billion dinars, but in the East they amounted to six billion.

 A trade war disguised as a banking war.

 This is certainly one of the reasons underlying the acceleration of war throughout Libya.

  No defense and no advance can be maintained with these internal economies.

 Nevertheless, if Haftar or Al-Sarraj fall, the funding of the two wars will take place completely “off the books”, as is still the case for the support of the jihad.

 The latest polls show that 37% of Libyans want safety and security, in particular.

 Whoever guarantees to put an end to the bloodshed in the streets wins the hearts of all Libyans. As would happen everywhere.

 “Forgiveness” and “justice”, which are certainly not synonymous, rank second for Libyans (25%). This is a sign that, however, the sectarian tension and the war between factions have reached their psychological limit, which is also a limit to everyday recruitment and political bias and partisanship.

 “Restorative” justice, in a context like the Libyan one, is favoured compared to “criminal or punitive justice”.

In other words, both in the East and in the West, the Libyan people want the return of what has been removed, the restitution of property – maybe even incomplete –  in exchange for the undeterred, undaunted and useless continuation of the clash, or the dream of future reintegration at the end of the fight.

  A metaphysical term, which is not used by chance.

 40% of the Libyans interviewed by various Western research centers – and we consider a weighted average of data – answered that all belligerents should be forgiven, even those who perpetrated crimes. Clearly people cannot stand it anymore.

 Libya and the Libyan people only want to live in peace, at last.

 50% of the Libyans interviewed by Western research centers think that the Libyan diaspora should play a role in the peace process, while 43% do not believe so.

 Said 43% do not want all those who made money in a “grey” way and ran away in time to still operate in Libya.

 Nevertheless, there is still a vast Libyan diaspora of intellectuals, technicians, professionals, entrepreneurs and  traders, who will inevitably be called back to their duties, when there is a credible peace project.

 The pacification process must be led by Libyans, in a new national government and with the planned support of the powers interested in the stabilization (and unification) of Libya.

 The splitting of Libya is just a silly memory of the peripheral vilayet(district) of the Ottoman Empire.

 Certainly, as some agencies supporting populations at war or in a period of serious political crisis suggest, it will also be necessary to create new nation-binding initiatives between the various Libyan groups – possibly non-artificial – so as to eliminate the animosity, tension and hatred, which have naturally spread.

 But “hate is a tiring exercise”, as Jean Rostand used to say.

 Moreover, there will be the need for a reparation mechanism, organized by a Trust including European and Middle East banks appointed by their governments among the warring factions.

 Paying means reigning, as Madame De Girardin maintained.

 Hence stopping immediately – or in a reasonably short lapse of time – the endless discussions on the damage caused to shops, or even on the children murdered, or possibly on the unlawful damages received by banks.

 Forgiving them their debts will be essential for genuine peace to materialize, without the anger and resentment of those who are or believe to have been damaged.

 This is the reason why a Trust would be needed, funded  with a share on the price of oil sold by Libya, plus a friendly, gracious and obviously anonymous contribution from the Libyan diaspora.

 Clearly, women and young people shall be involved in a process of national reconstruction very similar to Gaddafi’s old “committees”.

 The tradition of Gaddafism is still strong. Women are not excluded from social processes and civic participation, not even in areas with a very strong presence of radical Islamism.

 Furthermore, neither of the two governments is fully trusted by Libyans: 63% of them reject Tripoli’s GNA and 71% reject Tobruk’s government.

 The Libyans interviewed by the international organizations perceive the local units – that are parties to the conflict in all respects – as completely unreliable: only 28% of Libyans deem them effective.

 Therefore, it will obviously be necessary to re-establish the local units, in agreement (only) with the Libyan central government, but with a different territorial design, avoiding tribal or sectarian localization and allowing the administrations’ military and social control.

 Libya is large and the desire to still play the game of localist secession can be strong, especially in the presence of strong “natural” sources of income: oil, minerals, even water.

 Hence a Parliament shall be created – albeit not similar to European national Parliaments, but rather a large Assembly appointed by the tribes, in their own ways (obviously, it is useless to democratize Fezzan) -as well as a national government, answerable both to the Assembly of the tribes, that cannot be eliminated, and to an elective assembly according to the  traditional Western representation criteria.

 The government shall have the vote of both bodies.

 Rationally-designed areas of influence shall be created, with a view to resolving the OPEC Sunni countries’ struggle for Libyan oil, which emerged immediately after the silly war to bring “democracy” to Libya and to assassinate the “tyrant”, who was supported by all EU countries.

 Needless to send Turkey away from the Muslim Brotherhood and Qatar from Al-Sarraj’s GNA region.

 We will never make it. The West is an old arthritic.

It will be a matter of regulating – by means of an international treaty – the relations of Turkey with Libya, as well as of Egypt, which has direct interests in Cyrenaica, or of Saudi Arabia or even France, which is now useless, considering the diplomatic relations broken off with Al-Sarraj and the friendly request to General Haftar to stop the Libyan National Army’s attack on Tripoli. The classic end of the too sly people or countries.

 It will also be necessary for the United States, the European States, namely all the EU Member States, Great Britain and even Israel, to participate in the Libyan reconstruction, which will certainly be a long process.

 Israel could guarantee remote security and the Libyan oil market’s future integration with the Lebanon-Cyprus-Turkey axis, which will be among the most important ones in the future.

 A bank trust, an ad hoc agency, will ensure the sale of unitary Libya’s debt securities – with the set limits and some guarantees – by absorbing part of those still in circulation and possibly creating an international sales desk.

 The Armed Forces will be rebuilt with the typical national criteria, but with a chain of command in which the Clausewitzian power of the political leader with respect to the military hierarchy will be very clear. There should also be a clear and innovative funding for the struggle against the illegal trafficking of migrants, starting from Fezzan and spreading to the other regions. All European countries will pay for it and will be very happy to do so.

 We still need a great guardian in North Africa, but we also need to show that the Western madness of the “Arab springs” has been put to an end, thus stabilizing the other governments and starting to invest throughout North Africa, with the guarantees of a stable local government.

 Otherwise, sooner or later, the sea of migration will engulf us, thus destabilizing the entire EU economy and our welfare State.

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