Libya’s Haftar to be sidelined, sanctioned

Initial agreements between Egypt, Turkey and the UAE, under US auspices, indicate an increase in risk of attacks, sanctions, impacting territories held by General Khalifa Haftar.

Commercial Takeaway: Fighting is likely to escalate in Libya, first affecting the oil fields in the south of Libya in the next few months. If Haftar still refuses to relinquish power or compromise, the likelihood of attacks targeting the oil export terminals east of Sirte and the fields in the centre of Libya will increase, though these are complicated by Russia’s presence. The Dbeiba government is likely to award contracts to UAE, Turkish, Italian and Egyptian companies and consortiums, in exchange for these countries’ support, especially as its control over oil revenues and infrastructure increases.

Analysis

• Turkey has normalised its ties with the UAE and is taking steps to normalise with Egypt. These, along with Russia, France and Italy, are the key actors backing the different Libyan factions. France and Russia had been closer to Eastern Libyan (Cyrenaican) General Khalifa Haftar (also spelled Haftar), who commands the armed factions in Cyrenaica. However, the Ukraine crisis will probably force France’s hand leading her to drop Haftar.

• For his part, Haftar remains of the view that he ought to side with Russia. In talks with the US, he appeared willing to listen to US offers to reduce dependence on Russia, but his ability to do so in reality is very limited. Haftar depends on Russia for a range of military services, and works with the Wagner Group to extract gold from southern Libya to keep his military afloat. Turning against Russia is harder than it appears, and Haftar was likely simply buying time.

• This indicates that the West and its allies are increasingly likely to view Haftar as the key remaining obstacle to a peaceful settlement in Libya.

• Libya’s labour minister has called for facilitating the entry of Egyptian labour to support Egyptian companies’ projects. This is a key need for Egypt given its desperate need for foreign currency. The UAE has said it would reopen its embassy in Tripoli and resume flights between Tripoli and the UAE, giving a boost to investment in Libya. This suggests some concessions to the various sides within Libya on the part of the Tripoli-based Dbeiba government, which is closely aligned with Turkey.

• For its part, the Bashagha government, which is close to Haftar, is mostly paralysed due to lack of funds, political infighting and lack of external support. It is also not internationally recognised and is unable to sell oil.

• The presence of Russian military assets, and the UAE, Turkey and Egypt’s wish not to antagonise Russia, make military action unlikely. Rather, it means that the political process will move along without Haftar. The various forces in Libya will slowly chip away at his power.

• Haftar is likely to respond to any assaults on his positions by cutting off oil flows from fields that he controls. However, this weakens his position further, as the Tripoli government would respond by cutting off his funding.

• Haftar is unable to export oil due to the presence of European and American naval forces in the Mediterranean, ready to enforce sanctions against him.

• Critically, Haftar’s relations with the tribes of the east have worsened, in part due to his reliance on Gaddafi era commanders, rather than eastern commanders who are supported by their tribes.

• As such, Haftar’s position appears weak. Russia may be able to keep him afloat for a while, but even that is not guaranteed.

• It is worth noting that Haftar surprised western Libyan forces when he launched an offensive in the west of Libya (Tripolitania) in April 2019. I had expected the offensive by summer, and its timing in April also caught me somewhat off guard.

• I also note that during the campaign to oust Gaddafi, the front line moved 300km one way and then 300 km back again in just one day.

• I mention this as it demonstrates the suddenness with which conflict in Libya can break out, and the possible sharp changes in frontline positions once it does. Security professionals may wish to keep that in mind.

Commercial Implications:

• Haftar and his allies are increasingly likely to face US sanctions and asset freezes in a bid to prompt him to separate from Russia.