TRIPOLI: Libya is suffering a profound economic and political crisis, running out of cash because autonomy-seekers are blocking key oil exports, while a movement is afoot in congress to unseat the fragile government.

The oil-rich North African country has been shaken by political instability ever since long-time dictator Qadhafi was unseated and killed in late 2011.

The government has failed to bring stability and security, with Libya’s many tribes flexing their muscles and militias who fought to overthrow Qadhafi refusing to give up their arms, instead carving out fiefdoms of their own.

The latest crisis erupted in July, when security guards at key oil terminals shut them down, accusing the authorities of corruption and demanding a more equitable distribution of oil revenues.

Production plunged to around 250,000 barrels per day from 1.5 million bpd, and the economy ministry estimates the treasury has lost more than $9 billion in revenue.

That is a heavy blow to a country that relies on hydrocarbon revenues for 96 per cent of its gross domestic product.

Production has since recovered to 546,000 bpd, but the crisis has taken its toll.

“The situation is becoming more and more critical,” observed an executive with a foreign bank operating in Tripoli, who asked not to be identified.

“The government risks having to resort to borrowing to pay its bills.” The government has denied any corruption over its oil sales through the National Oil Co and has, in turn, blamed the protesters for seeking to line their own pockets.

More than two years after Qadhafi's ouster, Libya has still not managed to adopt a new constitution, which would include a decision on how the country is to be administered geographically.

With independence, which followed World War II, Libya was divided into three regions — Cyrenaica in the east, Fezzan in the southwest and Tripolitania in the north. Those regions were done away with prior to Qadhafi seizing power in 1969, but they were not forgotten.

The situation was exacerbated in August, when campaigners for autonomy in Cyrenaica set up a regional “government”, which later received the backing of the striking guards.

Danger of a naval confrontation

On Wednesday, Abd Rabou Al Barassi, who heads its executive bureau, said oil exports would resume despite a government ban, raising the prospect of a confrontation with the navy.

“We announce our intention to trade in crude after the government failed to meet our demands,” Barassi said.

He said guards would provide protection for all vessels entering the port of Al Sedra to prevent any repetition of an incident on Sunday when the navy blocked two tankers from docking in the port to take on crude.

“We will protect tankers taking on crude from Al Sedra from the moment they enter Libyan territorial waters until they leave,” Barassi said, raising the prospect of a standoff at sea.

Prime Minister Ali Zeidan accused Barassi of attempting to “undermine national sovereignty.” He warned that “any state, company, group or gang that tries to send a ship to Libya's oil ports without authorisation or agreement with the NOC... will face the necessary measures.” He even spoke of the possibility of “sinking” any vessel in contravention of the order.

The loss of Libyan oil from the market has been one of the reasons why European crude oil prices have been stuck above $100 per barrel.

While the increased production and exports should help push down prices, the risk of further disruptions is unlikely to lead to a significant drop, especially as most analysts doubt Libya could quickly return to its previous full output level.

While Zeidan struggles with the political challenge from Cyrenaica, he is also threatened with a parliamentary revolt seeking to unseat him back in the capital.

In little over a year in power, his government has come in for regular criticism for failing to restore stability.

Several members of the General National Congress, Libya's highest political authority, have been trying to bring down the government, but have so far not succeeded in securing the number of votes required.

On Tuesday, the GNC failed to agree on what action to take about Zeidan’s government, after a censure motion put forward by 72 out of the 200 lawmakers.

Zeidan said his critics are a “minority,” but that he would willingly step down if the assembly chose to replace him.

“I do not want to leave the country in a vacuum,” he said.

In the end, Libyan political analyst Fraj Najm said the GNC “is not in a position to bring down the government for the simple reason that [its members] are incapable of agreeing on a replacement.

The assembly itself, which was to have wrapped up its work in February with the adoption of a new constitution, is also under political fire. At the end of December, its members voted to extend its mandate for another 12 months.

Najm said “certain members of congress want to get rid of the government to justify the prolongation of their mandate and to present themselves as the sole masters of the ship.”—AFP