Financial Crisis .....
TRIPOLI/BENGHAZI, Libya (Reuters) - Libya's Prime Minister Ali Zeidan said on Wednesday his government will be unable to pay public salaries and may have to seek loans if armed militias blockading oilfields and ports continue to choke off crude shipments.
Zeidan's warning and renewed armed clashes, including an attack on a centuries-old shrine near Tripoli, have added to a growing sense of chaos in the OPEC producer two years after the NATO-backed ouster of Muammar Gaddafi.
Western powers worry the North African state may slide into anarchy as Zeidan's government struggles to rein in militias who helped topple Gaddafi but have kept their weapons and still control parts of the vast country.
Militias, tribesman and ethnic minorities have seized oilfields and ports to make demands, drying up the main cashflow for the budget, much of which is spent on state subsidies to stave off popular discontent or to buy the loyalty of the militias.
"We are facing a financial crisis," Zeidan told reporters, adding that the government might be forced to borrow. "Oil revenues are down to 20 percent."
He did not give further details. Libya had been exporting more than 1 million barrels of oil a day until summer, when the protests and strikes escalated, and output is now down to a fraction of that.
A government deadline to end the oil strikes expired last week but Zeidan only repeated that the authorities would take unspecified "measures". He declined to elaborate.
Libya might also start facing power cuts as the oil strikes hamper gas production at several fields, Electricity Minister Ali Muhairig said.
Hours before Zeidan spoke, new clashes broke out between army special forces and Islamists in Benghazi, the largest city in the oil-rich east.
Fighting on Monday between the army and members of militant group Ansar al-Sharia in Benghazi left at least nine dead before the Islamists retreated from their main base.
Gun battles erupted in parts of the port city in the early hours of Wednesday when members of Ansar al-Sharia threw a grenade at a patrol of special forces, a security official said. He later said it was not clear who was behind the attack.
Three soldiers were also killed in Benghazi in what city officials described as assassinations. The security situation in Libya's second-biggest city has sharply deteriorated in the past few months. Islamists run their own checkpoints, and assassinations and bombings occur daily.
In Tajoura outside the capital Tripoli, unknown attackers blew up part of a 16th century shrine, the mausoleum of an Ottoman ruler, witnesses said.
Western powers have promised more aid to the army and police to militants who control much of the vast desert country.
But popular anger is also growing against the militiamen and former fighters, and Zeidan's fragile government hopes to use that discontent to wrest back control from armed groups.
Hoping to co-opt former fighters, the government has hired militia groups to provide security. But they remain loyal to their commanders or tribes and often clash in disputes over territory or personal feuds.
Oil strikes have caused “financial crisis”: Zeidan
More than 40 killed in depot blast in Libya, more clashes in east
(Reuters) - More than 40 people were killed on Thursday in an explosion at an army depot in southern Libya after locals had tried to steal ammunition and four soldiers died in other violence in the restive east, officials said.
The incidents highlighted the turmoil in Libya where the government is trying to restore order in the oil producing country, which is awash with weapons after the 2011 ouster of Muammar Gaddafi.
The blast in Brak al-Chati, near the main southern city of Sabha, happened after a group of 43 locals and Africans were entering the army depot to steal ammunition, a security official said.
The casualties could rise further as the depot was still on fire and people might be trapped inside, the official said.
Libya's nascent military is struggling to secure army bases and curb Islamist militants, militias and gangs who fought in the uprising against Gaddafi but refuse to disarm and control parts of the country.
The four soldiers were killed in Benghazi as clashes erupted between army special forces and militant Islamists of the Ansar al-Sharia group, officials said.
The trouble started when soldiers stopped a car loaded with weapons, explosives and large amount of money. "Three soldiers were killed in clashes with Ansar al-Sharia," Wanis Bukhmada, commander of the special forces in Benghazi, told a news conference.
He later told Reuters: "We will defend Benghazi."
Another soldier was assassinated by unknown gunmen in the morning in another part of the city, a security source said.
Fighting had initially started on Monday between army special forces and members of the Ansar Sharia in Benghazi, Libya's second-largest city. At least nine people were killed before the Islamists retreated from their main base. Three more soldiers were killed on Wednesday.
APPEAL FOR DIALOGUE
Army officials went on nationwide television on Thursday to appeal to the Islamists and other militias to lay down their weapons in Benghazi and start a dialogue.
"Brothers of the Ansar al-Sharia. You are Muslims and we are Muslims. We don't differ on religion ... but don't impose something which is not part of the religion," Salah Obeidi, army commander of the eastern region, told reporters.
The security situation has sharply deteriorated in the past few months in Benghazi, where car bombings and assassinations are part of daily life.
Most countries have closed their consulates in the city of one million inhabitants, home to several oil companies. Some foreign airlines also have stopped flying there.
Ansar al-Sharia was blamed for the attack on the U.S. consulate in Benghazi in September last year when the U.S. ambassador and three other Americans were killed.
The chaos in Libya is worrying its neighbors and the Western powers that backed the uprising which led to the fall of Gaddafi in one of the Arab Spring revolts.
Hoping to co-opt former fighters, the government hired militia groups to provide security. But they remain loyal to their commanders or tribes and often clash in disputes over territory or personal feuds.
Libya's oil exports are down to a fraction of capacity due to seizures of oilfields and ports by militias, tribesmen and civil servants demanding more political rights or higher pay.
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'Major crude oil importers won’t deal with Libya’s militia'
Published time: November 27, 2013 11:28
Libyan militia won’t be able to successfully control the assets of the country’s oil production, Mamdouh Salameh, World Bank oil expert, told RT.
Moeen Raoof, Defence consultant, believes there is nothing Tripoly can do about separatists who declared an autonomy in the country's oil-rich eastern provinces. “The central government cannot rule beyond the hotel lobby, where the Prime Minister stays in,” Raoof told RT. There will be instability for the next 10-20 years unless they come up with solution, he said.
RT: The country's oil output has plummeted to about 10% of its previous capacity - what are the immediate and long-term effects of this drop?
Mamdouh Salameh: Actually the price of oil has dropped by $2 to $3 only, but that is natural because oil is connected and receptive to political developments. However, the overall trend for the future of oil is upward. Its drop of $2 to $3 is nothing. The demand for oil is going up and that’s why I’m saying the trend is ascending. So I wouldn’t be surprised if we see the price of $120 to $130 by 2015. However, the loss of 2 or 3 dollars in the price of oil seems to be welcomed by the global economies, although it won’t have a very great impact as yet.
RT: In terms of what’s going on in Libya itself and in terms of who actually controls the oil, we do hear that breakaway militias have formed an autonomy in Libya's oil-rich east. They want to export the crude oil for themselves. Do you think they will be able to succeed?
MS: No, they will not. Libya is a different category from the other Arab Gulf producers. For instance, since last year when the troubles started in Libya, Libya virtually ceased to be an oil exporter. This year they are not even able to satisfy their domestic needs which amounts to around 400,000 barrels a day - they are producing 200,000, which is 50% of their needs. And they used to export 1.25 million barrels to Europe, they are not exporting anything.
The militia or the armed gangs want to control the assets of oil production so that they can finance their activities. They will not succeed and they will also have to repair the damage to the oil industry in Libya. Furthermore, the major importers like Italy, France and Germany will not deal with them; they would rather buy oil from somewhere else but not deal with the militia.
RT: Given the huge economic problems Libya is now facing, particularly with reference to oil and gas revenues, are there any economic alternatives for Tripoli?
MS: There is no alternative because the Libyan budget depends to the tune of 85 percent to 90 percent of revenue from oil and gas export. The Libyan economy as a whole is dependent to the tune of 90 percent to 95 percent on the revenue from oil and gas. Since there is no gas and oil revenue, no export, so there is no revenue at all. The Libyan government is in real mess because they cannot issue the budget without knowing how much oil they will be able to export and what revenue they will get.