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Western Hands-Off Approach to Post-Gadhafi Libya Doesn’t Extend to Oil Companies

In Libya, Moammar Gadhafi remains at large, though rebel forces think they have him cornered. They’ve said that before, however. And adding to the confusion was a kind of debate between two members of Gadhafi’s family on separate TV channels, one reaching out to the rebels for a negotiated solution and the other vowing to fight to the death.

Meanwhile, the US and Europe magnanimously ruled out a nation-building role in Libya after the remnants of the Gadhafi regime are finally flushed away. Isn’t that nice of them. They’ll continue to drop freedom bombs until the war ends, a dubious manifestation of the “humanitarian” effort, but after that, Libya is on its own. On its own to make deals with the hydrocarbon sector, that is:

For now, at least, the war-weary allies say the post-Kadafi government can rebuild the battered country with its own money, even though Libya’s oil and gas sector may need two years to recover […]

France, Italy and other countries that are the traditional customers and oil field partners of Libya have lined up to sign new energy deals with the government.

The rebel government has talked about resuming oil exports within a couple months, and they’ve said since February that they will honor all existing contracts with oil companies. There’s some talk of a “review” for signs of corruption, but I’m assuming that’s a formality to just re-route the graft, i.e. the costs of doing business.

In a statement, the advocacy group Global Witness wrote that oil transparency must be a part of Libya’s future. Keep in mind that the UN holds about $1.5 billion in “frozen” Libyan assets that they’re trying to unlock now, which will start the spigot for about $150 billion in assets globally. That’s the seed money for the transitional government, and it’s not yet in their hands because the oil deals haven’t been written. The oil companies presumably want the deals made before an actual President of Libya gets elected, which could make it harder for them to get what they want. That’s just very likely to happen, and the idea that any of this will be transparent seems fanciful to me.

So yes, in a sense Western governments are taking a hands-off approach to nation-building. They’re happy to let the oil industry do the work.

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David Dayen

David Dayen

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