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  • Libyans Debate who will Benefit from their Oil

    Reed Lindsay reports Oil Minister denies secret French deal as Libyans question NTC and NATO interest -   September 26, 2011
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    Libyans Debate who will Benefit from their OilREED LINDSAY, TRNN: Posters thanking the Western powers adorn the plaza in front of Benghazi's courthouse. Their flags fly overhead and are painted on the walls. Most of the Libyans who led the revolt against Muammar Gaddafi are fiercely nationalist and devoutly Muslim. Here in Benghazi, the US-led occupation of Iraq is roundly condemned, and Western support of Israel is an object of scorn. But Libyans opposed to Gaddafi seem to have no problem reconciling these positions with their support of the NATO military campaign in Libya. Gratitude is overflowing in the streets of Benghazi, where NATO is credited with preventing a Gaddafi onslaught last March, and on the front lines, where rebels battle under air cover from European fighter jets.

    ZUHAIR, REBEL, WELDER FOR ARABIAN GULF OIL COMPANY: Oh! NATO's good. No, it's good, very, very good. Without NATO, there is no winning this war. With NATO--and with God first, with God first and NATO second, these wars will be for us.

    LINDSAY: But the rebels have no illusions about the economic interests behind the NATO bombing.

    ZUHAIR: There is oil, there is companies, NATO will help you; there is no oil, there is no companies, NATO not help you.

    LINDSAY: This sentiment is nearly universal in Eastern Libya, from the battlefields to the offices of Libya's largest state-owned oil company.

    ABDELJALIL MAYUF, SPOKESMAN, ARABIAN GULF OIL COMPANY: In politics, there is no ethics. There is--we saw many, you know, good speech about human rights and these things, but in reality, the economic interest is priority. Why do not interfere in Somalia, Somalia or Syria? Because there is nothing there. Here there is the oil and they have interest.

    LINDSAY: The war decimated Libyan oil production, which fell from 1.6 million barrels a day to zero. But with the rebels now in control of Tripoli and the key oil terminals of Brega and Ra's Lanuf, they have wasted no time in trying to revive the industry. In the coming days, Libya is expected to export crude for the first time in months. OPEC estimates the country will be producing a million barrels a day in half a year. Libya's future depends on it. Under Gaddafi, the petroleum sector contributed to 95 percent of export earnings and 80 percent of government revenue.

    KHAMIS RUBIYA, SUPERINTENDENT, SIRTE OIL COMPANY: They think people now, they feel the challenge, you know? And they feel that also by working hard to get back in operation, they are playing a very important role, you know, in this revolution. So it's our revolution, and it's our responsibility, you know, to get back in operation.

    LINDSAY: Even before the oil starts flowing again, rumors are swirling about who will cash in, including allegations of secret deals signed between the rebel leadership and NATO countries. The most egregious example includes a letter published in a French newspaper that allegedly promises 35 percent of Libya's crude oil to France.


    --article that came out in, I think, a French newspaper about the 35 percent promised to France. Can you explain that specifically?



    LINDSAY: This man holds the keys to Libya's oil wealth. Seven months ago, he was a professor of microeconomics at the University of Washington in Seattle, an anti-Gaddafi exile of nearly 40 years. Now, Ali Tarhouni is finance and oil minister for the rebel leadership, known as the National Transitional Council, or the NTC. Tarhouni insists that the NTC will respect contracts with foreign companies agreed to under Gaddafi and will sign no new ones.

    TARHOUNI: --not only that we managed to run this economy with very limited resources, but during all of this time, not a single contract has been signed that introduce any liability in the future wealth of Libya. And that's only will happen when there is an elected body, because we're not elected, we're not--you can question our legitimacy, and rightly so. Then the wealth of Libya--the contracts of Libya will be decided and have transparency.

    LINDSAY: Tarhouni says his hands are full getting the oil industry back to where it was before the war. He estimates that up to 20 percent of the country's oil facilities were damaged. Repairs have only just begun, and oil installations are still not secure. The Ra's Lanuf terminal was the target of an attack by Gaddafi forces earlier this month. Here at the Brega terminal, Gaddafi forces stored missiles inside the oil and gas facilities, ensuring NATO would not bomb them. A month after the soldiers fled, the arms still have not been removed. Meanwhile, many oil workers are still fighting and dying on the front lines.

    TARHOUNI: We have engineers, basically, with no cover, no protection. They venture into the desert. They protected the oil field.

    LINDSAY: Not only is Tarhouni responsible for Libya's oil reserves (the largest in Africa and the ninth largest in the world); he is in charge of Libya's finances, including $170 billion in foreign assets. The money has already started arriving in Libya after the UN began lifting sanctions. Earlier this month, 1.5 billion Libyan dinars were shipped to Benghazi from England. But with questions about the NTC's capacity and authority to spend the money, Tarhouni says he has asked the Western countries holding the funds to keep them frozen for the time being. At its independence 60 years ago, Libya was one of the poorest countries in the world. Its most important export was scrap metal salvaged from World War II battlefields. Today, Libya is rich in oil and natural gas, with billions of dollars in the bank. But many Libyans complain that mismanagement and corruption have prevented the country's relatively small population of 6.5 million from seeing the benefits.

    RUBIYA: Working in the oil, this is--I think it's very sad, because you know the amount of money the country own, and when you see the living standard in Libya, you feel sorry for that.

    LINDSAY: In the 1970s, Gaddafi began nationalizing the oil industry. But his departure doesn't necessarily mean a push toward privatization. On the contrary, some oil workers say they anticipate greater investment in state-owned oil companies.

    RUBIYA: Yeah, these facilities was built by MAN GHH. It's a German company. The other facility, the equipment was brought from Solar--gas turbines. That's an American companies. And the construction was done by a Russian company. It's all about management men, because, you know, there was a corruption in the management. We've been in this field, you know, for now more than 45 years, and we still depend on foreign companies. You know? But, hopefully, with good training programs and, you know, practical programs, we can depend on ourselves.

    LINDSAY: Many oil workers criticized Gaddafi not for nationalizing, but for allegedly squandering or stealing profits instead of reinvesting them. To cite one example, a lack of Libyan refineries means that 65 percent of the gasoline consumed in the country is imported, according to NTC officials. Shortly after taking power in 1969, Muammar al-Gaddafi nationalized foreign oil producers. The Arabian Gulf Oil Company, currently state-owned, is Libya's largest oil producer. It used to belong to British Petroleum. But foreign oil companies never stopped working in Libya or with the Libyan government, with the exception of the pullout of US companies in the 1980s. And when Gaddafi abandoned the government's unconventional weapons program and began liberalizing the economy, foreign investment poured back into the country.

    MAYUF: Gaddafi stay in power for 40 years, 43 years, because he controlled the oil sector and he, you know, corrupted everybody, even some politician of the Western, you know, countries, like this Berlusconi, like Tony Blair, like--this is--as adviser of Gaddafi. You know, it's not a secret for anybody now. And they corrupted even the United States, you know.

    LINDSAY: But if foreign oil companies made money with Gaddafi, they could stand to make even more without him, according to Mayuf.

    MAYUF: They are fed up with Gaddafi. He's arrogant, he's--you know, and he stay in power, he think he is God, you know, after 40 years. So I think they are also support this revolution because they want to get out from this Gaddafi. And I am sure even the new government or new Libya, they will sell the oil to these countries. You know, they will lose--they will lose nothing.

    LINDSAY: NTC Chairman Mustafa Abdul Jalil has indicated that when the time comes to sign deals, the NATO countries will be the first in line. Meanwhile, those countries that backed Gaddafi, including Brazil, China, and Russia, could stand to lose.

    TARHOUNI: Not a single promise, not a single promise, except what [incompr.] said is we have a pretty good idea who our friends are.

    LINDSAY: Oil companies previously working in Libya are already moving back. On his visit to the Brega oil terminal, Tarhouni was accompanied by a representative of Wintershall, a subsidiary of German multinational BASF, which produced 100,000 barrels a day in Libya under Gaddafi.

    ABSAL ABDEL MEDANI, WINTERSHELL REPRESENTATIVE IN LIBYA: They are preparing now to come back to Libya, and they look forward, really, for a bright future.

    LINDSAY: Meanwhile, foreign security and construction companies looking for contracts are already occupying the luxury hotels of Benghazi and Tripoli. Tarhouni insists the NTC is not making deals with any of them, especially with foreign mercenaries.

    TARHOUNI: We will not hire any security companies. I'm not about to repeat what--the Iraqi crap, the Iraqi experiences. A lot of these companies are no-good companies.

    LINDSAY: But some Libyans have cast doubt on the NTC's bona fides.

    ZUHAIR: I'm afraid the new president will be similar to Muammar al-Gaddafi. So I can't really believe that Libya will be new and improved and the new president won't steal our money and grant our freedom.

    LINDSAY: Charges of corruption have been leveled at NTC members, and complaints about a lack of transparency, unheard-of a few months ago, are now widespread.

    MAYUF: I don't know exactly what is going in Paris in their last meeting, you know, what they sign. I don't know. I am afraid that they sign something which--you know, which would--the Libyan people, they don't know the details. You know, [incompr.] maybe some of them from the Gaddafi regime or some new--newcomers.

    LINDSAY: Tarhouni might not be in charge of the country's oil for long. According to a Reuters report published on Wednesday, a former executive for Italy's largest oil and gas company, Eni, is slated to take over as the new Libyan oil minister. WikiLeaks documents show that US officials believe that in Libya under Gaddafi, Eni was acting as a stalking horse for Russian oil company Gazprom, which they allege is try to dominate the European energy market. Last week, Eni and Gazprom reaffirmed an agreement that gives the Russian company 50 percent of any stake in a major Libyan oilfield. Most Libyans in the east are too preoccupied with the ongoing battle against Gaddafi to worry about deals being made in Europe or North America. They seem to trust the NTC for now, and expectations are high that the country's oil wealth will soon be making an impact on their lives.

    RUBIYA: Yeah, I think now we trust the NTC, yes, we trust them. And we will wait, you know, see what will happen in the future. Now there is no fear. So if there is a corruption, we will face it. Yeah.

    LINDSAY: On the front lines, many rebels say that signing contracts with foreign companies doesn't imply a loss of sovereignty or control over their resources.

    MOUSSAD, REBEL, UNIVERSITY PROFESSOR (SUBTITLED TRANSL.): The United States, like any other country, it has its interests, and you can benefit at the same time. But if we don't like their agenda, we'll kick them out. You can't compare Iraq to Libya.

    LINDSAY: Unlike Iraq, there was no foreign military invasion or occupation in Libya, and the rebels have vehemently rejected the idea of establishing any kind of peacekeeping force that includes foreign troops. Nobody here doubts that NATO countries will seek to influence the new government and its oil policies, but it's not clear if the Libyan people, who have shed so much blood during the last seven months standing down bullets in street protests and fighting in a volunteer army, will accept a leadership that does not defend their interests. Reed Lindsay for The Real News Network in Brega, Libya.

    End of Transcript

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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