Tag: oil

UN, GNA Respond to ‘Cairo Declaration’ on Libya Crisis

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Egyptian President Abdel Fatah el-Sisi announced on Saturday a new political solution to the Libya crisis, dubbed the “Cairo Declaration.” The proposal has been welcomed by a number of Arab and Western nations but rejected by the Government of National Accord, which is instead pushing ahead with military offensives east of Tripoli.  

Libyan National Army (LNA) Chief Khalifa Haftar and Libyan House of Representatives Counselor Aguila Saleh joined el-Sisi in Cairo, and both backed the plan and agreed to a ceasefire starting on June 8. The GNA has yet to issue an official statement on the “Cairo Declaration” but in a clear rejection of the proposal, has continued to push eastwards from Tripoli, building on gains made against Haftar’s retreating forces in recent days.  

Fighting has centered on the strategic coastal town and former ISIS stronghold of Sirte but the GNA, with Turkish militia and weaponry support, is unlikely to stop there. They have the Libyan National Army (LNA) now firmly on the back foot and Libya’s oil fields in their sights.  

“Now what do you have right to the east of Sirte, you have the most strategic area of Libya,” Libya expert Jalel Harchaoui told the Associated Press (AP News). 

“You have effectively a series of oil terminals capable of exporting everyday more than 6,000 barrels a day,” he said. The oil revenue would be a boost to the UN-recognized GNA, which has been cut off from the country’s main source of wealth since the country essentially split in two and developed parallel governing structures in 2015. 

UN Responds 

The United Nations Support Mission in Libya (UNSMIL) has called for all sides of the conflict to seek a political solution and immediate ceasefire, declaring “any war among Libyans is a losing war,” in a statement issued late Saturday.  

UNSMIL did not comment directly on the “Cairo Declaration,” but welcomed “calls by international and regional actors in recent days for an immediate cessation of hostilities in Libya.” 

“A political solution to Libya’s longstanding crisis remains within grasp and the Mission, as ever, stands ready to convene a fully inclusive Libyan-led and Libyan-owned political process,” UNSMIL said in what appears to be a thinly-veiled swipe at el-Sisi’s announcement.

The UN also denounced the uptick in violence over recent days, noting fighting around eastern Tripoli and Tarhouna has displaced some 16,000 people. It called for an investigation into the “deeply disturbing” discovery of a number of dead bodies at a Tarhouna hospital and encouraged all conflict participants to respect the rule of law and international humanitarian law. 

“We have also received numerous reports of the looting and destruction of public and private property in Tarhuna and Alasabaa which in some cases appear to be acts of retribution and revenge that risk further fraying Libya’s social fabric,” UNSMIL added. 

Choosing Peace over Military Gains 

The Egyptian peace plan has received support from a number of Arab states including Saudi Arabia, the UAE, and Jordan. In the past 24 hours, Russia, the US, France, and Greece have also welcomed the Egyptian solution, while Germany and the UK have praised Haftar’s commitment to a political solution but called for all talks to be UN-led.

Despite Haftar and Saleh’s apparently genuine commitment to a ceasefire and political solution to the conflict, it seems that the GNA, led by Prime Minister Fayez Sarraj and backed by Turkish troops and Qatari funds, is much more interested in territorial gains than sparing civilian lives or securing a peaceful future for Libya.

Sarraj has called on his troops to “continue their path,” and Interior Minister Fathi Bashagha said the GNA will not consider negotiating until it has taken Sirte and the nearby Al Jufra Airbase. With Haftar’s troops on the back foot, it remains to be seen if the GNA will show restraint and look towards a political solution or continue the bloodshed that has torn Libya apart for years. 

Read also: Egypt’s Peace Plan for Libya Gains Ground in Arab World

Giant Arctic Oil Spill Prompts State of Emergency in Russia

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An oil spill in northern Russia has prompted the government to declare a state of emergency after 22,000 tons of red diesel oil spilled into Arctic waters. A diesel storage tank collapsed at a Nornickel power plant in Norilsk, Russia when the permafrost it was built on started to thaw. One of the supporting posts of the storage tank suddenly sank, damaging the tank and spilling its contents.

The diesel fuel spilled onto a nearby roadway, causing a passing car to catch fire, before spilling into the local waterways. For two days, the power plant attempted to stop the spill and clean up the 6,000 tons of oil that covered the ground and an additional 15,000 tons that had leaked into the local Ambarnaya and Daldykan Rivers, flowing down into their tributaries.

But the company was unable to undo the damage, the Ambarnaya River had turned bright red, and diesel oil flowed as far as seven miles from the power plant. After two days, the plant officials decided to contact the government as they realized the scale of the disaster.

Environmental concerns

Their communication came too late. The disaster is now described as a “135-square mile oil spill,” with Greenpeace warning the clean-up could cost as much as $85 million to deal with damage to waterways alone. The environmental NGO called the spill “catastrophic” as the first large-scale oil spill in the Arctic.

The Russian branch of the World Wildlife Fund released a statement expressing fears that the red diesel fuel may have spread as far as Lake Pyasino, situated 20 kilometers from the Norilsk power plant. “The most toxic components of diesel fuel are light aromatics (benzene, toluene, ethylbenzene and xylene), which in significant quantities will nevertheless dissolve in water and can in no way be collected by booms,” WWF Russia stated.

State of emergency

Russian President Vladimir Putin declared a federal state of emergency after reportedly shouting, “Are we going to learn about emergency situations from social media?” at Nornickel’s CEO during a televised video conference. By putting the responsible company at the front-and-center of the clean-up efforts, Vladimir Putin appears to be following Barack Obama’s communication playbook used during the 2010 BP oil spill.

With a state of emergency in place, clean-up efforts are underway. The cold conditions and large scale of the spill will likely slow down progress and many fear that the damage done to local nature will be irreversible.

Syrian Palace Intrigue Over Stolen Fortune Continues to Devolve

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The dirty laundry of Syria’s governing Assad family is airing publicly as the family attempts to gain control over an opaque fortune held by one side of the family. For decades the Makhloufs, the family of Bashar al-Assad’s mother, used their network of international businesses and government connections to channel a slice of Syria’s oil revenue into foreign bank accounts.

The bargain benefited the Makhlouf family while providing the Assads with financial firepower outside general taxation. But the relationship between the two branches of the same family started to fracture during the Syrian civil war, which required Russian military assistance to regain control over the population at a price.

Post-war tensions

If the conflict’s aftermath, Russia and Bashar al-Assad’s wife Asma have become increasingly influential in palace intrigue that would make for an interesting television drama. Russia benefits from a concentration of power around the Assads, who owe Russia for their intervention. Asma al-Assad competes with the Makhloufs for influence over the Alawites, an important political bloc that is the bedrock of Assad’s power.

Rami Makhlouf, the cousin of Bashar al-Assad, has become the focal point in the family rift. He followed in his father, Mohammed Makhlouf’s footsteps and used his family’s connections to accumulate tremendous wealth while backing the Assads with financial support and influence over the Alawites.

The mutually beneficial relationship between Rami Makhlouf’s business empire and al-Assad’s grip on power has now fractured to the point where both sides are making public moves. The conflict is revealing much about a structural kleptocracy where state and business overlap and intertwine.

Stand-off

The latest chapter in the palace drama has come in the way of a travel ban for Rami Makhlouf and an order for the Syrian stock market to ban trading in Makhlouf’s telecom business. In response, Rami Makhlouf “donated” his assets to a charity, one that he founded and controls.

Rami Makhlouf’s function as a “money man” for the Assad family appears to have come to an end, but the trouble with opaque hidden fortunes is that they are difficult to retrieve. Much of the money that the Assads channeled into foreign banks was routed by the Makhlouf family and it appears they now are the only ones that can provide access to the vast treasure of stolen Syrian wealth.

With the two family branches at a stand-off, more explosive developments and revelations will surely soon become public.

IIF: Gulf Countries Facing Historic Economic Crisis

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The six nations that comprise the Gulf Cooperation Council (GCC) are facing heavy impacts from the coronavirus pandemic and a drop in oil prices amid a sudden demand slump. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates are in for a difficult period according to the International Institute for Finance (IIF), a global association of financial institutions.

The Institute had already announced that emerging markets are facing an “unparalleled sudden stop,” with capital leaving the economies of developing nations at never-before-seen rates. Capital is flowing from emerging markets to developed ones at over five times the rate at the worst point of the 2008 global financial crisis.

Triple threat

For the six GCC countries, local economies are suffering from a trifecta of bad news. Capital flows are moving to developed nations and oil revenues have cratered while tourism, hospitality, retail, and travel sectors are all facing unprecedented difficulties due to stringent COVID-19 measures.

Despite the overall relatively successful containment of the coronavirus, GCC countries are set to see a contraction in real gross domestic product (GDP) of 4.4% according to IIF predictions. The World Bank in 2019 had predicted GDP growth between 1% and 4% for most GCC countries, an improvement over the previous year. Oman was considered one of the Council’s members most likely to grow, with an increase estimated at 3.7% due to increased natural gas production.

Oil revenue and state budgets

But the coronavirus and an international “war” over oil prices means the region is now in for a contraction in GDP. The IIF is cheering on unpopular austerity measures as a means to stop deficits from growing as cuts in public spending “could more than offset losses stemming from reduced oil exports.” Even with unpopular and painful spending cuts, the Gulf Council’s aggregate deficits are expected to increase to 10.3% of GDP.

Oman, which the World Bank touted as the GCC country most likely to grow significantly in 2020, is now considered “an increasingly vulnerable spot in the region in light of its mounting debt.” The country could face an economic contraction of 5.3% while its deficit is likely to widen to 16.1%, according to the IIF.

Opportunity to reform?

The crisis also poses an opportunity to build up resilience according to Alain Bejjani, CEO of Emirati retail operator Majid al Futtaim. “In the coming two to three years, we’re going to see, certainly, a very, very large impact that’s going to be asymmetric, depending on the readiness of countries,” Bejjani told CNBC on May 5.

“I think this is a golden opportunity to really change, to reform and to transform our economies into more resilient economies that have (the) ability to bounce back faster,” Bejjani stated. The current crisis could easily accelate reforms and diversification that have resulted in broader opportunities and even improved conditions for women in GCC countries.

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