Tuesday, August 30, 2011

After Gaddafi: Oil and Policy

Now that Gaddafi has been overthrown, there is much afoot in Libya. Western oil companies are charging in and China and Russia are going to have to adjust their policies to the new Libyan government.

Currently, it has been reported that "Major British companies are hatching plans to relaunch their businesses in Libya," such as BP which "had announced plans to spend upwards of £540m to fund a joint venture with the Libyans to search for gas and oil that would have seen it take about 19% of any future production revenues," yet had to halt their plans due to the uprising. However, the British aren't the only ones. Other NATO members such as the US and France are also scrambling for Libyan oil, with Italy's ENI leading the way. They recently signed a deal with the Libyan rebels which would restart a natural gas pipeline and give a technical assessment of Libya's oil infrastructure, with hopes of quickly restarting their operations in Libya.

Thus, the coalition that came together to support a hodgepodge group of Al Qaeda linked, racist rebels, is now falling over themselves to get at the nation's natural wealth. However, the overthrow of Gaddafi was of great interests to all the oil companies involved as many feared that Libya's oil would be nationalized, thus sealing them out of the oil wealth and leaving it for BRICS.

The Libyan rebel success also has had adverse effects as well, mainly on Russia and China who will now have to rethink their foreign policy towards Libya. As soon as a manager of the rebel-controlled Arabian Gulf Oil Company stated that they would favor Western oil corporations as the expense of the oil corporations of BRICS nations, China and Russia became quite worried. Chinese officials "called on the rebel leadership to protect the country’s investments in Libya" and "Russian foreign minister Seirgey Lavrov sought to put a good face on his country’s position by insisting that Russia was ready to mediate even at this late hour a political solution to the crisis." Yet once Gaddafi had been overthrown and it was clear that the rebels had won, China called for  "'a stable transition of power' in Libya and said it had made contact with the rebels there" (as did Russia) and argued for a UN-led rebuilding of Libya. This is of course to protect their interest in Libya, as the Chinese have invested over $20 billion in Libya in the form of oil, telecommunications, building, and infrastructure projects.

This intervention is having its effects on Africa as well. South Africa is not only refusing to recognize the Libyan rebels as the legitimate government, but have also refused to unfreeze $1.5 billion in frozen Libyan government assets on the grounds that the new Libyan government has not been recognized by the UN. Due to their plan for a power-sharing agreement having failed, South Africa and the African Union have suffered a serious setback, as South African is a "continental power broker" and the African Union exists in part to foster peace and cooperation on the continent.

We'll all have to wait and see how the situation plays itself out. 

1 comment:

Unknown said...

Good article... Used it against some shmuck who claimed the primary reason we intervened in Libya was because of human rights violations.