by Ryan Cole, Contributing Editor, Taipan Daily
In a far more destabilizing move, the oil-producing nation is descending into civil war and chaos.
When Egypt's protests were happening, we called for calm. There's no oil in Egypt, we said. The army isn't firing on anyone, we said. The Suez Canal is operating as normal. Mubarak was eventually forced to step down, and oil prices immediately eased, while developing market values saw a quick uptick. Libya is not Egypt. And this escalating civil war is an entirely different situation.
For one, Libya is a major oil-producing nation. It holds about 3% of the world's proven reserves, and pumps out over a million barrels of oil a day.
For another, this struggle has already turned bloody. Gaddafi has (allegedly) ordered his army to fire on crowds of protesters, killing scores. Local police and army forces have clashed -- with the army backing down. Anti-government protesters have taken over large swaths of the country -- including the oil-rich east, and the country's second-largest city, Benghazi.
What's more, there is dissent in the ranks. Gaddafi's ambassador to the U.S. has officially washed his hands of the dictator, and called for him to step down. An army official -- of unknown rank and division -- has called for the military to refuse to support Gaddafi, and sign a petition to that effect.
Libya's deputy head of its U.N. delegation has called for Gaddafi's ouster, saying the military strongman has declared genocide upon his own people. What's more, the deputy head has asked for Libya to be declared a no-fly zone, to prevent mercenaries from being shuttled in, and to stop Libya's air force from bombing the country.
Two Libyan pilots have defected to Malta, claiming political asylum after refusing to bomb Benghazi.
Gaddafi, meanwhile, has appeared on TV declaring his intention to remain in Tripoli, and die a martyr if need be. At the same time, anti-government forces now hold most of Libya's oil fields, and are threatening to disrupt production if Gaddafi isn't removed.
A Dangerous Time to Be in the Middle East
At this point, the best-case scenario is a quick end to Gaddafi's rule -- either with the dictator fleeing the country or losing the support of his army. The worst-case is a prolonged civil war -- which, at this point, appears almost inevitable.
Further complicating matters -- Libya has only been a unified nation under Gaddafi. During Italian colonial rule, it was three separate entities, each ruled autonomously by clans or other groups of geographic affiliation. Without Gaddafi, there is a fair chance Libya will again splinter, much like Yugoslavia did after the fall of Tito.
With the oil fields already under control of the rebels -- who themselves are backed by Libya's largest clan, the Warfala tribe -- disruptions in supply are almost assured if these clashes drag on longer.
What's more, the emerging politics of a new Libya are up for debate. Egypt has very clearly been moving toward a democratic revolution. Libya may well descend into a mess of clan allegiances and local strongmen.
In short, Libya is an unpredictable quagmire, with no clear path toward stability. It also bears more in common with other military regimes in the area than Egypt did; Libya's fall could easily spark intensified revolts farther afield.
This is no Egypt. Watch out for skyrocketing oil prices -- and this time, they might not come back down. Not for a while -- certainly not if pipelines get disrupted. This might be the beginning of a big shift in the Middle East. For now, we should hold our breath, hold our money and see what happens.
