Qatar’s big Libya adventure

By Dmitry Zhdannikov, Regan E. Doherty and Mohammed Abbas

BENGHAZI, Libya, June 9 (Reuters) – To get an idea of who might wield influence in post-civil war Libya, take a look at the flags flying in the rebel-held east of the country.

Outside the courthouse in Benghazi — rebel headquarters and symbolic heart of the uprising against the 41-year rule of leader Muammar Gaddafi — fly the flags of France, Great Britain, the United States, the European Union, NATO. There’s one other flag, too: Qatar’s.

“Qatar, really, it’s time to convey our gratitude to them,” Abdulla Shamia, rebel economy chief, told Reuters. “They really helped us a lot. It’s a channel for transportation, for help, for everything.”

It has a population of just 1.7 million people, but the wealthy Gulf monarchy has long sought a major voice in political affairs in the region. It has brokered peace talks in Sudan and Lebanon, owns the influential pan-Arab news network Al Jazeera, and recently won the right to host the 2022 soccer World Cup. Now the gas-rich nation has placed a big geopolitical bet in Libya, splashing out hundreds of millions of dollars on fuel, food and cash transfers for the rebels.

A representative from the Emir’s palace declined to comment on what products Qatar has delivered to Libya, and on the ruling family’s motivations behind its Libyan engagement.

It’s certainly a gamble. If the rebels win, Qatar is likely to pick up energy deals and new influence in North Africa. But if they lose, Qatar’s ambitions may further alienate it among its neighbours.

“I guess ever since the late 1990s, Qatar has been trying to break the Saudi-dominated status quo and carve out a niche position,” said Saket Vemprala from the London-based Business Monitor International consultancy.

“At the moment I think it’s more geopolitical, they want to broaden their (influence in the) region and become a more significant player … And it certainly makes it easy for them to portray themselves as being on the right side of history,” he said.

That sentiment is on display on a huge billboard in front of the courthouse. Over a picture of Qatari ruler Hamad bin Khalifa al-Thani reads the promise: “Qatar, history will always remember your support for our cause.”

“‘WE ARE FINE'”

Being on the right side of history doesn’t come cheap.

Qatar was the first Arab country to contribute planes to police the U.N.-backed no-fly zone over Libya. Simultaneously, hundreds of millions of dollars began to flow from the Qatari capital Doha to Benghazi from early March.

While international oil traders pondered whether to brave the bombs and international sanctions to start buying oil from the rebels, Qatar was quick to throw a lifeline and help eastern Libya meet its most pressing needs including fuel, food, medicines and telecommunications equipment.

Qatar’s foreign ministry has confirmed that it has shipped four tankers full of gasoline, diesel and other refined fuels to Benghazi, which specialists estimate is enough to feed the large Benghazi power plant for one or two weeks.

But people on the ground in Benghazi say they believe Qatar is behind much of the continuing delivery of fuel supplies, as well as food, medicine and cash payments. Given that oil production in the east has stalled and the economy generates no cash, they ask, where else are all the supplies coming from?

Overall, the Qatari shipments have covered 100 percent of eastern Libya energy needs for a month and a half, Salah Fouad, a rebel oil engineer based in the eastern coastal city of Tobruk, said in May. “We are receiving a huge help from Qatar. Its role in unforgettable. Even the little child knows Qatar’s role and assistance to us,” he said. A western consultant who worked in Benghazi in March and April supported this view. “You ask port workers how are they doing today and they say, ‘Oh, we are fine. We just received aid from Qatar,'” he said, declining to be named because of the sensitivity of his mission. “You ask the council what’s the situation with diesel and they say, ‘Oh we are just fine, we’ve got new deliveries from Qatar.’ You tell Libyan officials to let you know if something goes wrong with power facilities and they tell you, ‘Oh we are just fine, Qatar is helping us.'”

A Gulf-based oil trader with knowledge of Qatari gasoline deliveries estimated monthly requirements at 10 gasoline and 5-6 diesel cargoes a month to help run vehicles and Benghazi’s huge power plant.

As shipments are being settled on a government-to-government basis, they are usually not followed by satellite tracking systems, which monitor mostly commercial shipments.

Those commercial shipments have included a test-case export cargo from the rebel-held east, shipped out in early May by trading house Vitol. Some traders say Qatar has gone further.

“Everyone gets excited about one Vitol cargo and doesn’t see a fleet of Qatari tankers,” said another London-based trader.

Other countries are helping the rebels as well, of course. An anti-Gaddafi coalition called the Libya contact group, including the United States, France, Britain and Italy — as well as Kuwait and Jordan — agreed in May to set up a fund to help them; Washington pledged to unlock some of the $30 billion of Libyan state funds frozen in the United States.

What makes Qatar different is the breadth and depth of its aid.

Rebel officials in Doha say Qatari banks are helping facilitate international money transfers in rebel-held areas to recapitalise the paralysed banking system, though they won’t say which banks.

Qatar is also believed by diplomatic sources in Doha to have granted some Libyans working for Qatari companies leave of absence so they can contribute to the war effort.

Several western and Doha-based diplomatic sources say Qatar is even supplying the rebels arms, including possibly Milan anti-tank missiles. The Gulf state declined to comment on whether it has supplied the rebels with arms, or in what quantity.

In May, the rebels estimated they urgently needed $2-3 billion in cash. When the anti-Gaddafi coalition set up its fund, Qatar immediately pledged the largest sum of $400-$500 million.

IMMENSE WEALTH

What’s behind Qatar’s generosity? It helps that it is so rich. Qatar’s copious gas reserves have made it one of the world’s wealthiest countries, with a sky-high gross domestic product per person of $88,000 according to the International Monetary Fund. Its $60-billion plus sovereign wealth fund owns stakes in banks Credit Suisse and Barclays, as well as London’s iconic department store Harrods.

“Qatar will soon — literally — have more money than it knows what to do with,” according to a 2008 U.S. diplomatic cable, obtained by WikiLeaks and reviewed by Reuters.

The largesse in Libya is part investment, part strategic. “They are looking to park investments around the world. They helped the Lebanon peace process, Yemen, they got the World Cup, Doha talks, Al Jazeera — these are all parts of a very big diplomatic game and a fight for influence,” says a London-based British diplomat.

The big prize is energy. Libya produced 1.6 million barrels of oil per day before the war, or almost 2 percent of world output, and has enough reserves to sustain that level of production for 77 years, according to BP. Qatar would like to control a chunk of that oil supply as well as potentially large Libyan gas exports to Europe which otherwise would effectively rival Qatar’s own deliveries.