Political power grows out of the barrel of a gun, according to Mao, but also from the spigot of an oilwell.
Libya’s peace accord, reached in the Moroccan city of Skhirat, is now “final”, according to UN envoy Bernardino Leon, and it is up to the parties – the House of Representatives operating from the east, and the General National Congress in Tripoli in the west – to accept or reject it by tomorrow.
The draft agreement texts barely mention oil, except in referring to the security of facilities. But the country’s energy resources are absolutely crucial to building a functioning state.
Libya’s oil production, about 1.8 million barrels per day before the revolution, fell almost to zero during the fighting in 2011, then rebounded before being interrupted by a series of blockades by pro-federalist groups in the east, protests and terrorist attacks. It now hovers at about 500,000 barrels per day, a slight improvement on last year.
With approximately 370 million barrels of oil in storage worldwide, prices are hovering about $50 per barrel and the geopolitical risk premium is zero, a stark contrast to the rise above $120 per barrel in 2011 caused by the Libyan revolution. In the absence of geopolitical disruption, low prices are likely to persist.
However, Russian-backed rebels in Ukraine, ISIL in Iraq and Syria, war in Yemen and the yet-to-be implemented Iranian nuclear deal all could change this. Stabilising Libya offers an achievable step towards offsetting some of these other energy security risks.
Complaints that the US is abdicating its role of guaranteeing security in the region ignore the facts that Washington is a long way from Tripoli, and that it is the EU and Libya’s neighbours that are bearing the brunt of the country’s breakdown. The UAE, Turkey, Egypt and Qatar have been consulted on the peace agreement but, of course, beyond this, outside interference has worsened and prolonged Libyan infighting.
The EU needs to play a stronger role in brokering and enforcing the Skhirat agreement, engaging neutrals and isolating rejectionists and militants. European complacency is baffling, in the face of an ISIL outpost on the Mediterranean in the city of Sirte, the surge of refugees, and the danger of spill-over to the Arab Spring’s democratic success story, Tunisia.
Terrorist groups based in Libya threaten Algerian petroleum facilities, insecurity damages the financial interests of major European energy companies, while supplies of Libyan gas would add to European leverage in the power play with Russia.
The Union for the Mediterranean in June launched a Platform for Gas to improve cooperation between the EU and North Africa. But the absence of a functioning government in the holder of North Africa’s biggest hydrocarbon reserves blows a gaping hole in the platform.
Libya’s desperate need for finance, particularly with low oil prices, puts it at the mercy of any armed group that can blockade a field or an export terminal.
A durable Libyan state structure will have to address the distribution of oil revenues, under a possible “federal” or at least decentralised plan. At the same time, it needs a coherent national energy strategy, infrastructure and achievable budget. A post-conflict Libya has a second shot at avoiding the rentier-state trap, and building a diversified economy, but needs outside expertise, of the kind the EU provided so well to post-communist Eastern Europe.
After the successful 2011 revolution and international intervention, the role of Libyan oil and gas was largely ignored. This time, the international community should not miss its chance to restore an important part of global energy security, the key to rebuilding Libya, and one of its two key levers of power.
Robin M Mills is Head of Consulting at Manaar Energy, and author of The Myth of the Oil Crisis.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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