Bloomberg News

Tripoli Running Out of Gas as Sanctions Squeeze Qaddafi

June 27, 2011

(Updates with latest fighting in penultimate paragraph. See EXTRA and MET for more on unrest in the region.)

June 27 (Bloomberg) -- Mohammed leans his bicycle against the wall of a café on Tripoli’s Green Square, opposite the city’s red-stone museum and Roman walls. Six months ago, he would have left his Volkswagen Passat for valet parking.

“The boys would take it and wash it while I was here,” he says. The oil-company engineer asked to be identified by one name because of the security situation.

Libyans in the capital are getting on their bikes to avoid the hundred-meter lines and weeklong waits at gas pumps -- evidence that the rebellion against Muammar Qaddafi, backed by NATO warplanes and international sanctions, is applying a squeeze on the territory that remains under his control.

The U.S. and its European allies say the leader’s four- decade grip on the country that holds Africa’s biggest oil reserves is nearing its end, as economic pressure and strikes on troops and communication centers erode his capacity to resist a spreading insurgency. Qaddafi is betting that he can survive longer than the coalition against him can stay united.

Italian Foreign Minister Franco Frattini on June 22 called for a “humanitarian suspension” of hostilities. The House of Representatives refused on June 24 to authorize President Barack Obama to continue American involvement in the North Atlantic Treaty Organization’s aerial combat missions, while declining to restrict funding for the operation.

There are signs of opposition to Qaddafi even within the zone he controls. Drivers in Azzawiya, 100 kilometers (62 miles) west of Tripoli, are stopped by soldiers every five minutes at checkpoints amid searches for rebel weapons.

Covered Graffiti

Patches of fresh paint on some walls in the capital show where anti-government graffiti has been covered up, while slogans denouncing “the rats,” Qaddafi’s term for the rebels, are left alone. In the center of Tripoli, a city of 2 million people that is shaken almost daily by NATO bombs, unexplained bursts of gunfire sound at night.

The government claims it has widespread support. “We are not the Taliban in Afghanistan, we are a state, there are people standing behind their leader,” said government spokesman Moussa Ibrahim in a June 23 interview in Tripoli. “We will stay steadfast, because we have no other option. Their resolve and unity will falter, because they are aggressors.”

Oil rose more than $25 a barrel in the first two months of the Libyan conflict. The International Energy Agency in Paris said last week that the U.S. and 27 other countries will release 60 million barrels of emergency stockpiles, only the third such action in more than three decades, to offset the loss of 132 million barrels of Libyan output. The move helped push crude for August delivery below $90 a barrel in New York.

Talking Together

Talks between the Libyan government and insurgents have taken place via intermediaries in South Africa and Paris, Mahmoud Shammam, a rebel spokesman, told France’s Le Figaro newspaper last week. Qaddafi’s government portrays the rebels, who control the east of the country from their base in Benghazi, as a blend of Islamic extremists and corrupt defectors used by Western powers seeking to control Libyan oil.

It’s hard to tell how much support such views have in Tripoli. Reporters aren’t allowed to move around without government minders -- officially, to protect them from locals hostile to the international media because of its alleged pro- rebel bias.

In Green Square, Randa Mukhtar was taking part in a demonstration of women against NATO. Dressed in army-style fatigues, she said she was a member of one of the Revolutionary Committees, paramilitary units set up by Qaddafi.

‘Don’t Exist’

“There is no internal problem, there is a foreign aggression,” said Mukhtar, 30. “It’s you, the journalists, who are telling lies, fabricating stories that don’t exist.”

Mohammed, the engineer, spoke in English to make it harder for those around him to listen.

“Put aside petrol, we don’t really lack things,” he said. “But we are worried because we don’t know what to expect, we don’t know when this will finish and how it will finish.”

Fuel shortages are a novelty in a country where gasoline costs 0.15 dinar a liter. The official exchange rate is 1.20 dinars per dollar and in the black market it trades at about 1.70. Most Libyans are limited to 1,000 dinars a month in bank withdrawals.

The 120,000 barrel-a-day oil refinery in nearby Azzawiya can supply up to 30 percent of the needs of the territory controlled by Qaddafi, said the chairman of the Union of Libyan Chambers of Commerce and Industry, Abdulmagid Elmansuri, in a June 22 interview. No cargoes of imported oil products are reaching ports under government control, he said.

Power Functioning

Water and electricity are still available round the clock. NATO has mostly avoided hitting civilian infrastructure. A stray missile on June 19 was the first bombing acknowledged by the coalition to have caused civilian deaths in more than 5,000 sorties. Libya’s government said nine people died in the Souk El Gomaa district of Tripoli and maintains that civilians and their institutions are being targeted.

The bombings may have persuaded Qaddafi to consider relocating outside the capital, the Wall Street Journal reported June 24, citing an unidentified U.S. official.

While Tripoli’s supermarkets are well stocked with food, prices have increased to reflect higher transport costs for imported goods. A 680-gram (24-ounce) bottle of tomato paste, a key ingredient in the local dish of couscous, was on sale at one grocery store for 3.5 dinars, compared with 2.5 dinars before the conflict. A Kitkat chocolate bar was priced at 2 dinars, compared with 1 dinar in February.

Price Increases

While the chamber of commerce has no estimate for the increase in consumer prices, twelve shoppers interviewed in three grocery stores said they had seen rises of between 30 percent and 100 percent, depending on the goods.

The government on June 25 said it had ordered $3 billion of food supplies to cover local needs for at least six months, and was planning to add milk, bottled water, juices and dried beans to the list of food products that are subsidized. Subsidies already exist for some basic commodities such as wheat and pasta.

It is unclear how long the government can support Tripoli’s inhabitants. A sea blockade to prevent weapons and fuel from reaching Qaddafi’s troops, and European Union sanctions targeting ports, have reduced maritime traffic to the capital.

Tripoli’s only road link with the outside world is the coastal highway running west to the Tunisian border, a three- hour drive. The airport stopped operations because of the no-fly zone enforced by NATO, acting under a United Nations Security Council mandate to protect civilians from the conflict.

Cash Crisis

Qaddafi will also face a cash crisis, said Farhat Bengdara, the former central governor, who estimates the government had about $500 million at the end of February. “It’s almost run out,” he said in a June 14 interview in Dubai. “They have no fuel or tanks. It’s a matter of weeks.”

Qaddafi, who turned 69 this month, said on June 22 that the fight will continue “until doomsday.” He was speaking to mark the death of three grandchildren of Khweildi Hmeidi, one of the army officers who helped Qaddafi seize power in a 1969 coup. They were killed in an airstrike on a compound west of Tripoli that NATO said was a command and control center. The government said it was a farm.

There are signs that the fighting is moving closer to the capital. On the 100th day of the uprising, rebels clashed with Qaddafi loyalists about 80 kilometers (50 miles) southwest of Tripoli, the Associated Press reported today, citing Guma al- Gamaty, a rebel spokesman. The fighting began yesterday near the town of Bir al-Ghanem as the rebels attempted to push out of the Nafusa mountains toward Zawiya, a western gateway to Tripoli, the AP said.

The Libyan rebels have adopted the red-green-black flag of the monarchy that Qaddafi and Hmeidi overthrew. Pro-government graffiti in Souk El Gomaa, a working-class neighborhood, is scrawled in the olive-green of the flag Qaddafi introduced. “No to the rats,” one wall says.

--With assistance from Caroline Alexander in London and Greg Viscusi in Paris. Editors: Ben Holland, Anne Swardson, Digby Lidstone.

To contact the reporter on this story: Maher Chmaytelli in Tripoli at mchmaytelli@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.


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