As the Libyan rebels continue to battle Muammar Qaddafi's forces in what some now fear is devolving into a stalemate, a few news outlets are raising an important consideration: Both sides may soon run out of cash if the fighting persists--the Qaddafi regime within months, according to its finance minister, and the rebels within weeks, according to the head of the opposition's central bank. Let's take a look at what these reports reveal about how both sides are staying afloat financially, as well as the pivotal variable the reports don't mention: Qaddafi's personal fortune.
THE QADDAFI REGIME
- Raise interest rates from three percent to six percent to encourage citizens to deposit the cash they're hoarding in banks, and place limits on the amount of money Libyans can withdraw from banks each month (in the photo above, Libyans wait to collect money from the government at a Tripoli bank)
- Increase public sector pay and pensions to encourage Libyans to replace the migrant workers that have fled the country
- Ration fuel and increase local oil refinement in the face of international sanctions on refined oil imports
- Pay less than a third of the government's monthly bill to the state-owned electricity company, but promise to pay off the debt when the crisis is over
- Place limits on bank withdrawals to avert shortages of local and foreign currency
- Cap salaries in an effort to keep paying public sector employees, who used to receive checks from Tripoli
- Export oil and secure oil fields, which are mainly located in eastern Libya. The Qaddafi regime currently controls the country's largest refinery in Ras Lanuf and has tried to disrupt production in rebel-controlled areas. Two weeks ago, a tanker from a Geneva-based company took on about one million barrels of oil near the rebel-held eastern city of Tobruk, but the company didn't specify who its client was or where the oil was headed.
- Lobby the West to access the Libyan government funds that the U.S. and the U.K. have frozen
The Qaddafi regime is more experienced than the rebels in coping with international sanctions, which already gives it a leg up economically (the rebels, according to The Washington Post, claim they have an economic advantage because they control the border with Egypt and enjoy international support). But the Libyan government has another huge asset that could allow Tripoli to outlast Benghazi economically: the tens of billions of dollars that Qaddafi himself has stowed away in the Libyan capital. In an article last month, The New York Times reported that Qaddafi could leverage his personal fortune to pay his troops, African mercenaries, and political supporters, and prolong his fight against the rebels despite international sanctions.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.