Not Just Another Recession
Why the Global Economy May Never Be the Same
The military campaign against Muammar al-Qaddafi's regime has been hailed a success. In March, Permanent U.S. Representative to NATO Ivo Daalder and NATO Supreme Allied Commander Europe James Stavridis wrote in Foreign Affairs that, faced with the humanitarian disaster in Libya, NATO "succeeded in protecting those civilians and, ultimately, in providing the time and space necessary for local forces to overthrow Muammar al-Qaddafi." But all the celebration has covered up a worrying trend. The unrest surrounding Qaddafi's last months is now reverberating throughout North Africa and the Sahel -- a phenomenon that might be called Qaddafi's spawn.
First, there are the weapons: The neighborhood, especially Algeria, Mauritania, and Niger, was always uneasy about Libya's civil war. Many feared that it would pry the lid off Tripoli's sizeable weapons cache and lead to the dispersal of arms across the region. It turns out that they were right to be worried. Then, there is the money: Locating Libya's financial assets after the war has been another complicated matter. Members of Qaddafi's inner circle who know where the money is stashed are missing or unidentifiable. Basically, billions of dollars might wind up in the hands of individuals who could use the cash to sponsor terrorism or otherwise destabilize Libya. And finally, there are the refugees: Tens of thousands of Africans, no longer welcome in Libya, returned home this year. Besides the fact that many of them are ripe for jihadi infiltration, they will further strain the region's weak economies. Already, food security is becoming a major issue and famine looms.
The weapons bonanza, disappearing money, and wave of refugees have played out differently across the country. In Libya, militias, which amassed vast quantities of weapons during the war, are refusing to relinquish them to the interim government. Some groups, including the one that conquered Tripoli, are comprised of jihadists. Meanwhile, other groups -- tribes and private citizens -- are building their own arsenals against a background of resurgent tribalism and regionalism. The Misratans and the Zintanis, for example, have established domination over resource-rich areas. Some in Cyrenaica, which boasts most of the country's oil reserves, are threatening to secede from Libya. Meanwhile, the Toubou tribe is fighting the Zwei in Kufra and Sebha, near the borders with Niger and Chad; the Toubou have also threatened to secede. The Amazigh tribe is taking on the Arabs in the west, near the Tunisian border. And Libyan Tuaregs are locked in battle with Zintans in Ghat, near the Algerian border. Any of these conflicts could spill over soon.
Additionally, whether Libya will ever be able to recover the estimated $150 billion that the Qaddafi government hoarded or deposited in the West ($37 billion alone is thought to be in the United States), the Middle East, and Africa is doubtful. For example, with the mysterious death of Shukri Ghanem, a close ally of Saif al-Islam Qaddafi who served as prime minister and later as head of the national oil company, finding and unfreezing those assets becomes uncertain.
For its part, the U.S. Treasury promised in October 2011 to return to Libya the $37 billion that Qaddafi and his loyalists stashed in the United States, although a few congressional leaders suggested that some of it be used as payment for the NATO operations that toppled Qaddafi. Without that money, Libya's fragile economy could shatter. The International Monetary Fund is already reporting that Libya's deficit is unsustainable in the long run: "The present value of financial assets and future oil extraction indicates that from 2012, public spending will exceed the sustainable, long-term level by over 10 percent of GDP." If Qaddafi's gold is not recovered, Libya's outlook will look even worse.
Turning to Algeria, since the fall of Tripoli in August 2011, Libyan man-portable air-defense systems (or, Manpads), rocket-propelled grenades, SAM-7 missiles, and other sophisticated weaponry have made their way into the hands of al Qaeda in the Maghreb (AQIM), which is based on the Algerian border in northern Mali. In February 2012, Algerian authorities unearthed 15 Libyan Manpads and 28 SAM-7s in the southern city of In Amenas. Suspicions fell on three groups: weapons traffickers, AQIM, and the Movement for Oneness and Jihad in West Africa, a new jihadist group that has launched numerous attacks against Algerian military targets and kidnapped European aid workers in Sahrawi refugee camps in southwestern Algeria. In September 2011, terrorists launched rocket attacks against military helicopters parked in the airfield of Jijel, in eastern Algeria. So far, no one has claimed responsibility, and it is unclear whether the weapons came from Libya, but the incident might be part of a broader AQIM campaign to destabilize the country and the region.
Qaddafi's fall also shook the (until recently) fairly steady democracy in Mali. When it became apparent last year that the Libyan rebels were winning the war against Qaddafi loyalists, armed nomadic Tuareg detachments that had served alongside Qaddafi's troops began leaving Libya for homes in Mali and Niger. Niger disarmed the returning Tuaregs, but Mali failed to do so. As a result, by October 2011, 3,000 heavily armed men with 600 all-terrain vehicles had amassed in Mali's northern Azawad region. In November, they founded the separatist National Liberation Movement for the Azawad (MNLA). And on January 17, 2012, the MNLA began its conquest of Azawad.
Mali's ill-equipped, poorly trained government soldiers were no match for the battle-hardened Tuareg. A mutiny within the armed forces, and the subsequent military coup on March 22, weakened Mali further. The MNLA quickly seized three major cities in northern Mali -- Gao, Kidal, and historic Timbuktu -- and then proclaimed the independence of the Azawad on April 6. (It reversed that decision in July 2012, demanding autonomy instead.) Of course, the MNLA is not the only militarized group in town: The Ansar al-Din, a Tuareg jihadist faction led by the Salafi Iyad Ag Ghaly, Mali's former consul in Saudi Arabia, is intent on imposing sharia in several northern cities, including Timbuktu, which he conquered with the assistance of AQIM and newly acquired weapons from Libya. His troops defeated the MNLA in June, and Ansar al-Din and the jihadists established control over MNLA-held territories.
For its part, Niger is particularly worried that it will face a repeat of what happened in Mali. Its own Taureg population is large and restive. Now, it has been joined by thousands fleeing Libya. What is more, the country has had to cope with refugees fleeing Mali as well. By May of this year, 284,000 Malians had fled northern Mali: 56,664 found refuge in Burkina Faso, 61,000 in Mauritania, 39,388 in Niger, and about 15,000 in Algeria. The new refugees are a heavy burden on countries that can barely sustain their own populations, which are suffering from drought and hunger.
Qaddafi's fall has had particularly troubling repercussions on post-revolutionary Tunisia. Before the war in Libya, Tunisia and Libya had the highest volume of trade between any two North African countries, and the total was growing at an average of nine percent every year between 2000 and 2009. For its part, Libya absorbed 6.9 percent of Tunisia's exports, making it Tunisia's second-biggest export market after the European Union.
With the uprising in Libya, all that stopped. In the first quarter of 2011, Tunisia's exports to Libya dropped by 34 percent and imports fell by an amazing 95 percent; according to the African Development Bank, the downturns were direct consequences of the civil war in Libya. In addition, more than half of the 100,000 Tunisian workers who had been in Libya returned home. The remittances they sent to their families, an estimated 125 million Tunisian dinars ($76 million) before the war, virtually disappeared. Meanwhile, Tunisia's unemployment skyrocketed from 15 percent in 2010 to 18.9 percent by the end of 2011, undoubtedly thanks in part to the returning expatriates. Libyans, who had previously come to Tunisia in droves, stayed at home. After an annual average of 1.5 million tourists, Tunisia saw only 815,000 Libyan guests in the year ending May 2012 -- all bad news for an economy that depends on visitors. (Tourism makes up 11 percent of GDP and 14 percent of employment.)
Insecurity on Libya's borders has generated at least one positive outcome. It prompted the Maghreb states to resuscitate the Arab Maghreb Union (UMA), which was first created to establish a political and economic alliance in 1989 but went dormant in 1994. Despite lingering suspicions between Algeria and Morocco and Algeria and Libya, all three and Tunisia and Mauritania have expressed the need for cooperation on security and economic matters. In November 2011, Morocco's King Mohammed VI called for a "new Maghreb" that would be an "engine for Arab unity" capable of ensuring the "stability and security in the Sahel-Sahara region." Algeria's foreign minister, Mourad Medelci, stressed in January 2012 that "the changes we witnessed in the Arab countries, in the Maghreb, cannot but encourage us to move faster in the construction of the Arab Maghreb Union." Libya's transitional government and Tunisia signed a land border agreement on April 8 this year against organized crime, terrorism, and trafficking. And rapprochement between Algeria and Morocco in recent months might put the UMA back on track.
The major challenge for the region will be preserving the territorial integrity of every country and the safeguarding of its borders. The major challenge for Libya and Mali, meanwhile, is avoiding partition, as happened in Sudan -- or worse, "Somalization," where the state cannot control the various militias that impose their own laws on their respective territories. Regional and international actors will also have to address the socioeconomic and political grievances of their populations and undermine the appeal of extremist forces now holding sophisticated weapons. Compelling studies have demonstrated that nonviolent uprisings, such as the one in Tunisia, are more likely to succeed in making a transition to a democratic polity than violent ones. It is therefore doubtful that NATO's celebrated "successful operation" will bring prosperity to the new Libya and stability to the region.