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24.08.11
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Collateral Damage
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By Tai Adelaja
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Russia has started to count its economic and political loses in Libya even before the deafening sounds of Kalashnikovs, rocket and grenade launchers began to subside. As Muammar Colonel Gaddafi's 41-year-old iron rule crawls toward an inglorious end, there are ominous signs that things will not be quite the same for Russian businesses in the new Libya. The imminent end of the man widely seen as the Gadfly of Africa is expected to reopen the doors to Africa's largest oil reserves and give new, players such as Qatar's national oil company and trading house Vitol, the chance to compete with established European and U.S. oil majors, Reuters reported.
Victorious Libyan rebels warned Russian and Chinese firms this week that they may lose out on lucrative oil contracts for failing to support the rebellion. "We don't have a problem with Western countries like the Italians, French and UK companies. But we may have some political issues with Russia, China and Brazil," Abdeljalil Mayouf, information manager at Libyan rebel oil firm AGOCO, was quoted by Reuters as saying. "We have lost Libya completely," Aram Shegunts, the director general of the Russia-Libya Business Council, told Reuters. "Our companies will lose everything there because NATO will prevent them from doing their business in Libya."
Libya has been one of the few African countries where Russian companies have dug down deep, investing in sectors as diverse as oil extraction, weaponry and infrastructure. Russian companies, such as oil firms Gazprom Neft and Tatneft, have projects worth billions of dollars in Libya. So are aircraft maker Irkut and state arms exporter Rosoboronexport. But while the situation on the ground in Libya "is still very fluid," and "there remains a degree of uncertainty," as U.S. President Barack Obama puts it, Russian companies are already feeling that their economic interests in Libya are being shortchanged by Western countries.
"Whoever comes to power in post-Gaddafi Libya would hardly forget that Russia voted to abstain on UN resolution number 1973 authorizing a no-fly zone in Libya," said Professor Vladimir Isayev, deputy director of the Institute of Oriental Studies at the Russian Academy of Sciences. "The most likely course of action is that a new regime will give preferences to countries like France, United Kingdom and Italy, which were unequivocal in their support for Libyan opposition."
Russia's special envoy to Africa Mikhail Margelov said after talks with leaders of Libya's opposition Transitional National Council (TNC) in June that the TNC was willing to honor all of Libya's international contracts, including military deals with Russia. But, with hindsight on a post-Saddam-Hussein Iraq, analysts now say it was evident that Russia can’t protect its economic interests in Libya if and when Colonel Qaddafi relinquishes power. Such views gained credence this week as Italian Oil Company Eni moved back into Libya.
Russian arms exporters, too, are feeling the pinch. The Head of Rosoboronexport Anatoly Isaikin complained last week that Russia has lost as much as $4 billion in interrupted and lost contracts as a result of the arms embargo against Libya earlier this year, The Moscow Times reported. To partly compensate for such loses, Isaikin promised to continue supplying weapons to Syria despite a direct appeal from the United States to stop. The other "war casualty" is a ?600 million contract for the supply of Russia's latest BAL-E mobile coastal defense missile systems, inked just before the outbreak of conflict, Vedomosti quoted Boris Obnosov, the director general of the Tactical Missiles Corporation, as saying. Another contract for the supply of six Yak-130 training aircrafts has been frozen, said Alexei Fyodorov, the president of Irkut Scientific Corporation, which produces Sukhoi warplanes.
A lucrative deal signed by Russian Railways in April 2008 to build a 550-kilometer modern high-speed rail line from Sirt to Benghazi in Libya also appears to be going with the wind of revolutionary change. Although the company still hopes to complete the project at the end of the present conflict, experts say a lot would now depend on the goodwill of Libya's new rulers. "The likely winner in most cases will be France, which now has a green light to sell its Rafale fighter jets in Libya," Konstantin Makienko, the deputy head of the Center for Analysis of Strategies and Technologies, said.
Part of the problem, experts say, is that Russia has had no clear-cut policy to attain a strategic objective in Libya. Official statements have also varied from tacit support to outright condemnation of Western Allies’ military involvement in Libya. Experts say President Dmitry Medvedev has failed to reap any domestic political gains by backing military intervention in Libya. “By supporting sanctions against Colonel Gaddafi's regime, the president has bolstered his human rights credentials abroad," said Boris Makarenko, an analyst with the independent Moscow-based Center for Political Technologies. "But opinion polls in Russia indicate that most Russians support the Libyan leader." |
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