To the many existential threats facing Libya, it is now possible to add another: the oil-rich nation may be going broke.
Four years after its uprising against dictator Moammar Gaddafi, the North African country is buffeted from all sides: two competing governments vie for power and resources; militias and armed gangs impose their own capricious justice; targeted attacks have driven away investors and diplomats.
The country’s slow-motion collapse came to a head this week, when Islamic State militants were shown executing 21 Egyptian Christians on a Mediterranean beach. The next day, Egyptian warplanes pounded militant targets in retribution.
But Libya faces another, less visible, hazard, one that has not yet focused attention in Western capitals but that threatens to cause further — and possibly far deeper — turmoil.
Economists and Libyan and U.S. officials say Libya is burning through its international reserves at an alarming rate as the country scrambles to pay a huge bill for wages and subsidies without the benefit of normally ample oil revenues, virtually the country’s only source of income.
Last year, Libya depleted $27 billion of its reserves, which now stand around $81 billion, according to the International Monetary Fund (IMF). Unless fighting lets up this year, allowing wider oil exports to resume, the country could use the same amount this year.
“Libya is running out of money,” a U.S. official said, speaking on condition of anonymity to discuss another country’s finances. “What happens when Libya is bankrupt? … When they have no hard currency, they can’t buy food, so you have a massive humanitarian crisis.”
The situation is startling for an OPEC member country perfectly situated to export its light sweet oil to nearby Europe. The country’s economic lifeblood, oil accounts for almost 100 percent of Libyan exports. Prior to 2011, oil output stood around 1.6 million barrels per day.
Now, as confrontations continue between an array of armed factions seeking to secure their share of oil revenues, production hovers around 200,000 to 300,000 barrels per day. Much of the oil still flowing comes from offshore sites.