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Italy and Libya: Why Libyan stability is vital to PM Renzi’s career

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By Lorenzo Holt- Lorenzo is an Italian-American journalist based in London.

The Italian government is facing enough pressure to put its survival over the next few months into question. Depositors have withdrawn €78 billion from Italy’s central bank since May, while government attempts at bailing out Italy’s private banks have been met with little private-sector interest and inflexibility from the EU. Italian Prime Minister Matteo Renzi’s main opponents, the anti-establishment party Movimento 5 Stelle (M5S), accuse him of being subservient to EU interests while ignoring those of Italians.

Italians are also increasingly frustrated at Renzi’s inability to secure EU support for the migrant crisis. Over 300,000 migrants have landed in Italy since the EU took control of Mediterranean border security in 2014, costing the Italian government over €3 billion a year, according to the Financial Times.

The migrants and their smugglers are facilitated by the chaos in Libya, where Italy has very large interests but little influence. There too, Italian popular opinion doesn’t always coincide with international politics. The way Renzi handles the volatile situation in Libya – exacerbated by a recent coup – may determine his career.

Italy and Libya have mutual business interests reinforced by time and proximity, and Italy enjoyed a privileged economic relationship with Libya under Berlusconi in the 2000s. Thousands of small and medium-sized Italian businesses were working in Italy before Libya’s civil war in 2011, and many left behind millions of dollars in suspended contracts and equipment. ENI, Italy’s national oil company, has been operating in Libya since 1959 and is responsible for much of the country’s energy infrastructure.

The Italo-Libyan chamber of commerce estimates that business revenue between the two countries in the years leading up to the war (excluding oil and gas) totaled €30-40 billion- and that initial reconstruction investments in Libya could total €400 billion. Access to suspended investments and new business opportunities in Libya would be a much-needed tonic for Italy’s consumptive economy.

Obviously, no progress can be made until Libya is stable – a prospect which looks increasingly unlikely. Libya is divided between the secular Tobruk government in the east, Tuareg rebels and smaller fractions in the southwest and the UN-sponsored Government of National Accord (GNA) in the west. The GNA was formed in December 2015 in an attempt to unite Libya’s rival governments. Widely regarded by Libyans as a foreign imposition, it was first rejected by the Tobruk government in September and more recently deprived of some of its municipal buildings in Tripoli during a coup on October 14.

Foreign nations have been ambiguous about which of the many Libyan factions they support. Although officially declaring exclusive support for the GNA, US, French and British special forces have been widely reported to be fighting alongside other factions including the GNA’s main opposition, the Tobruk government. The UAE has been reported to be providing weapons to Tobruk’s military commander, Khalifa Haftar, in violation of the UN arms embargo, while Egypt – eager for stability on its western border – has also been reported to have supplied Haftar with military helicopters and aeroplanes.

Italy’s role in such a high-stakes environment is limited by its military and political weakness. So far, it has faithfully aligned itself with the UN and the interests promoted by France, the US and the UK. In September, Italy deployed 300 soldiers to Misrata to staff and protect a newly built field hospital, making it the first nation to establish an official military presence in the country. It has allowed US drones and aeroplanes to operate from its airfields and has publicly expressed its willingness to lead a UN intervention in Libya. During Renzi’s stay in Washington on Tuesday October 18, Obama praised Italy’s role in forming the GNA and fighting ISIS.

Libyan oil facilities captured by Haftar in September are producing over half a million barrels per day and funding the GNA. This provides the country with much-needed revenue and a tentative sense of progress. It also benefits Italian oil importers. But the coup in Tripoli on October 14, although largely ignored by the media, signals deep, unresolved divisions and the potential for escalated conflict.

Libya’s status quo is bad enough for Renzi, but his sensitivity to UN interests could make things very difficult for him should the situation deteriorate. Accusations from his opponents of being a US or EU stooge and wasting government money while neglecting domestic problems would be particularly damaging. Renzi can only hope that his traditional western allies will find a tactful, non-military solution in Libya; given their track record over the last 15 years, the odds are not in his favour.

Libya represents a relatively detached geopolitical interest to the main international actors but it is Italy’s next door neighbour. The impact of a worsening situation in Libya would be immediately felt through increased migrant arrivals, rising energy costs and the further loss of business and energy assets. Stability, on the other hand, would help keep the Italian economy afloat while offering a viable, safer alternative for migrants.

The question for Renzi is whether or not his decision to follow the UN line in Libya, like that of following the EU line at home, is something the Italian people will find agreeable.

PS21 is a non-national, non-governmental, non-ideological organisation. All views expressed are the author’s own.

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