Russia’s war in Ukraine has finally turned the fate of chaotic Libya into a critical question for the United States and its allies France and Italy. If Washington, Paris, and Rome act decisively, they can stabilize Libya while tightening the pressure on Russian president Vladimir Putin. But hesitation could see Libya deteriorate further, to Moscow’s benefit.

As the Organization of the Petroleum Exporting Countries (OPEC) continues to balk at pumping more oil, Libya remains exempt from the cartel’s production and sales cap. The country could easily double its production to two million—or, with some modernization, even three million—barrels a day, according to the head of Libya’s National Oil Corporation (NOC), Mustafa Sanalla. Achieving those impressive numbers would dampen the historic oil shock that OPEC has predicted will be caused by the potential sanctions-induced loss of Russia’s seven million barrels a day.

Unfortunately, continuing turmoil threatens Libya’s oil production. In the capital, Tripoli, financial mismanagement plagues the NOC. Despite record revenues, the NOC has mounting debts, leaving it short of funds for salaries, maintenance, and new equipment. Spot shutdowns of wells by disgruntled militias in the west of the country, overseen from Tripoli, have become commonplace. Meanwhile, political deadlock with Cyrenaica, the oil-rich eastern region of Libya, threatens the bulk of oil production at a time when limited global supply and spiking prices are keeping the Russian economy afloat.

The emergence of a potential consensus-building prime minister, Fathi Bashagha, offers Libya its best chance at stability since the civil war broke out eight years ago. The critical task for the United States, France, and Italy is to give Bashagha a chance to govern by salvaging the latest United Nations-guided international peace process.

One main obstacle stands in the way: the prime minister of Libya’s interim Government of National Unity, Abdul Hamid Dbeibah, refuses to resign, which he committed to doing when he accepted temporary reins one year ago. In another flagrant violation of the terms for power, the defunct prime minister put his name forward as a candidate for president, helping to scuttle long-anticipated elections scheduled for last December.

The eastern-based House of Representatives—itself a carry-over institution without legitimacy—passed a no-confidence motion against Dbeibah in September 2021. Last month, the House voted to replace Dbeibah with Bashagha—but only after coordinating the move with the rival, Tripoli-based High Council of State. This rare example of east-west political coordination was itself a breakthrough in deeply polarized Libya.

Like Dbeibah, Bashagha hails from Libya’s pivotal city, Misrata, a fiercely independent stronghold beholden neither to Tripoli in the west, nor Benghazi, the center of power in the east. Bashagha has managed to attract support from Marshal Khalifa Haftar, the notorious commander of the Benghazi-based Libyan National Army (LNA). Infuriated by Dbeibah’s refusal to step down, last week Haftar instructed the five LNA military representatives to walk out of security talks in the Joint Military Commission. This is more than a formality. The “5 + 5” forum guarantees the UN-brokered (and monitored) Geneva truce between the forces of each side.

​​The eastern Libya representatives demanded the closure of roads and airports connecting the east and west of the country. De facto guardians of the Libyan oil and gas oil fields in Cyrenaica and Fezzan (the southern region), the representatives also threatened to shut down production until Dbeibah yields his position to Bashagha. Following an appeal by Ambassador Richard Norland, the U.S. special envoy for Libya, Haftar initially backed off the threat. Four days later, on April 14, militias in the east and south partially blockaded oil fields and terminals, a step triggered by a dispute over Libya’s all-important oil revenue. The NOC had transferred $8 billion of frozen funds to the Ministry of Finance’s accounts—controlled by the Dbeibah government at the Central Bank of Libya. The transaction defied the request of the eastern House of Representatives for a freeze on such transfers until Dbeibah steps down.

A total shutdown of the eastern and southern wells by Haftar could trigger a forcible response, reigniting the conflict and deepening divisions, potentially to the breaking point. Russia would be the clear winner.

​​Locked in a never-ending, zero-sum contest over oil revenues and power, none of Libya’s leaders has clean hands. Haftar also torpedoed a potential breakthrough for Libya back in 2019 on the eve of a UN-prepared national conference. The conference was the culmination of a painstaking, consultative process aimed at achieving broad consensus. Instead, Haftar’s reckless, futile assault on Tripoli wreaked havoc and massively deepened the polarization and suspicion between Libya’s east and west. Haftar’s ambitions increased the east’s military and political dependence on Russia, while eventually triggering decisive Turkish military intervention on behalf of Tripoli.

In the wake of Haftar’s retreat and the ensuing battlefield stalemate, the UN launched another Libyan political dialogue in late 2020—this time with a narrow group of representatives handpicked by former UN representative on Libya Stephanie Williams. Instead of a transparent, inclusive conference, delegates to the Libyan Political Dialogue Forum met behind closed doors with scant consultation. Amidst allegations of vote-buying, the UN brokered an agreement in March 2021 under which Dbeibah took power—on a strictly interim basis.

In his short time in office, Dbeibah has aggravated Libya’s bleak condition. According to his opponents, the interim prime minister allegedly misused public funds to cling to power. With mounting liquidity problems, the government is struggling to keep Dbeibah’s promises, which included an increase in salaries and bonuses for an array of occupational groups. Of the six months' worth of child and family allowances promised by Dbeibah by the beginning of Ramadan, only a portion has been paid out.

The financial crisis is the result of years of rampant corruption, currency manipulation (through flagrant abuse of letters of credit), profligacy (typical abuse of a rentier economy), conflict, and the cost of maintaining “security” in the capital through often-feuding militias. Dbeibah’s “achievement” is to have taken the Libyan economy over the cliff.

According to his critics in the east, Dbeibah has continued to deprive Cyrenaica of funds for its public servants and army, despite previous agreements, while giving funds to militias to secure his position in the capital. The Dbeibah family has been investigated for financial crimes in the United Kingdom and Canada and for embezzlement of billions of dollars from Qaddafi-era transactions. Dbeibah is personally accused of corruption and nepotism, allegedly having directed millions of dollars to companies and individuals associated with his family.

With a looming food crisis stemming from the war in Ukraine, Libya lacks the agricultural or financial capacity to intervene and cushion the inevitable blow to its citizens. Erratic measures by the current government, including price controls, have backfired.

Dangers abound in the greater Tripoli area, as security has been left primarily to an array of militias. Rival militias and gangs clash several times a week. Street crime, burglaries, and kidnappings are a daily risk for the people of Tripoli and other large cities across Libya. Human trafficking and the smuggling of drugs, weapons, and consumer goods is a country-wide phenomenon.

At first, Dbeibah turned a blind eye to the security situation, as he did not have his own military power base to challenge the mighty militias. Now, he needs militia forces to deter his rival, Prime Minister-elect Bashagha, from returning to Tripoli.

The emergence of a figure like Bashagha—with backing across the country—represents Libya’s best hope in years. Unlike Dbeibah, Bashagha earned a strong reputation while in office, both as a capable leader and skilled politician. The former air force captain led the Ministry of Interior, where he helped guide Tripoli’s defense against Haftar’s assault on the capital two years ago. With his power base in Misrata and his success in holding off Haftar’s Tripoli invasion, Bashagha cannot be assumed to be intimidated or manipulated by Haftar the way that the chair of the House of Representatives, Aquilah Saleh, is in the east.

Bashagha is as well-positioned as any figure in Libya to navigate the critical steps with key stakeholders, which could finally lead the country to national elections. A strong, consensus figure is needed to ensure that the polling is conducted fairly and that the results are respected by all parties, including Islamists, Ghadafi loyalists, and Haftar.

But Bashagha’s wily businessman-opponent, Dbeibah, retains two powerful assets: the militias and the Central Bank of Libya. Several of the larger Tripoli militias—bankrolled by Dbeibah—have established an umbrella force, the “Constitution and Elections Support Force,” which risked a violent confrontation by blocking Bashagha from entering Tripoli on March 10.

As long as the Central Bank provides the Dbeibah government with access to official funds, then Bashagha cannot rule. U.S. special envoy Norland has proposed international oversight for Libya’s oil revenues. Under this regime, only funds to cover salaries, subsidies, food imports, and key infrastructures would be transferred to the Central Bank, and only under international supervision. Other revenues would remain frozen at the Libyan Foreign Bank. Grand Mufti Sadiq Al Ghariani and other Dbeibah supporters spoke out immediately and harshly against the U.S. proposal.