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The following is the March 7, 2023, Congressional Research Service In Focus report, Libya and U.S. Policy.

Twelve years after a 2011 uprising that toppled longtime authoritarian leader Muammar al Qadhafi, Libya has yet to make a transition to stable governing arrangements. Elections and diplomacy have produced a series of interim governments (Figure 1), but militias, local leaders, and subnational coalitions backed by competing foreign patrons have remained the most powerful arbiters of public affairs. The postponement of planned elections in 2021, Libyans continuing lack of consensus over constitutional and legal arrangements, the potential fragility of a United Nations (U.N.)-backed ceasefire, and the reemergence of institutional rivalry are prolonging Libyas instability and pose challenges for U.S. decisionmakers.

Successive U.S. Administrations have sought to prevent Libya from serving as a permissive environment for transnational terrorist groups and have taken different approaches to conflict and competition among Libyans. The Biden Administration supports the holding of new elections in Libya and has used U.S. influence to bolster U.N.-led mediation efforts to that end. Congress has appropriated funds to enable U.S. diplomacy and aid programs, and some Members have called for more assertive U.S. engagement.

War, Ceasefire, and a Deferred Election

Conflict reerupted in Libya in April 2019, when a coalition of armed groups led by Qadhafi-era military defector Khalifa Haftar known as the Libyan National Army (LNA, alt. Libyan Arab Armed Forces, LAAF), attempted to seize the capital, Tripoli, from the internationally recognized Government of National Accord (GNA). Russia, the United Arab Emirates (UAE), Egypt, and leaders of Libyas House of Representatives (HOR, an interim parliament last elected in 2014) backed the LNA. With Turkish military support, the GNA and anti-LNA western Libyan militias forced the LNA to withdraw. Libya has remained divided since, with foreign forces still present, and opposing coalitions separated by a line of control west of Sirte (Figure 1). During 2020, multilateral diplomatic initiatives helped achieve a ceasefire, and the U.N. has deployed civilian monitors at Libyans request.

In 2021, members of a U.N.-appointed Libyan Political Dialogue Forum (LPDF) and the HOR approved an interim executive authority and Government of National Unity (GNU) to replace the GNA, with a mandate to serve until elections or through June 2022. In 2021, the U.N. Support Mission in Libya (UNSMIL) facilitated discussions among LPDF members, the HOR, and the High Council of State (HCS, an advisory representative body) in an attempt to establish a constitutional and legal basis for parliamentary and presidential elections planned for December 24, 2021. However, disputes over candidacy criteria and constitutional and legal issues persisted, leading to an indefinite postponement of the elections. U.N. and U.S. officials have sought to preserve momentum toward elections, amid contending Libyan proposals and initiatives. Figure 1. Libya: Areas of Influence and Timeline

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Report to Congress on Libya and U.S. Policy - USNI News

Background

Libya has struggled to rebuild state institutions since the ouster and subsequent death of former leader Muammar al-Qaddafi in October 2011. Libyas transitional government ceded authority to the newly elected General National Congress (GNC) in July 2012, but the GNC faced numerous challenges over the next two years, including the September 2012 attack by Islamist militants on the U.S. consulate in Benghazi and the spread of the Islamic State and other armed groups throughout the country.

In May 2014, Haftar launched Operation Dignity, a campaign conducted by the LNA to attack Islamist militant groups across eastern Libya, including in Benghazi. To counter this movement, Islamist militants and armed groupsincluding Ansar al-Sharia formed a coalition called Libya Dawn. Eventually, fighting broke out at Tripolis international airport between the Libya Dawn coalition, which controlled Tripoli and much of western Libya, and the Dignity coalition, which controlled parts of Cyrenaica and Benghazi in eastern Libya, and a civil war emerged.

The battle for control over Libya crosses tribal, regional, political, and even religious lines. Each coalition has created governing institutions and named military chiefsand each has faced internal fragmentation and division.In an effort to find a resolution to the conflict and create a unity government, then-UN Special Envoy to Libya Bernandino Leon, followed by Martin Kobler, facilitated a series of talks between the Tobruk-based HoR and the Tripoli-based GNC. The talks resulted in the creation of Libyan Political Agreement and the UN-supported GNA. The GNA has continued to face obstacles to creating a stable, unified government in Libya.

Taking advantage of the widespread political instability, armed Islamist groups, including Ansar al-Shariathe terrorist group allegedly responsible for the attack on the U.S. consulate in 2012and the Islamic State, have used the country as a hub to coordinate broader regional violence, further complicating efforts to create a unity government.

As a result of the continued fighting, the UN Refugee Agency estimates that more than 217,000 people have been internally displaced and approximately 1.3 million people are in need of humanitarian assistance in Libya.

Concerns

The United States, European allies, and the United Nations continued to express concern over the permanent fracture of Libya as armed militant groups have tried to divide the country along political and tribal lines. Moreover, in the absence of a primary governing body, migration and human trafficking have remained problematic.

A member of the Organization for Petroleum Exporting Companies (OPEC), Libyan oil revenues constitute more than 80 percent of Libyas total exports. As armed groups continue to fight over oil fields and restrict production, concerns have also increased over whether the country will be able to support itself economically.

Recent Developments

The UN-backed Government of National Accord (GNA) declared a state of emergency in Libyas capital city of Tripoli in September 2018, less than a week after a UN cease-fire went into effect. Attempts to create a unity government have met with limited success as the House of Representatives (HoR)based in Libyas east and a key supporter of Libyan National Army's (LNA)leader General Khalifa Haftarand the GNA compete for power. Both governing bodies have created their own central banks and have consolidated control over oil fields. In May 2018, French President Emmanuel Macron convened a meeting between Haftar, GNA leader Fayez Seraj, and parliamentary leaders to discuss an end to the conflict and future elections. Though the rival groups agreed to hold elections in December 2018, UN Special Envoy to Libya Ghassan Salame said elections would be postponed until the spring of 2019.

Rival armed groups, including militia groups loyal to the LNAs Haftara Tobruk-backed former Qaddafi loyalistand the GNAs security forceshave continued to fight over access to and control of Libyas National Oil Corporation (NOC), as well as regional oil fields. In December 2018, the NOC closed Libyas largest oil field, El Sharara, due to security concerns; the LNA has since declared that the field is secure and ready to resume operations, but NOC Chairman Mustafa Sanalla refused to restart production in February 2019, stating that the field was still unsafe due to militant activity.

The presence of the self-proclaimed Islamic State, which established a foothold in the country in February 2015 and quickly gained control of the coastal city of Sirteformerly the groups most significant stronghold outside of Syria and Iraqhas further complicated the struggle for control. In July 2018, Haftar announced that the LNA had recaptured the city of Derna, the last outpost of the Islamic State militants in eastern Libya. However, the group continues to operate throughout the country and conducted an attack on Libyas foreign ministry in December 2018.

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Instability in Libya | Global Conflict Tracker

Libya entered 2021 as a divided nation aspiring for recovery and healing. With intensifying conflict and a blockade of oil terminals and fields, the economy registered one of the worst performances in recent records for the most part of 2020. Starting in mid-September, a rapprochement between political/military factions brought much-needed relief to the economy, capping the GDP plunge at 31.3%, annually. The election of a unity government in early 2021 has rekindled hope, but the reunification agenda faces formidable challenges ahead.

For the most part of 2020, the performance of the Libyan economy was the worst in recent records. Even with the rebounding oil proceeds in the last quarter, the economy could not recover its earlier losses, and registered a 31.3% real decrease in GDP. On average, oil production in 2020 is estimated at 405,000 barrels per day, roughly a third of actual output in 2019.

With looming uncertainties, projecting future economic trends is a daunting task. However, With major maintenance problems still pending, oil production is projected to reach 1.1 million barrel per day (MBD) in 2021. This would lead to a rebound in real GDP growth, to 67% in 2021. In terms of level of GDP, the economy would still be 23% smaller than that in 2010, the year prior to the start of the conflict.

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Libya's Economic Update April 2021 - World Bank

Libya made significant progress towards ending its decade-long conflict and moving towards reunification in 2021. This resulted in a strong rebound of oil production and economic activity, and a consequent upswing in fiscal, trade, and current account balances. Nevertheless, households still struggle with food insecurity, poverty, and poor public service delivery. Challenges with organizing national elections for December 2021 raise the specter of a deteriorating political and security situation which would threaten progress towards peace and recovery.

Following a massive contraction of the hydrocarbon sector in 2020, driven by intensifying conflict and a blockade of oil terminals and fields, the sector, and in turn the Libyan economy overall, are witnessing a significant rebound. Oil production has averaged 1.2 mb/d during the first half of 2021, compared to an average of 0.3 mb/d during the first 9 months of 2020 and 0.9 mb/d during the fourth quarter of the year.

Should the political process progress positively and the security situation remain stable, Libya will continue its path of economic recovery. In the coming months, if presidential and parliamentary elections and the reunification of public institutions proceed, and oil production persists, . In turn, trade and current account balances are projected to record double digit surpluses as a share of GDP. The fiscal balance may record a surplus, as well, given the strong rebound of oil production and exports and following the devaluation of the currency (which has reduced the cost of financing public sector salaries and goods and services using dollar-denominated oil revenues). This, however, will depend on whether there are any major deviations in spending patterns compared to the first half of the year.

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Libya's Economic Update October 2021 - World Bank

Since the delay of national elections in December 2021, political and security tensions and oil production disruptions have escalated. The confirmation of a new cabinet by the House of Representatives has returned Libya to a state of institutional division. While soaring global oil prices will have a positive impact on growth and fiscal and external surpluses, this hinges on the persistence of oil production. Meanwhile the population faces increasing food insecurity as global wheat prices rise.

While official national accounts data have been unavailable for much of the conflict period, rough estimates of GDP can be made using data on night-time lights, oil production, and government spending. (average of 1.2 million barrels per day (mb/d) compared to 0.4 mb/d in 2020). However, since mid-December 2021, there have been multiple production disruptions due to weather-induced port closures, infrastructure maintenance issues, and shutdowns by armed groups. Oil production in January 2022 recorded its lowest level since October 2020 (1.08 mb/d).

It is impossible to forecast economic outcomes with any degree of confidence due to the high level of uncertainty surrounding political and security developments. If oil production and exports continue without major extended disruptions, Libya will benefit from soaring global oil prices which will translate into higher fiscal revenues and inflow of hard currency. This will positively affect the trade, current account, and fiscal balances. Libya may face short-term wheat supply disruptions, higher wheat prices, and in turn higher inflation and lower consumption.

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Libya's Economic Update April 2022 - World Bank