Libya crisis: Big stakes for a rump state By Kevin Connolly

BBC News, Benghazi Published duration 24 March 2011

image caption After the euphoria of revolution, the demands of running large cities have become more pressing

In the skies over the big cities of Libya and in the deserts around them a conflict is raging that will settle the fate of Muammar Gaddafi and the country he has ruled with a tight grip for more than 40 years.

In the early days of the Libyan uprising the rebels hoped that their passion for democracy and change would sweep westwards towards Tripoli in a few days.

Col Gaddafi, we were told repeatedly, had 48 hours left at the most.

They were curious days in Benghazi, the atmosphere an uncertain cocktail of shock at the brutality with which the regime tried to contain the calls for democracy and joy at the sudden coming of freedom.

There was no planning, of course, because it all evolved spontaneously.

The street protests became an uprising, then a rebellion, then an armed revolution with breath-taking speed. Five weeks on, the images from the battlefield make it look uncomfortably like a civil war.

It is the military confrontations of course, and the intervention of the air forces of a number of countries, including Britain, France and America, which are making headlines all around the world.

But the rebels now have control of major cities like Benghazi and Tobruk and as the conflict stretches into a second month, that is starting to mean taking responsibility for running the local economy.

In the early days those new responsibilities did not amount to much.

Volunteer crews - some of them composed of lawyers, teachers and civil servants - managed garbage trucks and swept the streets.

Benghazi, the locals joked, was if anything cleaner than usual.

But as time goes on, the demands of running large cities are becoming more pressing.

Need for weapons

The main problem is simple.

Libya was a totalitarian state - one of the most centralised on earth. More or less everything was controlled from Tripoli and the old lines of communication are fractured.

image caption The rebels have little cash to pay for imports of arms and ammunition

The rebels are having mixed success in improvising solutions to the problems that brings.

One difficulty is obvious. The rebels have no desire to create an independent state in eastern Libya with its own currency and banks - they want a united, independent whole Libya without Muammar Gaddafi.

So any solutions to their economic problems have to be temporary and that is going to call for a degree of improvisation.

Some argue that their most pressing economic need is also military - they want to import arms and ammunition to close the gap between their fighters and the forces still loyal to Col Gaddafi.

For the moment any such supplies would have to be loaned or gifted. There is no money to pay for weapons and the rebels do not have any way of raising it or any banking facilities to pay for imports anyway.

It is likely that secret talks with potential arms donors are already underway, but answers have to be found to more mundane problems too.

Opportunity

Very few people in eastern Libya, for example, have access to the internet at the moment and at least one major mobile phone network appears to have been switched off.

The rebels point out that there's a major opportunity waiting here for any international communications company with the vision - or the nerve if you prefer - to enter the Libyan market now.

If the rebels eventually win power any such supplier would enjoy preferential access to the market of a small, but potentially very rich state.

Every so often someone gives me the name of an Egyptian or German or British company that is on the point of entering the local market but somehow it never happens.

Even more fundamental, of course, is the availability of cash.

Banks have rationed withdrawals of money and so far that measure has proved enough to keep the system ticking over, at least for now.

And so far there have been no obvious shortages of consumer goods.

image caption No sign of shortages in shops in rebel-held cities such as Benghazi and Tobruk

Libya has a thriving community of small shopkeepers, created in the wave of liberalisation which followed the country's re-opening to the West in 2003 and 2004.

Their main line of supply is by the coastal highway that runs into the country from Egypt through the border crossing at Salloum.

There have been no Libyan officials in place for weeks, but interestingly the Egyptians have left their side of it open too and fresh food and other imports are flowing in as usual.

It's an illustration of how the revolutions of the Arab Spring are interlinked.

Most Libyans are convinced, rightly or wrongly, that Hosni Mubarak would have closed the border out of some innate sense of caution. But Hosni Mubarak of course, isn't in charge any more.

The result is that you can buy not just flour, pasta and oranges in the shops of Tobruk and Benghazi, but chewing gum, baby formula, chocolate, crisps and expensive Austrian soft-drinks too.

Not everyone can afford them of course and it may not last but for now the revolution is well-supplied with snacks.

Sound footing

Petrol, too, remains readily available for the moment.

In circumstances which are not entirely clear, the rebels managed to acquire a load of refined petroleum which was originally destined for the Gaddafi regime.

Various versions of the story circulate which give it an extra piquancy - that it was intercepted on the high seas, or that the vessel belongs to one of Col Gaddafi's sons, but the bottom line is that there seems to be plenty of fuel around.

I have seen convoys of tankers replying filling stations so there seems no immediate danger of shortage.

So for now the rebellion seems to have a sound enough economic footing - although lots of ordinary citizens in Benghazi are telling us they are desperate to get back to work since most factories and all schools remain shut.

Keeping things running in the medium term may get more difficult but to balance the growing challenges the rebels can probably expect more international help as time goes on.