Western diplomats love a good boardroom solution to an active war zone. The latest favorite fix being floated by Washington advisers is a "power-sharing plan" for Libya, centered on a mathematically precise split of the country’s massive oil revenues. The logic seems neat on a spreadsheet: if you divide the money evenly between the warring factions in Tripoli and Benghazi, everyone stops shooting and starts counting their cash.
It is a comforting theory. It is also completely wrong.
Splitting oil wealth in a fractured state does not incentivize peace. It funds the next phase of conflict. I have watched international institutions try this exact brand of fiscal engineering in Iraq, South Sudan, and previous iterations of the Libyan crisis. Every single time, treating a sovereign country like a distressed asset to be carved up by rival warlords yields the same result: it institutionalizes corruption, guarantees a future civil war, and treats the civilian population as an afterthought.
The consensus view assumes that Libya's conflict is driven by an unfair distribution of cash. The real problem is an absolute absence of state authority. You cannot engineering stability through an escrow account.
The Mirage of the Technical Fix
The core of the current Washington proposal hinges on creating a centralized, internationally monitored mechanism to distribute oil revenues from the National Oil Corporation (NOC). The money would be funneled directly to geographic regions based on population size or historical grievance, bypassing the central bank in Tripoli, which the eastern factions distrust.
This approach treats the symptoms of a failed state as a bookkeeping error.
Consider the mechanics of Libyan oil production. The vast majority of the infrastructure—the oil fields of the Sirte Basin—lies under the physical control of Field Marshal Khalifa Haftar’s Libyan National Army (LNA) in the east and south. However, the legal right to sell that oil, recognized by the United Nations, belongs solely to the NOC and the Central Bank of Libya (CBL) based in Tripoli.
This creates a structural deadlock. The east holds the taps; the west holds the checkbook.
The lazy consensus says: force them to share the checkbook. But let us look at what happens when you actually implement a forced revenue-sharing model in a state without a unified military. You create a system where rival militias receive guaranteed, legally protected revenue streams without having to provide a single public service, build a school, or enforce the law.
Imagine a scenario where a corporate board decides to resolve a hostile takeover by giving both rival CEOs a permanent, unconditional share of the revenue while leaving control of the factories entirely undecided. Neither side settles. They just use the guaranteed cash flow to buy better weapons, hire more mercenaries, and wait for the other side to slip up.
Why the Iraqi Model Spells Disaster for North Africa
Proponents of this plan frequently point to federalist systems or historic oil-sharing agreements as proof of concept. They are looking at the wrong examples. The closest structural parallel to what is being proposed for Libya is the post-2003 political configuration of Iraq.
In Iraq, the Muhasasata Ta'ifia system institutionalized ethnic and sectarian quotas, dividing ministries and oil revenues among competing factions. The Western architects of that system called it "stability through inclusion."
The reality was the creation of a kleptocratic cartel. Ministries became private fiefdoms used to bankroll sectarian militias. Competence was replaced by allegiance. When ISIS swept through the country in 2014, an army that had swallowed tens of billions of dollars in oil wealth collapsed in days because the money had been siphoned off by the very political actors the revenue-sharing plan was designed to placate.
If you replicate this in Libya, you are not building a state. You are subsidizing a perpetual conflict economy.
When you guarantee a militia leader a fixed percentage of oil revenue regardless of their political behavior, you remove any incentive for them to disarm. Why would the local brigades in Misrata or the armed groups guarding the oil terminals in the Gulf of Sirte ever submit to a centralized ministry of defense when their financial survival is permanently secured by international decree?
The Fallacy of the Neutral Technocrat
Another major blind spot in these Western proposals is the obsession with "neutral" institutions. The plan relies heavily on finding independent technocrats to manage the funds, audited by international accounting firms.
This is a dangerous fantasy. There is no such thing as an independent technocrat in a country where armed men can walk into an office and dictate policy at gunpoint.
We saw this play out clearly during the various blockades of Libya’s oil ports over the last decade. Whenever the eastern government felt ignored, they simply shut down production, costing the country billions in lost revenue. When the head of the NOC tried to maintain an independent line, he was subjected to immense political pressure and eventual replacement.
An international audit cannot protect a central bank governor from a militia pickup truck parked outside his home. By focusing entirely on the financial architecture, international advisers are ignoring the monopoly on violence. Security sector reform must precede fiscal reform. Any attempt to reverse that order is a waste of time.
Dismantling the Consensus
To understand how upside-down the current debate is, we need to address the questions people are actually asking about the crisis, and expose how flawed the premises of those questions are.
- Don't the people of eastern and southern Libya deserve their fair share of the wealth? Of course they do. But a revenue-sharing agreement between rival elites does not put money into the pockets of ordinary citizens in Benghazi or Sebha. It lines the pockets of the military commanders and political brokers who control those regions. True economic fairness requires a transparent national budget spent through local municipalities, not a cash-delivery system to parallel governments.
- Isn't a flawed financial agreement better than a return to open warfare? This is the ultimate short-term trap. A bad agreement buys temporary peace at the cost of long-term fragmentation. By legitimizing two separate financial structures, you are effectively partitioning the country. Once a state is financially partitioned, physical partition is rarely far behind.
- Can international oversight prevent the money from being stolen? No. International tracking can show you exactly where the money went, but it cannot stop it from being spent on patron-client networks once it hits Libyan accounts. We have seen decades of oil-for-food programs and special escrow accounts worldwide; they excel at creating specialized consulting industries for foreign firms while failing to improve the lives of the local population.
The High Cost of the Contrarian Path
If splitting the money is a failure, what is the alternative? It is an incredibly difficult, deeply unpopular strategy that Washington policy circles hate because it cannot be wrapped up before an election cycle.
The only way out of the Libyan trap is to tie oil revenues directly to explicit, verifiable milestones in political unification and disarmament.
This means making a hard choice. The international community would have to freeze sovereign funds and refuse to recognize any unilateral sale of oil that does not flow through a single, genuinely unified central bank—one whose leadership is protected by a neutral, international security force if necessary.
The downside to this approach is obvious: it means leaning into the gridlock. It means accepting that oil production might drop to zero for months at a time. It means dealing with short-term economic pain and inflation within Libya. It requires the kind of diplomatic spine that Western capitals rarely demonstrate.
But the alternative is worse. The alternative is the current path: playing the role of an accountant for a civil war, neatly balancing the books while the country slowly disintegrates.
Stop trying to fix Libya with an accounting trick. If you want to solve the crisis, you have to fix the security architecture first. Everything else is just funding the elite who are tearing the country apart.
