By Dmitry Zhdannikov, Regan E. Doherty and Mohammed Abbas
BENGHAZI, Libya, June 9 (Reuters) - To get an idea of who might wield influence in post-civil war Libya, take a look at the flags flying in the rebel-held east of the country.
Outside the courthouse in Benghazi -- rebel headquarters and symbolic heart of the uprising against the 41-year rule of leader Muammar Gaddafi -- fly the flags of France, Great Britain, the United States, the European Union, NATO. There's one other flag, too: Qatar's.
"Qatar, really, it's time to convey our gratitude to them," Abdulla Shamia, rebel economy chief, told Reuters. "They really helped us a lot. It's a channel for transportation, for help, for everything."
It has a population of just 1.7 million people, but the wealthy Gulf monarchy has long sought a major voice in political affairs in the region. It has brokered peace talks in Sudan and Lebanon, owns the influential pan-Arab news network Al Jazeera, and recently won the right to host the 2022 soccer World Cup. Now the gas-rich nation has placed a big geopolitical bet in Libya, splashing out hundreds of millions of dollars on fuel, food and cash transfers for the rebels.
A representative from the Emir's palace declined to comment on what products Qatar has delivered to Libya, and on the ruling family's motivations behind its Libyan engagement.
It's certainly a gamble. If the rebels win, Qatar is likely to pick up energy deals and new influence in North Africa. But if they lose, Qatar's ambitions may further alienate it among its neighbours.
"I guess ever since the late 1990s, Qatar has been trying to break the Saudi-dominated status quo and carve out a niche position," said Saket Vemprala from the London-based Business Monitor International consultancy.
"At the moment I think it's more geopolitical, they want to broaden their (influence in the) region and become a more significant player ... And it certainly makes it easy for them to portray themselves as being on the right side of history," he said.
That sentiment is on display on a huge billboard in front of the courthouse. Over a picture of Qatari ruler Hamad bin Khalifa al-Thani reads the promise: "Qatar, history will always remember your support for our cause."
"'WE ARE FINE'"
Being on the right side of history doesn't come cheap.
Qatar was the first Arab country to contribute planes to police the U.N.-backed no-fly zone over Libya. Simultaneously, hundreds of millions of dollars began to flow from the Qatari capital Doha to Benghazi from early March.
While international oil traders pondered whether to brave the bombs and international sanctions to start buying oil from the rebels, Qatar was quick to throw a lifeline and help eastern Libya meet its most pressing needs including fuel, food, medicines and telecommunications equipment.
Qatar's foreign ministry has confirmed that it has shipped four tankers full of gasoline, diesel and other refined fuels to Benghazi, which specialists estimate is enough to feed the large Benghazi power plant for one or two weeks.
But people on the ground in Benghazi say they believe Qatar is behind much of the continuing delivery of fuel supplies, as well as food, medicine and cash payments. Given that oil production in the east has stalled and the economy generates no cash, they ask, where else are all the supplies coming from?
Overall, the Qatari shipments have covered 100 percent of eastern Libya energy needs for a month and a half, Salah Fouad, a rebel oil engineer based in the eastern coastal city of Tobruk, said in May. "We are receiving a huge help from Qatar. Its role in unforgettable," said Salah Fouad, oil engineer. "Even the little child knows Qatar's role and assistance to us," he said.
A western consultant who worked in Benghazi in March and April supported this view. "You ask port workers how are they doing today and they say, 'Oh, we are fine. We just received aid from Qatar,'" he said, declining to be named because of the sensitivity of his mission. "You ask the council what's the situation with diesel and they say, 'Oh we are just fine, we've got new deliveries from Qatar.' You tell Libyan officials to let you know if something goes wrong with power facilities and they tell you, 'Oh we are just fine, Qatar is helping us.'"
A Gulf-based oil trader with knowledge of Qatari gasoline deliveries estimated monthly requirements at 10 gasoline and 5-6 diesel cargoes a month to help run vehicles and Benghazi's huge power plant.
As shipments are being settled on a government-to-government basis, they are usually not followed by satellite tracking systems, which monitor mostly commercial shipments.
Those commercial shipments have included a test-case export cargo from the rebel-held east, shipped out in early May by trading house Vitol. Some traders say Qatar has gone further.
"Everyone gets excited about one Vitol cargo and doesn't see a fleet of Qatari tankers," said another London-based trader.
Other countries are helping the rebels as well, of course. An anti-Gaddafi coalition called the Libya contact group, including the United States, France, Britain and Italy -- as well as Kuwait and Jordan -- agreed in May to set up a fund to help them; Washington pledged to unlock some of the $30 billion of Libyan state funds frozen in the United States.
What makes Qatar different is the breadth and depth of its aid.
Rebel officials in Doha say Qatari banks are helping facilitate international money transfers in rebel-held areas to recapitalise the paralysed banking system, though they won't say which banks.
Qatar is also believed by diplomatic sources in Doha to have granted some Libyans working for Qatari companies leave of absence so they can contribute to the war effort.
Several western and Doha-based diplomatic sources say Qatar is even supplying the rebels arms, including possibly Milan anti-tank missiles. The Gulf state declined to comment on whether it has supplied the rebels with arms, or in what quantity.
In May, the rebels estimated they urgently needed $2-3 billion in cash. When the anti-Gaddafi coalition set up its fund, Qatar immediately pledged the largest sum of $400-$500 million.
What's behind Qatar's generosity? It helps that it is so rich. Qatar's copious gas reserves have made it one of the world's wealthiest countries, with a sky-high gross domestic product per person of $88,000 according to the International Monetary Fund. Its $60-billion plus sovereign wealth fund owns stakes in banks Credit Suisse and Barclays, as well as London's iconic department store Harrods.
"Qatar will soon -- literally -- have more money than it knows what to do with," according to a 2008 U.S. diplomatic cable, obtained by WikiLeaks and reviewed by Reuters. [ID:nLDE72L11M]
The largesse in Libya is part investment, part strategic. "They are looking to park investments around the world. They helped the Lebanon peace process, Yemen, they got the World Cup, Doha talks, Al Jazeera -- these are all parts of a very big diplomatic game and a fight for influence," says a London-based British diplomat.
The big prize is energy. Libya produced 1.6 million barrels of oil per day before the war, or almost 2 percent of world output, and has enough reserves to sustain that level of production for 77 years, according to BP. Qatar would like to control a chunk of that oil supply as well as potentially large Libyan gas exports to Europe which otherwise would effectively rival Qatar's own deliveries.
Although gas markets have faced a severe glut in the past few years, the outlook is improving fast, especially in the aftermath of Japan's Fukushima disaster and the decision by Germany to phase out nuclear power. [ID:nLDE7521NM]
"Qatar is putting energy at the forefront of its diplomacy. Libya brings them closer to Europe and to their future markets. They will be right on the Mediterranean," said the British diplomat.
With direct access to Europe, Qatar would be in a position to carve up the gas markets between itself and Russia, with which Doha enjoys increasingly friendly ties. [ID:nLDE6B028V]
There's also Libya's sovereign wealth fund (LIA), which has some $70 billion worth of assets frozen around the world. The LIA owns stakes in Italian bank UniCredit, defence company Finmeccanica, British publisher Pearson which owns the Financial Times, and Belgian financial group Fortis, now known as Ageas.
If the rebels win, Qatar would have a say in what the LIA does with its investments.
"Libya is not Iraq. You are unlikely to have a protracted civil war once it is over," said the western risk consultant who worked in Benghazi. "So those investments are not like putting money at the bottom of a pit. It should pay back and also possibly give Qatar influence on what the LIA can invest money in. If we use takeover terminology, Qatar is exploring unrealised value."
The Qataris see such rich pickings they have recently turned down opportunities elsewhere, according to a source close to the Qatar Investment Authority (QIA), the country's sovereign wealth fund. "Qatar's leaders are intensely focused on sorting out the crisis in Libya, to the extent that they have passed on a few items over the past few months."
THE EMIR OF WHERE?
A popular joke in Benghazi illustrates Qatari ambitions in Libya perfectly. What's the new nickname of Qatari ruler Sheikh Hamad bin Khalifa al-Thani? The Emir of Qatar and Libya.
So why is an absolute monarchy, with little time for democracy at home, mixed up with a democratic rebellion?
Qatar's foreign ministry has cited the U.N. resolution and the emir's desire to alleviate the suffering of the Libyan people.
"The reasons as laid out as to why Qatar is acting do not quite seem to account for the huge risks and extraordinarily bold actions that Qatar is taking," said David Roberts, deputy director of the Royal United Services Institute based in Doha. "I can only account for this apparent discrepancy by suggesting that this policy is being heavily pushed by Qatar's elite."
Rumours abound in Doha that the real reason for Qatar's interest in Libya is that al-Thani's wife Sheikha Mozah has close personal ties there, although her representatives declined to comment.
"Most of Qatar's leadership, the al-Thanis and the sheikhs, know Libya very well, because they went to school with Libyans in the U.S. and the UK in the 70s and 80s," said Mahmoud Shammam, Doha-based spokesman for the rebels. "So they know the situation there very well. They know the ugliness of the regime."
MORE THAN U.S. PROXY
Could Qatar also be working for Washington? Before the war, U.S. companies had large investments in Libya, with majors ConocoPhillips and Marathon involved in direct production deals with Gaddafi's Libyan National Oil Co. [ID:nLDE72R0PG] Now consultants and deal-brokers in Benghazi are struck by the low numbers of American fixers relative to their European peers.
"To some extent they may be acting as a U.S. proxy. Washington wants to achieve things but doesn't want to do it with its own hands," said a London-based risk consultant who has European firms as clients.
Qatar hosts a large U.S. military base; its decision to contribute planes to police the no-fly zone over Libya helped Washington argue that the western-led air strikes had Arab support. Its importance there was underscored by its ruler's visit to Washington in April.
"We would not have been able, I think, to shape the kind of broad-based international coalition that includes not only our NATO members but also includes Arab states, without the emir's leadership," U.S. President Barack Obama told reporters that month after meeting the emir in the Oval office.
Diplomats also point to strains in U.S.-Saudi relations as proof of -- or perhaps even reason for -- improved ties between Washington and Qatar, pointing to events in Bahrain where U.S. calls for negotiation to end a recent uprising stood in stark contrast to Saudi Arabia's decision to send in troops. [ID:nLDE72F02J]
Qatar's stand is certainly appreciated by European countries, whose diplomats argue that the emirate is playing a smart multi-polar game. "The Qataris are replacing the Saudis on certain agendas," said a French diplomat based in Europe.
Qatar's emir has twice been guest of honour at France's annual Bastille Day parade since 2007 and the emirate has stakes in Airbus parent EADS, energy group EDF and construction firm Vinci. In 2008, France also passed a law granting special tax exemptions to the emir and other Qatari investors who had bought property in Paris.
BLOW TO QATARI RISK PROFILE
Despite wide-ranging support in the West, Qatar's actions in Libya have created unease among its neighbours.
Qatar has long played the role of intermediary in the region. Though it is close to Washington and Saudi Arabia, it also has ties to Iran.
Foreign firms, including almost all the world's major oil companies, have invested tens of billions of dollars in projects with Qatar even though they know its gas reserves are, in effect, shared with Iran. The Iranian part is the South Pars field while the Qatari part is known as the North Field.
The country's Libya adventure increases the hazards again. "The Qatari risk profile is changing significantly now due to Libya, whereas before they had been simply viewed as a stable and wealthy partner," the London-based British diplomat said. "No doubt that foreign majors are taking notice of that." (Dmitry Zhdannikov reported from London, Regan E. Doherty from Doha and Mohammed Abbas from Benghazi; Additional reporting by Emma Farge in London, Sherine El Madany in Benghazi and Humeyra Pamuk in Dubai; editing by Simon Robinson and Sara Ledwith)