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Libyan Rebels' Allies, Now Financial Backers, Poised For Payday

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DUBAI, United Arab Emirates -- When Libyan rebels first called out for international aid, the wealthy Gulf was quick to answer: Warplanes from Qatar and United Arab Emirates joined the NATO-led military coalition against Moammar Gadhafi and critical aid and diplomatic support were funneled to opposition fighters.

Now the rebels' Gulf allies could be quickly shifting from uprising backers to deep-pocket patrons of reconstruction in what would mark another step in the region's transformation from political bystander to front-line player.

Aref Ali Nayed, ambassador to UAE and spokesman for the rebel "stabilization team" currently working out of Dubai, said Tuesday that Gulf expertise would be key in areas such as construction and port operations.

"This has really been a partnership," he said.

The head of the rebels' acting Cabinet, Mahmoud Jibril, told reporters in Benghazi, Libya late Tuesday that on Wednesday, Qatar will host a conference to be attended by U.S., Britain, France and others to provide $1.5 billion for Libya to help pay employees' salaries.

The extensive Gulf help to Libya's rebels, however, has little to do with shared visions of wide-open democracy. Gulf rulers have shown zero tolerance for Arab Spring-inspired protests in their corner of the Middle East.

Instead, Libya represents another frontier for the Gulf's two most politically ambitious nations – Qatar and the UAE – that are increasingly adept at turning their energy riches into an international currency of influence and commercial opportunities in places such as Somalia and Pakistan.

"The UAE and Qatar are well poised to play a big role in Libya," said Shadi Hamid, director of research at The Brookings Doha Center in Qatar. "Part of their strategic calculation in having a role in the military operations was that they stood to benefit in post-Gadhafi Libya."

Already, the Gulf has become a back office for the rebels. The leadership of a reconstruction planning team has set up shop at least temporarily at Libya's Dubai consulate, which is flying the rebel flag. Qatar is the base for the rebels' main satellite TV channel and a key liaison for oil sales.

Both nations are expected to have prominent roles in the next international conference on Libya on Thursday in Istanbul and could give hints about where Gulf money and expertise may flow. Each has played host to similar get-togethers already.

The most likely priority is help upgrading Libya's national oil company, which is the gatekeeper for Africa's largest known reserves of crude. The state oil industry received a boost of Western technology and expertise after U.S. sanctions were lifted in 2004. But its output remains well below potential and some facilities need extensive repairs from damage during the uprising.

"On a political front they will continue to play a role I'd imagine, and might send significant help to the (national oil company) of Libya to reorganize itself," said Samuel Ciszuk, Mideast and North Africa energy analyst with the London-based IHS Global Insight. "I'm sure there can be some assistance to bridge the cash flow problems, or to do repairs to bring it back onstream."

Qatar appears to have an edge after coming to the rebels' aid at critical times.

In April, Qatar helped rebels complete the sale of 1 million barrels of crude that brought in roughly $129 million when the opposition fighters were in desperate need of cash. Libyan officials also showed reporters intercepted cases of assault rifles and ammunition carrying Qatari markings, suggesting arms from the Gulf state may have been used in the turning-point offensive that spread from the mountains of western Libya to Tripoli.

The Abu Dhabi National Energy Co. – which is among the UAE's most active overseas oil and gas investors – has no current deals in Libya. It didn't rule out expansion there if Gadhafi is ousted.

"We are ... looking at the greater (Middle East and North Africa) region with an emphasis on power and water and see that the current geopolitical environment will create investment opportunities," said spokesman Allan Virtanen in an email reply to questions about an interest in postwar Libya.

Crescent Petroleum, an oil and gas producer based in the UAE emirate of Sharjah, has previously identified several projects it would be interested in developing in Libya, said President Badr Jafar. He believes outside companies can have an important role in postwar Libya by providing investment and technical know-how.

"Regional Arab companies such as Crescent Petroleum ... should be well placed to contribute to this development," Jafar said.

But the rebels' Gulf allies face some serious competition.

China's investments in Gadhafi-ruled Libya were estimated at $18 billion, including extensive oil and construction ventures. China's Foreign Ministry spokesman, Ma Zhaoxu, said the country is ready for more with an "active role in the future reconstruction of Libya."

Western oil companies, led by Italy's Eni, also are desperate not to backpedal with their Libyan investments.

"So the advantages of Qatar and the UAE may not be that clear cut," said Ehsan Ahrari, a regional analyst based in suburban Washington.

Much also depends how the post-Gadhafi leadership shakes out if his regime is ultimately pushed aside.

"I'm not quite certain that the ruling committee of Libya will remain the same when the dust is settled," said Ahrari. "There are a lot more assassinations and other violent incidents waiting to happen."

For the moment, however, the Gulf states appear to view Libya as the next point in their growing political reach.

The UAE has used aid efforts in Pakistan and Somalia as leverage for greater influence, including taking a more high profile role in anti-piracy measures off the Horn of Africa. Qatar – which has outsized regional clout through the pan-Arab broadcaster Al-Jazeera – has played mediator roles in conflicts such as Sudan's Darfur region and internal power clashes in Lebanon.

The Gulf's main political bloc is also looking beyond its borders to possibly add Jordan and Morocco – ironically as part of attempts to protect the Mideast's monarchies from possible revolts such as Libya's.

"There is tremendous goodwill toward UAE and Qatar on the part of the (Libyan rebels) ... and that may will translate into new business ties," said Jane Kinninmont, a Mideast expert at the London-based think tank Chatham House. "It's quite possible you could see Qatar Petroleum or one of the UAE firms getting involved on the marketing side" of Libyan oil, for example.

She said the Gulf's other showcase industries – airlines, port operation and construction – also could be in high demand in Libya. Dubai-based DP World is the world's third-largest seaport operator, and airlines Emirates, Etihad and Qatar Airways are counted among the premier brands.

"The property developers who've been able to build attractive hotels out of nothing in the deserts of the Gulf are also going to look favorably on the deserts of Libya," said Kinninmont. "They're obviously interested in North Africa."

And at least one Emirati bank is closely following the events unfolding in Libya.

Abu Dhabi-based First Gulf Bank suspended its operations in the North African country and cut ties with its Libyan subsidiary's board after U.N. sanctions were imposed earlier this year. It set up its First Gulf Libyan Bank division in partnership with a Gadhafi regime government fund, and has opened several branches, including one in the Rixos Hotel now housing foreign journalists in Tripoli.

It had no further comment about its future plans for Libya on Tuesday because the situation there remains uncertain.

"Countries that provided security and political support (to the rebels) ... might will find it easier to get contracts," said Rachel Ziemba, a London-based analyst at Roubini Global Economics. "Where political influence goes, economic influence follows."

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