July 14, 2011 / 1:37 PM / 8 years ago

SPECIAL REPORT-How fuel smuggling keeps Gaddafi machine running

* Efforts to choke off Libya fuel imports by sea are working

* But overland smugglers getting large volumes into Libya

* Smugglers say some fuel comes from Algeria, via Tunisia

* Illegal trade exploits porous borders

By Lamine Chikhi, Christian Lowe and Emma Farge

ZOKRA, Tunisia, July 14 (Reuters)- Yacine, a 24-year old Tunisian in jeans and an oil-stained red T-shirt, has been busy since war broke out next door in Libya.     Yacine is the owner of a corrugated iron shack on the side of the road that cuts through the desert from the Tunisian town of Ben Gardane to the border with Libya.     Every day, hundreds of Libyan vehicles come to the shack, and a dozen others like it clustered in the tiny village of Zokra. There, they fill up with gasoline from jerry-cans Yacine has lined up on the roadside, then head to the Ras Jdir border crossing.     Once on the other side, they are in territory firmly under the control of Libyan leader Muammar Gaddafi. A short distance from the crossing, the cars stop on the side of the road at informal collection points. Using lengths of tubing, they siphon the fuel out of their tanks and into blue and green jerry-cans.     Then, according to a Reuters reporter who witnessed the operation, they head back into Tunisia to collect another tank of gasoline.     “Business is good,” said Yacine, who declined to give his family name because his business operates without a licence. Asked where the fuel comes from, he replied: “The gasoline is Algerian, and it’s available now.”     This is the lifeline that is helping Muammar Gaddafi cling to power in spite of a five-month-old rebellion against his rule, a NATO bombing campaign, and international sanctions.     The areas of Libya under Gaddafi’s control are suffering a shortage of fuel. Sanctions make it difficult to import fuel legally and Libya’s own refining capacity has been severely curtailed by the conflict.     If supplies get tighter, most analysts say, Gaddafi will no longer be able to hold on. His troops will struggle to travel to the front line to take on the rebels, and the economy will grind to a halt.     But smuggling by networks like the one operated by Yacine and his colleagues bypasses the sanctions and — combined with fuel from the one operational refinery under Gaddafi’s control — helps keep his government ticking over.     That’s a problem for western powers as they try to tighten the noose around Gaddafi. While they can make it extremely difficult for ships to dock in Libyan ports with cargoes of gasoline, they cannot staunch the flow of smuggled fuel.     For that, they need to rely on Tunisia and Algeria, its oil-producing neighbour to the west and source of much of the gasoline smuggled into Libya.     Governments in Tunisia and Algeria say they are not supplying fuel to Libya, and that they are implementing United Nations sanctions.     “We are rigorously enforcing the ... (U.N. resolutions). We have submitted a report on that to the United Nations and we invited the U.N. to monitor our implementation,” Algerian Deputy Foreign Minister Abdelkader Messahel told Reuters.     “For us it’s food products and pharmaceutical products (which are exported to Libya). All other products we consider are under embargo,” he said, including motor fuel.     There is evidence that Algeria is taking a firm line on supplies to Libya. Last week, Algeria’s government turned away a Libyan-flagged ship which tried to unload a cargo of gasoline in an Algerian port, probably for trucking overland to Libya, according to a western diplomat.     But stopping the smuggling routes altogether is tricky.     “It’s hard to stop trucks from going back and forth,” said Firas Abi Ali, the Deputy Head of Middle East and North Africa Forecasting at Exclusive Analysis, a consultancy. “The border with Tunisia is long and porous, making it suitable for smuggling.”

    TIGHTENING THE NOOSE     There is no fuel embargo on Libya per se, but dealing with specific individuals and organisations linked to Gaddafi is prohibited, so selling fuels to oil firms that may be linked to the Libyan leader carries considerable reputational and legal risks. (For a factbox on international sanctions on Libya, click here: link.reuters.com/qak62s)     Most of the companies trading with Libya before the war stopped in March after sanctions came in. Other firms, lured by hefty premiums for gasoline, have found creative ways of delivering the fuels.     In one scheme unveiled by Reuters in April (link.reuters.com/rak62s), a ship docked in a Tunisian port loaded gasoline onto a vessel owned by the Libyan government's shipping arm, General National Maritime Transport Company (GNMTC). The firm does not appear on any sanctions list because European countries failed to agree to add it. But it is believed to be controlled by Gaddafi's son Hannibal, who is on a sanctions list.     Now though, even the most brazen of oil traders are running scared of dealing with the Libyan government and GNMTC has resorted to sourcing fuels itself using one of its own vessels, shipping and oil trading sources told Reuters on condition of anonymity.     The Libyan-flagged, GNMTC-owned, tanker Cartagena has been trying to bring a cargo of 30,000 tonnes, or 250,000 barrels, home since mid-May. But it has been prevented by a hardening NATO line on fuel imports and, according to one source monitoring the vessel's movements, a mutinous Libyan captain.     "The captain had sympathies with the rebels and wanted to charter it east (to the rebel stronghold in Benghazi). Gaddafi had wanted to change the whole crew for a Libyan one, but in the end I believe they just changed the captain," said a western diplomatic source who has been tracking the ship.     The tanker loaded gasoline in a Turkish port. The Swiss company that sold the ship the fuel, speaking on condition it not be named because of the sensitivity of the matter, told Reuters the buyer had duped them by placing Tripoli, Lebanon as the destination.     But when it left the port in early May, the vessel sailed west, not east to Lebanon. The actual destination was Zawiyah, a Gaddafi-controlled town and the main oil port adjacent to the Libyan capital.     NATO initially rubber-stamped the deal, saying the gasoline shipment to Libyan distribution company Al Sharara Libya Oil and Gas "does not raise concerns", according to a May 4 fax obtained by Reuters and apparently sent in response to a request for NATO clearance.     But while the Cartagena was en route to Zawiyah, NATO diverted another west-Libya bound fuel tanker on the grounds that the fuel would be used for military purposes.     The Cartagena, carrying enough fuel to fill nearly a million cars, then spent the next month anchored off the Mediterranean island of Malta while the Libyan government tried to come up with another means of unloading it. In early July, it headed for the port of Annaba on the northeastern tip of Algeria, according to AIS Live ship tracking data based on satellite signals sent from the vessel itself.     The plan was to unload the fuel there and transfer it via Tunisia and into Libya through a smuggling network, according to the western diplomatic source.     But Algerian authorities, who had discussed the shipment with European Union authorities, stopped it from berthing.     "It was refused permission to dock. The Algerians were persuaded to stand down," said the source.     The vessel's satellite signals show it did not enter the port as planned on July 2, and instead has lingered about 80 km (50 miles) north in the Mediterranean, posting no new destination port.     "We are working on the assumption that the noose is tightening around Gaddafi, and that we are entering the final stage," said the diplomatic source.     BICYCLES IN DEMAND     Western efforts to choke off fuel to Gaddafi are certainly having an effect in Tripoli. There, long lines of

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