by David Malone
Just a quick update on Libya. There have been reports from unnamed sources within Libya, reported by Reuters and Al Jazeera, that foreign mercenaries are being used to put down the protests. There have also been videos coming out of the country showing a heavy troop presence, but I certainly can’t say if the troops are foreign or not.
What the reports of mercenaries does suggest however is support for what I was writing in the previous post, within the country loyalties are not national nor to the government, not even within the army. If the army was loyal to Gaddafi and his government then there would be no need for mercenaries.
I have heard reports of troops from French speaking West Africa. Gabon would be one source. I would be surprised if French units where not already in the country. Other rumours are of East European mercenaries also. One rumour is that the units are there not only to patrol the streets but to secure the oil installation and if threatened with government defeat, to set them alight.
Even the rumour of such is going to help push oil prices up. Remember, high oil will not help any ideas our governments might have of growth as the solution to our debts.
On the financial side UniCredit, our old friend, is feeling very shaken by events. Part of UniCredit’s last efforts at raising capital investment was to sell a 5% chunk of itself to Libya. The Libyan Central Bank owns 5% and the Libyan Investment Authority owns another 2.6%. On the news that Gaddafi might have left the country UniCredit’s shares plunged nearly 6%.
UniCredit already had bad debts rolling in from Eastern Europe via its Bank Austria subsidiary and was hugely exposed to US debt coming from its one third of a trillion dollar investment arm, Pioneer, in the US. And now its rescue plan of getting oil investment from the dictator everyone used to like to hug for the cameras, Colonel Gaddafi, seems to be failing too.
Italy is in increasing trouble. Berlusconi is facing trial, again, after having barely survived the last attempt to oust him and now Italy’s largest bank (one of Europe’s largest) is where it does not want to be, in the spot light.
Oil price, mercenaries and UniCredit all tied to events in Libya!
David Malone is the author of the book Debt Generation. You can read and listen to excerpts from his book here: http://www.debtgeneration.org/index.php