The brewing civil war in Libya is likely to drag in much of the region, Central Africa as well as North Africa and the Middle East. Already rumors suggest that this is coming true.

Yesterday, reports originating in the Saudi-owned daily Asharq al-Awsat claimed that Libyan rebels brought down two Syrian planes ostensibly assisting Qaddafi loyalists. The Syrian media is denying the report. As for anti-Qaddafi support, Robert Fisk reported that Riyadh is helping to arm the Libyan rebels at the request of the Obama administration. The Saudis, too, are denying that they played any part. The Saudi columnist and editor-in-chief of Asharq al-Awsat Tareq Homayed writes that this is “misinformation” planted “with the help of some of Iran's allies in our region”—i.e. Syria.

This media war over Libya is all part of the regional cold war, pitting Washington and its allies against the Iranian-led resistance bloc, including Syria, Hezbollah, and Hamas.

“The Saudis find themselves once again in opposing camps with the Syrians,” says Tony Badran, a research fellow at the Foundation for Defense of Democracies. “The Syrians, Iran's allies, sought to embarrass the Saudis over its position on the riots in Bahrain. The Saudi press has highlighted Bahrain's contention that reports of a Saudi military intervention in the small Gulf state originated on Syrian official TV. And now Asharq al-Awsat is reporting Syrian military interference on the side of Qaddafi loyalists. The fault lines in the region are between Iran and the American-allied states, and Syria and Saudi Arabia are diametrically opposed.”

As for other regional actors, there are also rumors that Egyptian special forces are inside Libya assisting the anti-Qaddafi faction. If the story is true, it wouldn’t be the first time Egypt has taken a position against the colonel—in the mid-1970s, Cairo gave refuge to two military officers who tried to bring down Qaddafi, and the Libyan leader in turn plotted to overthrow Egyptian president Anwar Sadat. The tension culminated in a brief war on their border in 1977. Some analysts have read especially dark motives into Cairo’s alleged actions, arguing that oil in Libya would serve Egypt nicely. And indeed, the Egyptian military regime has concerns that are perhaps even more pressing than how to get through three rounds of elections—parliamentary, presidential, and ratifying a Constitution—by next September. As David Goldman writes:

Egypt needs about $54 billion a year in foreign exchange at 2010 prices to cover its import bill. It stands to lose about $13 billion in tourism, $2 billion due to expulsion of Egyptian workers from Libya who send remittances home, and another $2 billion from the natural gas exports to Israel [ed.—the flow of Egyptian natural gas to Israel was suspended in February]. That’s nearly a third of its foreign exchange budget. And the rise in food prices probably adds another $3 billion or so to the bill. Egypt’s market remains shut. How these numbers are supposed to add up is past my ability to reckon with available information. The country could go into a tailspin.

It’s doubtful Egypt really has any designs on Libyan oil; if Egyptian special forces are in Libya, it is not just because Cairo has a long history of trouble with Qaddafi, or because it wants friendly relations with the faction that may well come to rule Libya. It is rather because Arab regimes understand what is apparently lost on the Obama administration and its friends in the policymaking establishment: A Libyan civil war has the potential to destabilize its neighbors.

Writing in the Wall Street Journal today, Richard Haass argues against U.S. intervention in Libya: “American policy makers would be wiser to focus on what they can do to see that Egypt’s transition proceeds smoothly, that Saudi Arabia remains stable, and that Iran does not.” However, all of these issues are tied to what is unfolding in Libya. Perhaps even more important than the prospect that Egypt’s transition could be affected by Qaddafi’s war spilling over the border is the key fact that Iran is benefiting from all the regional instability.

As Tareq Homayed explains in his Asharq al-Awsat column:

Iran wants to take advantage of the Libyan crisis that has led to significant increases in oil prices, not to mention the global tremors taking place in the oil markets. Iran wants to compensate for the losses it has incurred due to the economic sanctions imposed on it by the West, and develop its revenue as a result. Therefore, Tehran opposes the idea of increasing [oil] production and maintaining stable oil prices, whilst Saudi Arabia seeks to do the opposite. Because Saudi Arabia is trying hard to support the stability of oil markets, as the country is well aware of the consequences of high oil prices, which, if they were exaggerated, would be disastrous for everyone, whether the producer or the consumer. Riyadh is aware that an exaggerated rise in oil prices may actually lead to the collapse of states, rather than markets. This is of course a battle that is being conducted out of sight [between Iran and Saudi Arabia], and few are aware of its existence.

In other words, the Iranians and their allies are using Libya as yet another battleground for their regional war against the U.S.-backed order—the shame is that Washington is all but oblivious to what’s at stake.

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