Stratfor On The Very Real Obstacles To Libyan Ceasfire Rumors (Which Gave Goldman A Crude Entry Point)

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With oil once again supposedly doing a headfake on the second round of Libyan peace reports (remember when Hugo "Peacemaker" Chavez was going to usher in a new era of world peace?) here is Stratfor with a much needed analysis beyond just the headlines, of the real and very deep obstacles to a ceasefire in Libya, which may pour some water over the next attempt at spinning a "give ceasfire a chance" meme, which as we predicted yesterday will last at most a day or two. As for our comment that Goldman is now merely loading up on oil, well: we were right. Following the closing of Goldman's Top trade of 2011 which told GS clients to sell Crude, Copper, Cotton And Platinum who do you think was on the other side of the trade?

From Stratfor

The African Union and the Turkish government are both trying to
negotiate a cease-fire in Libya. Libyan leader Moammar Gadhafi has
already given the green light to an African Union proposal led by South
African President Jacob Zuma on the condition that NATO first cease its
airstrikes. The rebels in the east have rejected the terms of the
cease-fire, sticking to their demand that Gadhafi first step down.
Meanwhile, NATO forces maintained that they will continue launching
airstrikes as long as Libyan civilians in the east are threatened.

Clearly, the cease-fire negotiations are fraught with complications.
But as time wears on, it’s looking increasingly likely that the current
stalemate in Libya could give way to a de facto partition between east
and west. This may not be the ideal scenario for many, but it could
allow the United States to avoid another costly nation-building exercise
in the Islamic world, while allowing Gadhafi to remain in power,
however tenuously. Each party in this conflict — whether you’re talking
about the eastern rebels, Gadhafi’s forces or NATO forces — are facing
considerable dilemmas in how to proceed in this military campaign.

The eastern rebels have made clear that they’re not content with
holding onto the east and ceding the west to Gadhafi’s forces. The
problem with the rebel forces it that they are severely ill-trained and
ill-equipped. And if you take a look at the battles that have been
taking place in the energy-critical areas of (Marsa el) Brega, Ras
Lanuf, Zawiya and the port of Sidra, show just how difficult of a time
the rebels are having in trying to push Gadhafi’s forces back. And the
more Gadhafi’s forces deliberately pull back into built-up urban
strongholds in the west, the less likely NATO forces are to provide air
cover for fear of causing mass civilian casualties. Simply put, the
rebels do not have the fighting power to advance westward to Tripoli.

Meanwhile, Gadhafi’s forces remain largely in control of the main
energy-producing regions running alongside the dividing line of the
country and the Gulf of Sidra region. These forces reach as far as
Ajdabiya, just below the rebel stronghold of Benghazi. Though a number
of Gadhafi’s tanks are being eliminated by NATO airstrikes, his forces
have been able to rely on much less resource-intensive and highly mobile
civilian vehicles and technicals to move their forces around and push
the rebels back. Gadhafi’s forces are facing heavy constraints in
resupply as long as NATO forces are patrolling the seas and the skies
over Libya. All in all, though, Gadhafi would be negotiating from a
relative position of strength in any cease-fire negotiation. Even if
Gadhafi himself is eliminated, there do appear to be enough forces loyal
to him that could step in and reassert control from the west.

This obviously puts NATO in a very difficult spot. As long as
Gadhafi’s forces have the option of pulling back into well built-up
urban strongholds, NATO will face very heavy constraints in trying to
avoid the risk of blowback in causing civilian casualties. This gives
Gadhafi undeniable staying power. Meanwhile, the United States is facing
much more pressing and strategic concerns more eastward in the region
in the Persian Gulf region, where Iran is waiting to fill a power vacuum
in Iraq as U.S. forces are drawing down there. The U.S. then may be
resigning itself to the idea that it may not be getting much beyond a
stalemate in Libya, and that forcing a power vacuum in the country may
be a lot more trouble than it’s worth.