Libya Violence Escalates as Qaddafi's Son Vows `Rivers of Blood'

Libya erupted into violence last night after Muammar Qaddafi’s son threatened “rivers of blood” and deployed security forces on protesters, some of whom claimed control of the second-biggest city, Benghazi.

At least 250 people died in Tripoli alone, al-Jazeera reported, citing witnesses. Troops attacked “terror” hideouts and urged citizens to fight back the “organized gangs that are destroying Libya,” state television said. Amid the violence were signs that some officials and troops were deserting.

Oil surged to the highest in more than two years. Libya, holder of Africa’s largest oil reserves, is the latest country in the region to be rocked by protests ignited by last month’s ouster of Tunisia’s president and energized by the Feb. 11 fall of Egyptian President Hosni Mubarak. Violence has flared in Yemen, Djibouti, Iran and Bahrain as governments cracked down on demands for change.

“This is not a regime that will compromise,” said Dirk J. Vandewalle, author of “A History of Modern Libya” and an associate professor of government at Dartmouth College in New Hampshire. “Whichever way this goes, we can expect a good amount of chaos and bloodshed.”

Diplomats in several cities were reported to have abandoned the Qaddafi regime to protest against the violence. Two Libyan warplanes crossed to Malta and requested asylum after refusing to bomb protesters, according to al-Jazeera.

‘Genocide’

“We find it impossible to stay silent,” Libya’s deputy ambassador to the United Nations, Ibrahim Dabbashi, told reporters. “The Libyan mission will be in the service of the Libyan people rather than in the service of the regime.” He accused the regime of “genocide.”

Brent crude for April settlement adding as much as 2.5 percent to $105.08 a barrel. It traded at $104.87 at 5:08 p.m. in London yesterday. Persian Gulf shares extended declines, with Dubai’s benchmark index dropping to a six-month low.

“This is much, much worse chaos than we saw in Egypt or Tunisia,” said Daniel Byman, director of the Security Studies Program at Georgetown University in Washington. “They’re in a civil war, at least a low-level one, right now. The question to me is, does the regime capitulate or does the civil war intensify.”

Arab League Meeting

The Arab League will meet today to discuss the turmoil in Libya, al-Jazeera said. The broadcaster televised pictures of what it said were corpses of Libyan civilians killed in the clashes, some charred and with bullet wounds.

“Instead of weeping over 84 dead people, we will weep over hundreds of thousands of dead,” said Saif al-Islam Qaddafi, the son of the Libyan leader. “Rivers of blood will flow.”

He said the army will “impose security and get things back to normal, whatever the price,” and warned that the conflict may drive oil companies away. Several international companies in Libya announced evacuations or halted operations. Royal Dutch Shell Plc said it evacuated the families of personnel in Libya, and Norway’s Statoil ASA closed its offices and said it is evacuating expatriate workers.

Shares in Italy’s Eni SpA, which produced 244,000 barrels of oil equivalent a day in Libya in 2009, fell 5 percent at 4:50 p.m. in Milan.

“Libya has oil,” Qaddafi’s son said. “This oil will be burnt. Thugs, criminals, gangs and tribes will burn it.”

Vulnerable Regime

Protesters said they had taken over Benghazi, the Associated Press said, citing witnesses. The International Federation for Human Rights said more than 300 people have been killed in the past week.

The Quryna newspaper, based in Benghazi, reported that the country’s top judicial official, Mustafa Abduljelil, resigned to protest the violence. Libya’s representative to the Arab League quit his post and sided with the protesters, Egypt’s state-run Middle East News Agency reported yesterday. Libya’s ambassadors in China, India, the U.K., Indonesia, Bangladesh, Poland and the Arab League also resigned, al-Jazeera said.

“The regime is exceptionally vulnerable right now,” Byman said. “You’ve seen defections among the elite. That’s a good sign the regime has problems.”

Thousands of people demonstrating yesterday in Benghazi were met by gunfire from forces loyal to the regime, New York- based Human Rights Watch said, citing reports from witnesses.

‘An Obstinate Place’

“Benghazi is always known for resisting tyranny and diktats, it’s an obstinate place,” said Faraj Najem, a historian and author of “Tribes, Islam and State in Libya.”

The leader of the opposition Front for the Salvation of Libya, Ibrahim Sahad, told ABC television that some army units in Benghazi had defected to join the protesters and were helping to protect them.

“The world is watching the situation in Libya with alarm,” Secretary of State Hillary Clinton said last night. “Now is the time to stop this unacceptable bloodshed.”

U.K. Prime Minister David Cameron denounced the violence as “appalling and unacceptable” while in Egypt yesterday, where he was the first Western leader to visit since Mubarak’s fall.

Protesters across the region have focused on the same blend of economic ills, political repression and unelected rulers in power for decades.

In Yemen, the poorest country on the Arabian peninsula, President Ali Abdullah Saleh held a press conference in the capital, Sana’a, to rule out meeting the demands of protesters seeking an end to his more than 30 years in office. People took to the streets for an 11th day as Saleh said their calls for regime change are “not logical.”

Regional Turmoil

Thousands gathered outside Sana’a University and in the southern provinces of Aden and Taiz, while followers of the Shiite Houthi rebel group joined in the protests by holding a demonstration in the northern Saada province, according to activists in Sana’a. At least five people have been killed.

In Bahrain, home to the U.S. Navy’s Fifth Fleet, opposition groups are drawing up demands and discussing the government’s call for dialogue, said Ebrahim Sharif, head of the National Democratic Action Society. Protests have been led by the Shiite Muslim majority, which says it is discriminated against by Sunni rulers.

Thousands of mainly Shiite demonstrators are camped in the central Pearl Roundabout in the capital, Manama, after tanks, armored personnel carriers and riot police withdrew on the orders of Crown Prince Salman bin Hamad Al Khalifa.

Saudi Arabia

Analysts including the Eurasia Group, a New York-based company that assesses political risk, have warned of the risk of unrest spreading to Saudi Arabia, the world’s biggest oil exporter.

Saudi Arabia neighbors Bahrain and has a Shiite minority population in the east, where most of its oil is produced. It was the lowest-ranked Middle Eastern country in the Economist Intelligence Unit’s 2010 Democracy Index, which classified all Gulf nations as authoritarian regimes.

Swap contracts for Saudi Arabia, used as a measure of confidence although the country has no debt to insure, rose basis points to 144 yesterday and have almost doubled since the end of January, according to CMA prices. Saudi Arabia’s Tadawul stock index fell for a seventh day, dropping 0.6 percent. The Bloomberg GCC 200 Index of Gulf stocks fell 0.4 percent to a four-month low.

“Perception of risk is only increasing,” said Alia Moubayed, senior economist at London-based Barclays Capital. “Investors will not take any sort of half solutions to be enough for calming their sense of risk aversion.”

To contact the reporters on this story: Mariam Fam in Cairo at mfam1@bloomberg.net; Kevin Costelloe at kcostelloe@bloomberg.net; Massoud A Derhally in Beirut, Lebanon at mderhally@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.

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