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Gaddafi Death Just 'End of First Stage' for Libya: Analyst

The death of Muammar Gaddafi in his home town at the hand of militia who have been battling his dwindling forces for months marks a new stage in Libya's history, but the country's troubles are not yet over, a political analyst told CNBC Friday.

Muammer Gaddafi
Mahmud Turkia | AFP | Getty Images

"This is potentially the end of the first stage of the civil war," Julien Barnes-Dacey, head of MENA desk at Control Risks, said.

"What remains to be seen is if this is really the beginning of a more stable future or if we are going to see more infighting emerge between the different groups as they jostle for control of Libya."

While the disparate regional groups fighting against the dictator who ruled Libya for more than four decades have been united against him, there are now concerns that they will begin fighting among themselves.

"There are lots of political differences between the groups. Different groups believe they were responsible for the end of Gaddafi and that they should be at the forefront of the new Libya," said Barnes-Dacey.

"We will see now whether there's a body that can keep them in check."

After the initial exuberance following the shooting of Gaddafi, the groups competing for power will have to think about how to run the country.

Libya Facing Internal Division Post-Gaddafi

The Gaddafi regime has amassed vast sums over the years, with close to $70 billion in the Libyan Investment Authority (LIA) sovereign wealth fund. In the wake of the rebellion in Libya which overthrew his government, more than $35 billion worth of assets were frozen by governments around the world, including the US, Canada and the United Kingdom.

Not much of this wealth has trickled down to Libya's population, which has an average annual salary of $12,000, according to the World Bank - substantially less than other oil-producing countries close by, such as Saudi Arabia and the United Arab Emirates.

Production of Libya's most lucrative export, oil held back by the crisis, has begun again, and analysts at Barclays Capital say output should rise to about 600,000 barrels a day by year's end.

Libya had been producing around 1.6 million barrels of oil a day before the unrest, which caused a spike in oil prices. Brent crude prices hit $127 a barrel in April as the Arab Spring gained momentum, and European refiners, which rely heavily on Libya's light, sweet crude, were particularly badly hit.

Both the British and French governments aided the resistance, and there are now questions over whether they will have increased influence over the new government, when it comes into power.

"The key is, how much will the West try to assert itself with the new Libyan authorities?" said Barnes-Dacey. "There is a very positive relationship so far between these groups at the forefront and the Western governments."

"Libyans see themselves as having been at the frontline of this battle and I don't think they will allow British or French influence to seep in if it is contrary to their interests," he added. "They will certainly grant some preferential treatment to those who aided them."