Internationalized kleptocracy is on the rise in Libya
On April 16, 2024, UN Special Representative for Libya Abdoulaye Bathily announced he would resign, citing a “lack of political will and good faith” among Libyan leaders. Few would disagree with his diagnosis that the vested interests of Libyan leaders have created a roadblock for progress. Bathily conducted eighteen months of shuttle diplomacy before concluding that the leaders he was seeking to negotiate a better future for Libya with were acting in their own interests instead of those of the country. These events are sadly reflective of how recent years have represented a boon for Libyan kleptocrats who have found ways to prosper amid the Libyan state’s governance crisis. Moreover, they do so with the active support and complicity of external state actors. This trajectory bodes ill for Libya’s future.
The rise of Libya’s kleptocrats
By predicating political progress on agreement between the “five major actors” in Libya in order to reach elections, Bathily ensured a situation whereby those currently in power would have a monopoly over what comes next. In truth, however, only two of the five major actors he identified—Khalifa Haftar, commander of the Libyan Arab Armed Forces and Abdulhamid al-Dabaiba, the head of the Tripoli-based Government of National Unity (GNU)—have a meaningful influence on what happens on the ground. The other three—the heads of the Presidency Council and the High State Council and the speaker of the House of Representatives—draw their influence from their formal mandates, as well as political support from Turkey and Egypt, respectively.
Even if Bathily had created a more inclusive and representative process, there is a strong chance that vested interests would have ensured its failure. Indeed, it has become increasingly apparent that any political strategy will be doomed unless efforts are made to tackle the growth of kleptocracy that is sustaining the status quo.
For proof of this, it is necessary to look at the leaders and interests at the heart of the discussions. The Dabaiba family’s vast wealth has been generated through the management of Libyan state funds that remain subject to investigation, and the expansion of spending under Dabaiba’s GNU has been connected to widespread corruption. Meanwhile, Haftar’s dominion over eastern and southern Libya has translated into direct control over parallel institutions and their publicly funded budgets, which are subject to no oversight. When a fund for reconstruction was established in eastern Libya in recent months under the leadership of Khalifa’s son Belqacem (who appears to have no qualifications for the role), it was declared that there would be no financial oversight from the Libyan state’s anti-corruption agencies. The two sets of kleptocrats, the Haftars and the Dabaibas, also appear to have an under-the-table understanding on the management of the National Oil Corporation, through which state spending is skyrocketing, with little to show for it.
Libya’s list of kleptocrats is not limited to the Haftars and the Dabaibas. Armed group leaders and corrupt businessmen continue to build wealth and influence at the populace’s expense. Taken together, the vast majority of what acts as Libya’s formal state is controlled by kleptocratic forces. A recent report by The Sentry found that an array of illicit industries results in enormous wealth and power not only with the tacit but often active support of public institutions. The resources of the state are being plundered through widespread contract fraud and several forms of trafficking, including large-scale abuse of fuel subsidies for smuggling purposes.
This ubiquitous barrage of corruption is hurting the population. Prices continue to rise, leaving ordinary Libyans in a position where they need to spend more for less. Tragedies such as the September 2023 floods in Derna and surrounding areas, where over four thousand five hundred deaths have been recorded and thousands more are missing and presumed dead, show the extent to which the state has become hollowed out, as vested rather than public interests prevail.
International complicity and partnership with the kleptocrats
While Bathily’s criticisms in his recorded remarks to the UN Security Council focused on Libyan leaders, much of his comments to the press afterward also took aim at the regional and wider international picture. “Libya today is a battleground,” Bathily noted. “We needed all of the support of all the international and regional players to achieve meaningful results. Unfortunately, we have seen… parallel tracks taken by different foreign actors which undermine efforts of the UN. As long as this exists, there is no room for a solution in the future,” he bleakly concluded before later stating that “Libya is the prey to foreign economic interferences.”
This conclusion is accurate. Of course, there will continue to be a focus on security dynamics, particularly as a result of Russia’s growing presence in Libya and international concerns over the Sahel’s “arc of instability.” However, the economic plunder of the state continues at pace. In the oil sector, the 2022 deal to appoint a new chairman of the National Oil Corporation was brokered by the United Arab Emirates, while a Turkish-led and UAE-based energy merchant has grown increasingly involved in Libya’s fuel imports and crude exports. At the time of writing, recriminations over the contracting of oil concessions in Libya to international companies are rising, with widespread allegations that some newly formed companies are in fact fronts for Libyan kleptocrats and their international partners. These dynamics raise serious concerns over who is profiting from Libya’s oil sector and highlight a significant reduction in transparency at a time when expenditures on fuel subsidies have reached unprecedented levels. Meanwhile, the Belqacem Haftar-led reconstruction fund is busy signing contracts, primarily with companies from Egypt, which openly eschew any form of oversight.
These dynamics illustrate that the accumulation of wealth by Libyan kleptocrats comes with the full knowledge and, indeed, support of regional interests, making it harder for the United Nations to adopt firm positions or marginalize Libyan leaders who enjoy continuing support from regional actors.
How to tackle these dynamics
Successive UN special representatives have found this fusion of Libyan and regional interests impossible to untangle. Ghassan Salamé sought to bring the international players with interests in Libya together through the Berlin process—which held one meeting in 2020 and another in 2021—with the support of the German government, but any consensus built remained short-lived. Today, it appears that the UAE and Turkey have found accommodation with one another through the alignment of economic interests. And, while Egypt has continued to interfere in the political process to achieve its goal of displacing the GNU, it has also pursued its economic interests through its partnership with Haftar’s dominant alliance in Libya’s east.
While the status quo, which keeps deteriorating and might collapse any day, seems comfortable for Libyan kleptocrats and their international partners, the Libyan population increasingly suffers the consequences, runaway inflation by way of a depressed dinar being only one of them. The situation is also harmful to the interests of the United States and like-minded states. Mounting corruption in the oil sector imperils the status of Libya as a key oil producer, and Haftar’s engagement with Russia has led to a growing influx of weaponry and men through eastern Libya in recent weeks.
The question then becomes how this kleptocratic boom can be addressed. In reality, it will fall to the United States and like-minded governments such as in the United Kingdom and Germany to impose greater pressure in a concerted and targeted way on the kleptocracy to address the cause of Libya’s governance crisis rather than its symptoms. This will require support for Libyan institutions that are trying to push back against these dynamics in highly challenging and dangerous circumstances. It will also require the use of targeted network sanctions on the kleptocratic elite and calling out their enablers in external states through clear diplomatic messaging. The UAE, recently removed from the Financial Action Task Force’s “gray list” for anti-money laundering and countering the financing of terrorism, should be a particular point of emphasis. An ongoing Organized Crime and Corruption Reporting Project-led investigation has identified that the Gulf state remains a prime location for those seeking to invest despite being subject to allegations of criminality and corruption. The United States and its like-minded allies should seek enhanced engagement between the private and public sectors through the use of business advisories and intelligence-sharing mechanisms to ensure Libyan kleptocrats can no longer launder and then stash their ill-gotten gains in financial centers and wealthy states across the globe.
A forceful focus on the kleptocracy is not a silver bullet by any means, but it is an attempt to attack the underlying cause behind most of the country’s problems in a way that has, to date, been lacking. The challenge of delivering on promises of democratic change for the Libyan people seems as far away now as ever. However, with a change of focus, international stakeholders can start to help Libyans begin to right the wrong of decades of kleptocracy and start to exact some accountability for the ongoing plunder of the country’s public resources. Only in such an environment will the next special representative have a more meaningful chance of success.
Oliver Windridge is the Director of Illicit Finance Policy at The Sentry.
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