The dominant role of the Libyan National Army
By Noria Research
This report is based on interviews conducted with a range of actors in Libya, Tunis, Cairo and Istanbul, including businessmen, administrators, victims of armed groups, LNA dissidents, local notables and others.
Some interviews were conducted remotely. The report also draws from information contained in official documents, some of which are confidential and are not sourced in this paper.
On 4 April 2019, the Libyan National Army (LNA) launched a surprise attack on Tripoli, as the UN-sponsored dialogue process was reaching a critical stage.
The leader of the LNA, Khalifa Haftar, was betting on a quick victory but was confronted with fierce resistance. The LNA has become embroiled in a destructive stalemate south of the capital.
The war has destroyed the little trust that existed in Libya, and both sides appear committed to continue fighting.
In light of this, there is an urgent need to understand how the LNA funds itself and its involvement in the black economy, as well as its ability to carry on a war far from its eastern heartlands.
One aspect of LNA financing that is relatively well understood is its use of a parallel Central Bank and Russian-printed dinars to pay its wage bill.
This controversial programme has led to a dangerous build-up of debt and there are limits to how much further it can be stretched. The financial pressures arising from this situation are very likely to be a major part of Haftar’s urgency in the current conflict – he is running out of time to see through his plans.
On top of this, there are fears that Tripoli may wage economic war on the east’s banking system, further undermining its already shaky finances and posing an even greater threat to Libya’s unity.
But the LNA has not only relied solely on the parallel banking sector to fund itself. In fact, it has been directly taking control of both licit and illicit economies in eastern Libya, mirroring the development of a predation economy led by dominant armed groups in western Libya.
Tripoli, the capital and seat of the country’s political and financial institutions, has been the playground of armed groups competing to capture state resources. These groups have exerted influence over these state institutions to serve their private interests, and their candidates have been appointed to senior positions.
At the same time, international governments have been particularly sensitive to the involvement of armed groups in criminal activities in western Libya, notably human smuggling.
This is explained by the fact that the vast majority of migrants attempting to reach Europe make the sea crossing from the Libyan west coast, posing what was perceived as a political and security threat by a number of European countries.
International observers have been trying to identify and measure the sources of financing available to Libyan warring parties, in a country with the largest oil reserves on the African continent.
Armed groups’ access to state funds and their involvement in smuggling activities have enabled them to sustain long-term military efforts, thereby fuelling the Libyan conflict.
At the international level, this situation brought about the appointment of Ghassan Salamé (a French-Lebanese academic) as the new Special Representative of the UN Secretary-General (SRSG) to Libya in June 2017.
In his first briefing to the UN Security Council, given in August 2017, Salamé unequivocally expressed his concerns over the economic situation in the country:
‘The impression now of a well rooted political economy of predation is palpable, as if the country is fuelling its own crisis with its own resources to the benefit of the few and the frustration of the many.’
In an attempt to deter the development of illicit economic activities, the UN Security Council sanctioned five Libyans in 2018 who have been involved in human smuggling and racketeering.
Since 2014, western Libya has been at the heart of the international community’s concerns over the development of an economy of predation led by armed groups.
But, in contrast to the attention paid to the development of a predation economy by armed groups in western Libya, a comparable process led by the LNA in eastern Libya has elicited less interest from international observers.
With its base far from the capital, the LNA has been wrongly seen as an outsider to the ongoing competition to capture state resources.
Nonetheless, the LNA has developed over recent years a strategy of predation in a bid to access new revenue streams.
This report sheds light on the predatory behaviour of the LNA in territories that have been under its control since the so-called ‘liberation’ of Benghazi in July 2017.
The report analyzes the three-pronged strategy used by the LNA to gain control of the major streams of revenue in the territory under its control.
First, the LNA has used force to take control of public infrastructure and private property, and to extort and bring under its control local lucrative economies. The LNA has also threatened government officials and blackmailed bank employees for cash.
Secondly, the LNA imposed a monopoly over a number of export businesses, notably of scrap metal and refined petroleum products. These export activities are either banned or highly regulated.
Since mid-2017, Libya’s Interim Government and the Libyan House of Representatives (HoR) have granted the LNA unregulated ‘legal’ monopolies over a number of illegal export activities.
This has led to a rapprochement between LNA-affiliated institutions and officers on one side, and smuggling networks specializing in illicit exports on the other.
Thirdly, the LNA deployed a strategy to sponsor armed groups in spite of their known involvement in the human-smuggling business, providing them with political and military support and, by doing so, allowing them to take control of smuggling routes and eliminate competition.
This sponsorship strategy allows groups to develop and increase their financial capacity, while remaining under the patronage of the LNA. However, there is no indication that the LNA’s leaders have access to revenue generated by human smuggling.
More recently, the (in some cases public) presence of human smugglers among the LNA’s forces attacking Tripoli raises questions concerning the LNA leadership’s attitude towards human-smuggling activities in Libya.
Recent official reports have indicated that efforts to contain illegal migration in Libya have been undermined, owing to the return of violence in western Libya.
The military’s strategy of predation is blurring lines between licit and illicit economic activities, both falling under the control of a military actor. This overlapping of the economic interests of military actors and smugglers reinforces the merging of illicit and legal interests.
Moreover, the use of force and unlawful practices – such as extortion – LNA commanders to obtain economic advantages, such as tax exemptions and monopolies over a number of export businesses, threaten the private sector in eastern Libya.
A brief introduction to the LNA
The creation of the LNA was announced by Haftar in February 2014 in a televised broadcast.
In his declaration, made on the Saudi-owned pan-Arab channel al-Arabiya, the former army general announced a coup d’état, which, however, was not followed by any military action.
The LNA effectively came into existence in May 2014 in Benghazi with the launch of Operation Karama, which targeted extremist organizations present in Benghazi.
The LNA, perceived as the last bulwark against these groups, which had flourished in Libya between 2011 and 2014, immediately gained strong support among the military and the Libyan people.
On 2 March 2015, the LNA, led by Haftar, was granted legitimacy by the HoR, nominating him as the General Commander of the Armed Forces.
However, the LNA failed to be endorsed by the internationally recognized government based in Tripoli, the Government of National Accord (GNA), and as a consequence, failed to secure sustainable access to state funds to finance its expenditures and pay the salaries of its troops.
Only members of the LNA with military numbers granted before May 2014 continued to be paid by the central government.
Since May 2014 and the start of Operation Karama, securing revenue for the LNA has been a matter of concern for its leaders.
LNA commanders of armed groups in Benghazi lamented a shortage of ammunition and weapons, accusing the leadership of nepotism and extending support to groups led by Haftar’s tribesmen and sons.
In 2014, the LNA relied on direct military support and assistance from countries in the region and further afield, and on supplies of military equipment owned by Libyan army troops who joined Operation Karama.
From March 2015, when Haftar was sworn in as the General Commander of the LNA, the army had access to funds provided by the Interim Government.
In February 2019, Ali al-Hebri, the Governor of the Eastern Central Bank of Libya (Eastern CBL), said in a TV interview that one-third of the Interim Government’s budget over the last three years (or LYD9 billion, equivalent to US$6.47 billion) was allocated to financing the LNA.
The Interim Government’s own access to state funds was discontinued and dependent to a large extent on the Central Bank of Libya’s (CBL) goodwill to pay the salaries of public functionaries in eastern Libya.
Access to state funds became even more constrained following the establishment of the internationally recognized GNA. The Interim Government relied on unregulated loans provided by Libyan commercial banks and the Eastern CBL.
The Audit Bureau put the total of the Interim Government’s expenses between 2015 and 2017 at LYD21 billion (US$15 billion), of which a significant portion was transferred to the LNA, according to several sources.
The Audit Bureau also indicated that LYD15 billion (US$10.79 billion) of the total budget came from loans.
In 2018, a confidential report indicated that the Eastern CBL agreed to extend a credit of LYD10 billion (US$7.9 billion) to the
Interim Government, even though the Interim Government did not generate any income and was unable to service its financial obligations.
The CBL, based in Tripoli, warned against the increase of public debt due to unregulated loans granted to the Interim Government by the Eastern CBL and commercial banks based in the east.
More recently, under mounting international pressure, the CBL and its eastern counterpart in al-Bayda agreed to an international audit of their accounts.
In parallel, the LNA is today challenged by increasing expenditure incurred by its continued military (and political) expansion, and has been trying to find autonomous and more sustainable revenue streams.
The LNA had imposed undisputed control over Cyrenaica by mid-2017 and expanded its presence to al-Jufra.
Composed of around 70 000 men, the LNA is today in control of a territory larger than France and engaged in an effort to modernize and equip its troops – initiatives that necessitate financing.
In the absence of a sustainable state budget and difficulties encountered by the Interim Government to access funds, the LNA has had to develop independent and more accessible revenue streams, notably since the liberation of Benghazi on 5 July 2017.
To this end, the LNA has used its political and military leverage over legislative and executive bodies in Cyrenaica to expand its control over licit and illicit economies in eastern Libya, and to cover with a veil of legality a strategy of predation.
to be continued
Noria (Network of Researchers in International Affairs) is an independent network of political analysts and researchers. It brings together specialists around shared methods and objectives, producing and disseminating fieldwork-based research and political analysis. Noria also provides political analysis for decision-makers, and fosters public dialogue and reflection on key international issues.