Libya Tribune

Community Dynamics and Economic Interests

By Tim Eaton, Abdul Rahman Alageli, Emadeddin Badi, Mohamed Eljarh, and Valerie Stocker

This paper is based on approximately 200 interviews carried out by the authors – in person and remotely – with a wide range of Libyan actors between November 2018 and September 2019. This the paper does not claim to cover all armed groups in the country.

PART THREE

Armed group revenue generation in Libya since 2014

Armed groups must mobilize resources to operate effectively and build and expand their power bases. To varying extents since 2014, armed groups have developed networks that enmesh political and business stakeholders in order to cultivate sources of revenue.

Although ideology and personal connections can play a role in cross-network alliance-building, the need to obtain resources to achieve military objectives (and sometimes vice versa) tends to supersede ideological considerations.

The revenue-generating mechanisms utilized by Libyan armed groups vary according to four factors.

The first is the structure of the economic opportunity that exists in a particular territory. Access to state resources and assets is a key determinant of revenue opportunities in Libya’s conflict economy.

Leverage generated from the control of state institutions has been monetized by armed groups through the development of protection markets and extortion schemes, and through the enactment of legislation to open further avenues of revenue generation.

Groups able to extract wealth from the state in this way are largely able to eschew other forms of financing. In areas where access to state revenues and assets is limited, armed groups typically seek to profit from economic activity via protection markets and taxes on movement.

The second factor determining armed groups’ revenue-generating activities is the nature of each

group and its goals. Groups with ‘official’ recognition – whether from authorities in the west or east – can usually access direct state payments. The LAAF also receives some funds from Tripoli for fighters registered before 2014.

At the same time, it operates more intricate and systematic financing and transfer mechanisms through its deeper and more formalized role with relation to eastern authorities in the public and private sectors.

The ideological stance of a given group and its leadership also plays an important role. For example, ideologically motivated groups such as the Nawasi Brigade have selectively focused on infiltrating state institutions, based on each institution’s strategic value rather than revenue-generating potential alone.

Third, the relationship to the community is key in determining what is viewed as a legitimate source of revenue. For example, armed groups in southern Libya vary the tolls they levy at road checkpoints according to the type of merchandise and tribal affiliation of the transporter.

Groups that perform security functions and have public support in a particular area can obtain recognition and funds through or from local authorities (although some groups exploit their connections without providing services to the community).

Even groups criticized for being unaccountable to local populations must take public opinion into account. Attempts by Tripoli’s so-called ‘quartet’ of dominant armed groups to manage public relations following clashes in the capital in 2018 involved actions such as clamping down on the black market and supporting hospitals.

Tax-raising initiatives, in contrast, typically encounter resistance from local communities; this makes it more likely that armed groups will seek to tax illicit activity only, or at least do so at a higher rate than for licit economic activity.

Finally, external pressure and the extent to which armed groups have access to external funding have a significant impact upon local activity, particularly in the current phase of the war.

External pressure has visibly shaped some armed groups’ approaches to revenue generation. An example of this is the emergence of an ‘anti-human smuggling market’ in western Libya, where armed groups have switched from taxing human smuggling to preventing it in return for financial support.

Attempts to extend this model to southern Libya have not succeeded, although some armed groups have tried to position themselves as potential partners both for the GNA and for EU countries seeking to reduce migrant flows.

In other areas of the country, such as in the east, external support through the provision of both non-military and military aid has reduced the need for local revenue generation:

Non-military aid has included the supply of Russian-printed banknotes and -minted coins through the eastern Central Bank of Libya (CBL) – the unrecognized central bank affiliated with the eastern authorities – while military aid has included assistance from the United Arab Emirates (UAE) for the LAAF’s air force.

In the context of the ongoing war, this external support has become crucial.

Access to state salaries

The revenue-generating models of armed groups in specific regions are explored in subsequent chapters of this paper. First, however, it is important to understand how affiliation to the state (and, consequently, access to state salaries) has become a key income source for armed groups across the country.

Access to state salaries varies by region and type of actor. One set of people have salaries paid directly into their personal bank accounts. These include members of the regular army and police, as well as civilian employees of the Ministry of Defence and Ministry of Interior.

By contrast, members of armed groups paid by the government usually receive salaries indirectly, via their group’s leadership.

Irregular fighters who are not on (direct or indirect) state payroll may be compensated from additional revenue collected by their armed group.

Some people registered with the authorities do not receive salaries, either because of administrative problems or because they are from segments of the population that have not been allocated national ID numbers (and are thus, in principle, barred from the public payroll).

The expansion of the security sector after the 2011 revolution opened up multiple avenues for accessing state salaries. While the Gaddafi regime’s army disintegrated, and military salaries were partially suspended or remained low, the revolution was followed by a massive inflow of civilians into the security sector.

Transitional authorities in early 2012 opened up registration with the state sector to thuwwar (‘revolutionaries’), both to reward these personnel for their role in overthrowing Gaddafi and with the ultimate aim of integrating former rebels into the armed forces and police.

But salaries were not paid directly to individuals. Rather, payments were distributed via local military councils, and later via armed group leaders who submitted membership lists to the Ministry of Interior’s payment committees and military accounts offices.

This system was widely abused. Commanders enlisted non-combatants, some individuals claimed multiple salaries, funds were often misappropriated, and the number of people on the state payroll

exploded. By the end of 2012, the number enrolled through these mechanisms had exceeded 200,000.

Overall, the post-revolution transformations and the first attempts to place thuwwar under state control led to the emergence of a complex web of semi-autonomous armed groups, supported by diverse financial streams both to individual recruits and to armed group leaders.

State spending on salaries post-2014 was drastically reduced as a result of SSR initiatives and through austerity measures introduced by the CBL.

The introduction of the national ID number system enabled the General National Congress (GNC) – Libya’s parliament between 2012 and 2014 9 – and its Interim Government to cut down on salary fraud. These measures are clearly reflected in changes to state expenditure between 2013 and 2016, as shown in reports by the Libyan Audit Bureau.

In 2013, the Ministry of Defence allocated LYD3.5 billion (approximately $2.5 billion at the official exchange rate) to salaries, and the Ministry of Interior LYD2.1 billion.

By 2016, these figures had fallen to LYD1.6 billion and LYD870 million respectively, suggesting that armed groups would need to find alternative sources of financing to offset the reduction.

The freezing of military salaries has exacerbated national divisions and spurred recruitment among irregular armed groups, though steps have been taken to address this.

The Ministry of Defence’s disbursement of salaries to regular army members is centralized through the General Administration for Military Accounts (GAMA) in Tripoli.

Salaries are based on military rank and years of service, as stipulated in relevant laws and regulations. The salary grid was amended by Cabinet Decree 441 of 2013, setting salary levels for different ranks as well as annual raises, allowances and benefits.

However, the decree was not implemented consistently throughout the country, meaning that for many soldiers rank progression and salary raises were frozen at the pre-2013 levels.

This created frustrations, leading many military personnel to neglect their service duties or even join armed groups. Starting from late 2016, the LAAF raised its military salaries to an average of LYD2,000–3,000 per month; this compared with an average of only LYD1,000–1,500 per month for personnel registered with the GAMA in Tripoli.

The move has made a significant difference in eastern Libya, where higher salaries have boosted military recruitment. The GNA reconfirmed Decree 441 only in September 2018, when it announced a pay rise of 15–20 per cent for army personnel registered with the Ministry of Defence in Tripoli.

The updated salaries started to be paid in late 2018 and early 2019, alongside a new allowance for outstanding service allocated to individuals of lower ranks.

This means that today there is no longer a significant gap between regular military salaries paid through the GNA and those paid by the LAAF.

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About the Authors:

Tim Eaton is a senior research fellow with the MENA Programme at Chatham House, where he focuses on the political economy of the Libyan conflict. Tim previously worked for BBC Media Action, the BBC’s international development charity, on projects in Iraq, Egypt, Tunisia and Libya, and helped to set up and manage its Libya bureau from 2013 to 2014.

Abdul Rahman Alageli is an associate fellow with the Middle East and North Africa Programme, based in Tripoli, Libya. He is currently an adviser to the GNA Chief-of-General Staff of the Libyan Army. Abdul Rahman previously worked with the stabilization team of the Libyan Prime Minister’s Office in 2011 before becoming the national security file coordinator in the Office of the Libyan Prime Minister and a member of the Libyan government’s National Security Coordination Team until 2015.

Emadeddin Badi is a researcher and political analyst who focuses on governance, conflict and the political economy of Libya. He has worked with multiple international development organizations and business risk firms as a consultant, and his analysis has been published widely.

Mohamed Eljarh is a Libyan affairs specialist who has covered Libya’s developments since 2011. He is the co-founder and CEO of Libya Outlook, and he acts as the regional manager for CRCM North Africa in Libya. Previously, Eljarh worked with the Atlantic Council and Foreign Policy magazine.

Valerie Stocker is a researcher who has studied Libyan politics and society extensively, mostly focusing on the southern region. She has worked with various development organizations since 2013, conducting fieldwork and analysis on conflict dynamics, peace processes, migration and other subjects. Valerie was based in Tripoli for several years starting in 2008, and has previously worked as a freelance journalist and business risk consultant.

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