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.
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International enforcement
The international community has a mixed record on addressing Libya’s conflict economy. On the one hand, international actors continue to support the activities of armed groups, both directly in the form of military aid and support, and indirectly through the provision of diplomatic cover.
These fault lines are of course well known in Libya, which makes it more difficult for international actors to appear as neutral arbiters in any criminal justice-led initiative.
On the other hand, there have been some notable successes: in 2014, US marines were deployed to prevent exports of crude oil from the east; the policy has had a lasting effect despite continuing efforts by armed groups in that region to access the international oil market directly.
In addition, joint Italian–Libyan efforts to apprehend the fuel-smuggling ‘kingpin’ Fahmi Salim Ben Khalifa proved successful in 2017. Here, the collaboration between Italian and Libyan authorities must be seen as a positive means of supporting the Libyan state’s capacity to apprehend conflict economy profiteers.
International actors should commission experts to analyse the supply chains for illicit activities. This could perhaps be done through providing additional resources to the UN Panel of Experts on Libya, or through commissioning sectoral expertise and attaching the experts to UNSMIL.
The advantage of expanding the capacity of the UN Panel of Experts is that the panel’s mandate from the UN Security Council places it in a stronger position to compel Libyan actors to cooperate.
The focus of the analysis should be to identify chokepoints along illicit supply chains that could be targeted to undermine specific activities.
International enforcement mechanisms have focused on the imposition of sanctions on individuals.
These have served multiple functions to date: to increase pressure on certain Libyan players (e.g. the speaker of the House of Representatives, Agila Saleh) who were threatening to undermine negotiations ahead of the signature of the Libyan Political Agreement in 2015;
(a) to target individuals accused of involvement in human trafficking (e.g. Ahmed al-Dabbashi, Mohamed Kushlaf);
(b) to target individuals who have endangered civilians (Salah Badi); and
(c) to target those who have wrought economic damage upon the state (Ibrahim Jadhran).
To date, two principal problems have characterized the use of international sanctions: first, they are perceived locally as arbitrary and politically motivated; and second, their implementation and enforcement have been ineffective.
Consequently, there is little evidence that the use of sanctions against individuals in Libya since 2011 has had any real impact.
There is no evidence to suggest that the ability of Saleh, Jadhran and Badi to travel or manage their finances has been impaired by UN Security Council sanctions – which included a travel ban and the freezing of their assets abroad.
Nonetheless, if properly used and enforced, sanctions can be an effective means of restraining Libya’s conflict economy.
The international community should adopt criteria that can be consistently applied, and which place the interests of the Libyan state at the heart of its approach.
While international actors may consider sanctions on individuals who block political progress or who have committed violations of human rights, such measures will undermine efforts to tackle the conflict economy if they continue to be applied inconsistently.
For example, the sanctioning of Badi for impeding a political resolution to the conflict (and, to a lesser extent, for his role in the fighting in Tripoli in 2018) is inconsistent with the failure to sanction Field Marshal Haftar for derailing the proposed national conference with the launch of his offensive on Tripoli in April 2019.
An approach that places the emphasis on targeting individuals who are plundering Libyan state resources and assets would be more likely to win support from the general population. Increased international pressure and oversight alone would likely reduce some of the excesses of Libya’s conflict economy.
Indeed, the threat of sanctions should always be made clear before their actual application, in order to induce behavioural change (where possible) across networks of revenue-generation mechanisms.
This could contribute significantly to tackling the conflict economy in cases where economic incentives outweigh other considerations.
Sanctions should target ‘rent maximizers’ (actors who have amassed significant resources from illicit practices) in particular. Such figures are better targets for sanctions than those engaged in activities where the profits are more widely distributed.
Placing sanctions on rent maximizers is likely to be more effective at undermining illicit activity, and should not be limited only to those who bear arms.
For example, applying sanctions to networks of profiteers engaged in financial crime is likely to be more effective than targeting fuel smugglers, because financial crime supply chains are shorter and resources are concentrated in fewer hands.
Such actors are also likely to have more limited social legitimacy.
Increasing transparency in the fuel sector is also a necessary first step before more effective criminal justice measures can be adopted.
Efforts to target commanders in groups with vertical command structures are likely to be more successful.
The activities of the MAIPW, along with joint ventures and holding companies created as subsidiaries of it, should be subject to extensive investigation.
Sanctions should also target actors with significant assets overseas. The most underutilized – but most powerful – point of leverage for international players is the ability to target assets held overseas by Libyan individuals.
A wide range of actors have accumulated significant funds and assets overseas, particularly in the UAE, Morocco, Turkey and Europe. For many of the principal types of activity in the conflict economy, a foreign company is necessary to operationalize revenue-generation schemes.
This also implies the existence of a paper trail that includes a record of transactions.
The ability to monitor such activities is hindered by the complexity of asset-tracing, a lack of transparency in Libya and the limited appetite of the international community to investigate.
Yet if international players are serious about clamping down on the worst excesses of Libya’s conflict economy, they have the tools to do so.
In particular, the reliance of Libyan actors on US dollar transactions in international markets means that the US Department of the Treasury is privy to the details of the sender and recipient accounts (along with the value of each transfer) involved in the import of goods to Libya.
Nonetheless, there are clear limits to what sanctions against individuals can achieve: most revenue-generation mechanisms require a network of participants across multiple institutions.
Therefore, it would be very rare for one individual to be central enough to an entire revenue-generation scheme for the scheme to be significantly curtailed through the imposition of sanctions on that person alone.
In an environment highly conducive to illicit activities, sanctions may even be redundant, as one individual may simply be replaced by another or remain in charge regardless of the sanctions imposed (as has been seen with the sanctioning of Mohamed Kushlaf).
This underscores the need for sanctions to be used as part of a broader political, economic and social compact that would allow the overhaul of Libya’s official distributive system.
At best, the threat of sanctions or their use could disincentivize economically motivated actors from engaging in particular revenue-generation mechanisms.
There is also a risk that sanctions and international pressure could lead to second-order effects.
This was witnessed in Tripoli following cutbacks in spending by the Ministry of Interior and the Ministry of Defence in 2014, when armed groups appeared to partly offset reductions in official disbursements with revenues generated from illicit activities.
Armed factions are likely to seek alternative mechanisms rather than simply accepting reduced income. Attempts to disrupt illicit activities also threaten to destabilize situations where there is a fragile status quo.
For example, the control of trade and smuggling routes linking Libya to Egypt, Sudan and Chad has long been a source of contention between Zway and Tebu groups in Kufra.
Since around 2015, in the wake of communal kinsmen to assume exclusive control over smuggling operations south of Sarir – this development has been perceived by the Tebu involved as a humiliating defeat.
Yet pragmatism prevails: traders from both tribes still interact when necessary, even paying road tolls to opposing armed groups when crossing areas controlled by those groups.
Paradoxically, these developments have created a stability of sorts.
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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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