Gaddafi’s Looted Wealth and Libya’s Financial Future

By Ferhat Polat

Libya has been an important producer of crude oil since the 1960s. With a population of only six million and substantial annual oil revenues, amounting to $32 billion in 2010, Libya’s potential is tremendous.

However, during Gaddafi’s 42 years in power, Gaddafi and his cronies reportedly plundered as much as $200 billion from the country that was deposited in bank accounts around the world.


Since the fall of the Gaddafi regime in 2011, authorities have been trying to track and get access to these hidden funds. Libya’s future depends on the capacity of the UN- backed government to ensure political stability and rebuild the economy.

Libya’s hidden wealth could provide an essential source of finance to support post-conflict reconstruction.


In 1969, following the overthrow of the Libyan monarchy, Gaddafi came to power and ruled the country for 42 years until 2011. During this period, the Libyan leader amassed a great fortune.

Reportedly, the Gaddafi family had significant control over state funds via Libya’s sovereign wealth fund, also known as the Libyan Investment Authority (LIA).

Analysts estimate that the Gaddafi regime had as much as $200 billion in bank accounts around the world.

Since Gaddafi’s death in October 2011, authorities have been searching for the money he moved out of the country.

Thus, authorities have launched a massive mission to assess the value of all the various assets throughout the world and seek to protect and further enhances those Libyan assets in order to achieve the best financial returns to support the Libyan economy.

Since 2011, the United Nations (UN), the US, and the European Union (EU) have imposed sanctions on Libyan authorities and have frozen some of Gaddafi’s fortune, including about $67 billion in LIA assets, mainly invested with banks and fund managers in Europe, the US, the United Arab Emirates (UAE) and throughout Africa.

While allegedly Gaddafi secretly hid away more than $200 billion in bank accounts, real estate, and corporate investments around the world before he was toppled.

Libya’s future depends on the capacity of the internationally-ecognised Government of National Accord (GNA) to ensure political stability and the rebuilding of the economy.

As a result, the wealth fund could prove to be an essential source of finance for the war-torn country. However, instead of using these resources to rebuild the country, reportedly, the huge amounts of money had been used to fuel Libya’s civil war for the past nine years.

According to a UN report, Gaddafi’s hidden money was sent to armed groups in Libya, which could have led to destabilising the country even further.

Libya’s economy under the Gaddafi regime

Libya has been a significant producer of crude oil since the 1960s. With a population of only six million and significant annual oil revenues, amounting to $32 billion in 2010, Libya’s potential is enormous.

However, during Gaddafi’s 42 years in power, he reportedly controlled money to benefit his own family and tribe rather than developing the country.

As a result, Libya has experienced a lack of transparency, ineffective state institutions, widespread corruption and misuse of its oil wealth, leading to the underperformance of its economic potential.

This was severely exacerbated following the revolution that brought to end his brutal rule in October 2011.

Alison Pargeter, the author of “The Rise and Fall of Qaddafi,” wrote that “Libya has a vast territory covering 1.7 million square kilometres, most of which is desert.

There are no rivers, and it rains rarely and occasionally, making much of the land unsuitable for cultivation.

Before the discovery of oil in the 1950s, pastoralists and nomads lived on as best they could from the unyielding dry land. Before the country struck oil and gas, it was one of the poorest countries in the world.”

Libya’s large population centres are based on the coast in two major clusters in the west and the east of the country. However, these centres are divided by enormous expanses of empty desert.

There is no railway connecting the cities of the west and the east. The only way to travel between the two either by the Libyan Coastal Highway which is the only major road that runs along the entire east-west length of the Libyan Mediterranean coastline or by air.

This relative lack of connectivity between the two centres exemplifies one of the distinguishing features that have shaped the country. Libya has always been a country of three separate parts, each with its own specific identity.

There is Tripolitania in the west, which covers Tripoli and other cities like Misrata and Tajoura. There is Cyrenaica in the east, which includes the regional capital of Benghazi and smaller towns, such as Derna and Tobruk.

Finally, there is the mostly desert area of the Fezzan in the south, which has Sebha as its main city.

Libya’s oil and gas

The Libyan economy depends heavily on hydrocarbon exports. According to the International Monetary Fund (IMF), oil accounts for over 90% of fiscal revenue. Non-oil exports of goods and services represent less than 3% of overall GDP.

When Libya’s oil was first discovered in 1959, and first exported in 1961, Libya was a young monarchy under Idris al-Sennusi. He was a Libyan political and religious leader who served as the Emir of Cyrenaica and then as the King of the United Kingdom of Libya from 1951 to 1969.

Over the first decade of his rule, the country’s oil industry and infrastructure developed rapidly, with key oilfields lying in the sparsely populated interior, and pipelines running north to export terminals and refineries on the coast of the Gulf of Sirte, and later to al-Zawiyah (in the west) and Tobruk (in the east).

Dirk Vandewalle, the author of “A History of Modern Libya,” wrote that “the economic riches that accrued to the country were astonishing. Per capita annual income, estimated at $25–35 at independence, mushroomed to $2,000 by 1969.”

Libya has unique advantages as an oil producer, and its reserves remain significant: with over 48 billion barrels, or just under 3% of the world’s total, the deposit is Africa’s largest. The National Oil Corporation (NOC), the state oil company, believes further exploration will undoubtedly increase the recoverable reserves base.

The country’s location is likewise a significant asset. Proximity to the European market, notably to the southern European ports, has been a big advantage for Libyan oil vis-à-vis other Middle Eastern oil.

This position has meant cheaper shipment costs. Furthermore, there were few geopolitical concerns to improving the Libyan oil industry; the state’s oil transport pipelines, unlike those of some Arab Gulf states, run completely across the country’s territory, making them unlikely to be hit by sabotage or closed down.

Libyan oil is also easy to extract, and the installation of production and transport infrastructure has historically been straightforward, providing the oil-rich hinterland with links to several specific export terminals on the more inhabited coast.

This pipeline structure is vast, meaning the capacity exists for a considerable extension of production when it becomes available.

During Gaddafi’s rule, Libya produced some 1.6 million barrels per day. However, the Libyan economy has since experienced a significant decline because of political unrest and fighting over the control of oil fields, resulting in a concomitant decline in production.

Libyan Investment Authority (LIA)

In 2011, after 42 years in power, Gaddafi was ousted. It has been widely reported that, during this time, the Libyan ruler collected an enormous fortune.

Much of this wealth is managed by the Libyan Investment Authority (LIA), the sovereign wealth fund (SWF) of Libya. It was established in 2006 to manage the surplus of the Libyan oil revenues, managing assets worth more than US$64 billion and investing extensively across the world.

According to a Wall Street Journal report, in 2007, flush with cash from oil, Libya decided to follow other oil-producing nations and create a sovereign-wealth fund to invest its riches.

The creation of the LIA was also part of Gaddafi’s efforts to demonstrate that Libya was open to the West. The purpose of the LIA was to invest Libyan wealth overseas and in distinct fields in order to establish and expand the national economy’s resources and to achieve the best returns to support the economy.

Reportedly, 80% of these investments were in the sectors of real estate, services, telecommunications, energy, and mining.

Sabrine Hassen, Associate Managing Director at K2 Intelligence, commented that “What was unclear was the specifics of these assets. Gaddafi had bought them not for business purposes but mainly to garner political loyalties amongst his government and indeed other political leaders in Africa and further afield; as such they have remained elusive, even to this day”.

Under Gaddafi’s rule, corruption became engrained in Libya’s political and economic structures. This was mostly as a consequence of the vast centralisation of power in the hands of Gaddafi and a small elite of family members and close friends which dominated and controlled oil resources.

Gaddafi’s regime had failed to attract foreign investment, which led to the flight of domestic capital. This was due to economic and bureaucratic corruption that was irreconcilable with the presence of an independent competitive environment that was essential to developing domestic investment and to appeal to foreign investment alike.

It also led to an increasing gap between wealthy elites and ordinary people, with poverty increasing drastically. The Gaddafi regime was aware that more than one million Libyan people lived in poverty – more than 16% of the Libyan population.

Thus, Libya was fit for the categorisation as “a rich country with poor people.” The situation aggravated many Libyans, who ultimately started to emigrate.

Gaddafi’s opponents expressed concerns that the leader was hoarding Libya’s enormous oil revenue. He was also accused of having spent substantial funds to pay mercenaries from Africa to suppress any uprisings in his own country.

According to a Washington Post report, Gaddafi secretly hid away more than $200 billion in bank accounts, real estate, and corporate investments around the world before he was killed.

The money represents about $30,000 for every Libyan citizen. According to senior Libyan officials, the worth of the alleged embezzlement is double the amoun that Western governments had previously suspected.

Paul Richter, a veteran diplomatic correspondent based in Washington, wrote that “The estimates of the deposed dictator’s hidden cash, gold reserves and investments are staggering, one person who has studied detailed records of the asset search said no one truly appreciated the scope of it.

If the values prove accurate, Gaddafi will go down in history as one of the most rapacious as well as one of the most bizarre world leaders”.

Since the Libyan civil war broke out in 2011, the United Nations, the US, and the European Union imposed sanctions on Libyan authorities and froze the assets of Gaddafi.

The UN started searching for his assets, and more than $60 billion has already been found and seized by banks in the United States, Germany, Belgium, and the United Kingdom.

The GNA has sought for years to repatriate assets Gaddafi either collected or laundered outside the country. Countries where Libyan sovereign assets are believed to have been under the control of Gaddafi or his family allegedly include the UAE, the United States, Britain, Italy, Switzerland, Germany, France, Malta, and several African nations.


Ferhat Polat is a Deputy Researcher at the TRT World Research Centre. He is a PhD researcher in North African Studies at the Institute of Arab and Islamic Studies in Exeter with a particular focus on Turkish Foreign Policy.





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