Wolfram Lacher
Collusion among former enemies in Tripoli has opened up unprecedented access to funds for the east-based Haftar family, threatening a fragile equilibrium
Tripoli feels like a backwater these days — rather unusually so for a city on which Libya’s struggles over power and wealth have focused for the past 14 years. Now, all the action is elsewhere. Libyan businesspeople and foreign diplomats come back stunned from eastern Libya, describing with wide eyes how brand new roads, bridges, public buildings and housing projects are rising out of the ground at dizzying speed.
Their amazement at this sudden turn of events is all the greater as it comes after more than a decade during which large-scale infrastructure projects had been mostly on hold. But the reconstruction now underway in areas controlled by Libyan strongman Khalifa Haftar’s family is “unprecedented” even when compared with the late Gadhafi era, a Benghazi resident told me over the phone. (When you have written about the repression and corruption of the Haftars’ family-based power structure, as I have, it’s inadvisable to go and see for yourself.)
In Tripoli, by comparison, lethargy prevails. The only construction activity of any note is a motorway being built by an Egyptian consortium that cuts through Tripoli’s southern districts — an attempt by the Tripoli-based prime minister, Abdelhamid Dabeiba, to curry favor with the Egyptian government. Contractors working on other projects in western Libya complain that they’re having trouble getting paid unless they have allies in Dabeiba’s inner circle. And even if they do, business is slow: The government now has little access to funds for development.
This is a paradoxical state of affairs. Libya’s oil money, after all, is channeled through the National Oil Corp. (NOC) and the central bank. Both are headquartered in Tripoli and formally cooperate with Dabeiba’s government, rather than the rival administration led by Usama Hammad, which is based in Benghazi and provides a civilian facade to the rule of the Haftar clan. Officially, the central bank in Tripoli had not disbursed any funds to the Hammad government as of the time of writing. Opacity surrounds the financing of the large-scale projects in areas under the Haftars’ control — projects managed by an entity headed by one of Haftar’s sons, Belgasem, and a body that effectively reports to another, Saddam.
At the heart of the puzzle is a power struggle in Tripoli that has reshaped Libya’s political alliances and helped the Haftar family to unparalleled funds to dispense patronage. The Haftars have proven adept at exploiting that rift, between the seemingly immovable central bank governor, Siddiq Kabir, and Dabeiba — or more precisely, Dabeiba’s nephew Ibrahim, who is widely seen as the real power broker behind the Tripoli government. As a result of that struggle, the hemorrhage of state funds is worsening, Haftar’s sons are consolidating their power — and ultimately, the shaky balance that has maintained the calm in Libya over the past decade might come undone.
If Libyan politics has rarely made international headlines in recent years, this isn’t necessarily a good sign. Whereas the first decade after Gadhafi’s demise in 2011 was marked by turbulence and repeated civil wars, the period since 2022 has been one of deadlock and backroom deals. Politics is no longer a public affair but now plays out in the hidden machinations of a select few.
The basic contours are deceptively simple: two competing governments and military blocs, backed by two foreign powers — Turkey and Russia. Those two states’ military presence has prevented a relapse into civil war since western Libyan forces, supported by Turkey, defeated Khalifa Haftar’s offensive on Tripoli in mid-2020. In the wake of that conflict, U.N. mediation led to the formation of a unity government under Dabeiba in early 2021. But the U.N.’s plan to hold elections later that year failed. Dabeiba’s western Libyan discontents allied with Haftar to form a new government, but Dabeiba prevailed in the bidding contest for the loyalties of armed groups in Tripoli, leaving the rival administration nominally in charge of the Haftar-controlled east and south of the country.
But the formal divides have concealed increasing collusion between Libya’s leading antagonists. In July 2022, Ibrahim Dabeiba and Saddam Haftar struck a deal to appoint Haftar’s candidate, Farhat Bengdara, as head of the NOC. In exchange, Haftar lifted a partial blockade on oil production with which he had sought to pressure Prime Minister Dabeiba to stand down. From then on, oil exports once again washed revenues into the central bank, and thence on to the Tripoli government, which paid salaries across the country. Dabeiba and Kabir cooperated closely, each relying on the other to ensure their political survival.
For a while, it appeared that the stalemate offered a comfortable setup to all key players. Both the Haftars and their nominal adversaries — the core group of militia leaders who had ensured Dabeiba’s survival — captured ever greater sums of money and influence over the distribution of posts. Ibrahim Dabeiba and the commanders allied with him now dealt routinely with Haftar’s sons. The Dabeibas’ western Libyan opponents were marginalized, and clashes in Tripoli — previously common — became extremely rare. The pillage of state funds, which had provoked so many confrontations and sudden reversals, now proceeded in silence. Meanwhile, the two ruling families and their allied militia leaders accumulated ever more wealth and power.
There are competing narratives about what prompted Kabir’s falling-out with the prime minister, which ended this tranquil state of affairs in the summer of 2023. Kabir and his advisers emphasize that the Dabeiba government’s expenditure proved unsustainably high, requiring the central bank to suspend payment authorizations for everything other than salaries in October 2023. A particular point of discord, an adviser to Kabir told me in late 2023, was implausibly high spending in public sector bodies headed by close allies of Ibrahim Dabeiba, such as the administration handling payments for hospital treatment abroad. In public, Kabir voiced particular alarm at a dramatic increase in the bill for fuel imports and the corresponding decline in the proportion of oil export revenues that the NOC transfers to the central bank.
With fuel imports, Kabir pointed the finger at a key source of the Haftar clan’s finances. Libya has limited refining capacity and imports most of its fuel. The NOC buys the fuel at world market prices, but its subsidiaries then sell it to Libyan consumers at some of the lowest prices worldwide: a liter of gasoline costs about three cents at the official exchange rate. The price differential offers huge opportunities for illicit profit. Fuel smuggling to neighboring countries was common even in the Gadhafi era, but since 2011 industrial-scale networks have replaced small-time smugglers.
Haftar’s forces have been leading players in the fuel-smuggling market since they extended their control over much of Libya’s land and sea borders. Leadership became domination after Haftar’s nominee Bengdara took over at the NOC in mid-2022 and subsequently appointed a Saddam loyalist as the head of its subsidiary Brega, which handles fuel sales. Since then, the quantities of imported fuel have continued to grow, as has the scale of smuggling operations in areas under the Haftars’ control. The opaque system under which the NOC barters the fuel it imports for crude oil exports has also attracted accusations of irregularities — “a black box,” one senior financial official called it.
In the months preceding Bengdara’s appointment, tankers had occasionally loaded fuel at Benghazi’s port to smuggle it abroad. But thereafter, such shipments became routine, according to an expert panel that monitors violations of U.N. sanctions on Libya. Trucks load fuel at depots controlled by Haftar’s forces and pass through checkpoints manned by these forces on their way to Sudan and Chad, reaching as far as the Central African Republic. Businesspeople I spoke to who are involved in these networks, and sources close to the operations at Benghazi port, all name Saddam Haftar as the actor ultimately overseeing fuel smuggling. The profits, they allege, are reinvested in military units reporting directly to Saddam, his brother Khaled and other close relatives.
Kabir understandably charged that the growing cost of fuel imports underpinning these activities was unsustainable. From 2021 to 2023, the annual fuel import bill more than doubled, to $8.5 billion — equivalent to a third of the oil revenue transferred to Libya’s central bank that year. But by singling out fuel imports, Kabir also denounced financial arrangements over which he, as central bank governor, had lost control. Since Libya’s government institutions split in two in 2014, Kabir had been the central arbiter of both monetary and fiscal policy in Libya. Now, bartering by Bengdara’s NOC prevented any central bank oversight over fuel imports. More importantly, the reckless expansion of fuel smuggling enabled by these imports had to be seen as part of the tacit arrangements linking Prime Minister Dabeiba and Haftar. Whether Dabeiba liked it or not, they were a part of the price he had to pay to keep the oil flowing. These arrangements were at the heart of Libya’s politics, but they bypassed Kabir and thereby undermined his centrality.
Kabir and his entourage point the finger at the Dabeiba government’s corruption as the reason for the rift.
***
Wolfram Lacher is a senior associate at the German Institute for International and Security Affairs and the author of “Libya’s Fragmentation”
_____________________
