Wolfram Lacher
By describing debt-fueled eastern spending as “parallel expenditure of unknown origin,” Kabir ostensibly denied any connection to it. In fact, central bank officials were well aware of how the funds granted to east-based banks were being used, but publicly they maintained silence. “Marei Barassi is operating with a gun to his head. We have to be easy on him,” an adviser to Kabir told me this June, referring to Kabir’s Benghazi-based deputy.
Kabir also adopted a permissive attitude to counterfeit currency, apparently printed under the Haftars’ aegis in eastern Libya. The Benghazi central bank had previously printed its own dinar notes in Russia from 2016 to 2021, and the central bank in Tripoli had grudgingly allowed them to circulate. But in early 2024, large amounts of 50 dinar notes began circulating that the central bank identified as fake, and of a quality inferior to the Russian notes.
Central bank and other financial officials said they believed the Haftar family had brought in a printing machine and was producing the notes in eastern Libya. Their estimates of the face value of the counterfeit notes varied widely, from $400 million to $1.4 billion. The central bank notified the attorney general about the notes in February but waited until April to go public. Even after announcing that it would withdraw all 50-dinar notes (worth about $10) from circulation, it gave banks until the end of August to use them. In the meantime, the counterfeit notes have continued to circulate in eastern Libya.
The Haftars now receive hundreds of millions of dinars from the Tripoli government each month even as they maintain their own rival government. Their sway extends to the highest levels of the NOC while they smuggle imported fuel on a large scale.
Their control over both commercial banks and the Benghazi central bank has enabled them to wipe out old debts and start spending on credit all over again. Dinars created out of thin air turn into hard currency. The center of gravity in Libya’s state of plunder has moved decisively to the east. And following years of wreaking destruction, Khalifa Haftar and his sons are now cultivating an image as builders.
To the Haftars’ credit, their reconstruction efforts are progressing swiftly and are already yielding visible results. But they also make clear that the Haftar family views those parts of Libya it controls as its private domain.
In addition to Belgasem’s fund, another body has recently started major construction work in Sirte and other cities: the National Agency for Development. This is a new name for an entity set up by Saddam Haftar, the Tareq ben Ziyad Agency for Services and Production. The head of both agencies, Jibril al-Badri, reportedly oversees fuel smuggling from Benghazi, according to an associate of his.
The Tareq ben Ziyad Agency served to channel profits from embezzlement and predation to Saddam’s military units. It also forced residents of Benghazi’s destroyed city center to sign over their properties with little or no compensation and subsequently cleared the area. Now, the National Agency is developing the prime real estate Saddam Haftar appropriated in Benghazi.
“Jibril al-Badri has closed off the seafront. People can’t access it, and they don’t even know what is being done there,” a Benghazi resident told me in June.
In Sirte, the National Agency’s projects are managed by Mahmoud al-Firjani, who has also run two TV channels supporting Haftar with propaganda. Municipal officials say they haven’t even been told — let alone consulted — about the agency’s plans.
“Egyptian companies have shown up and started working without anyone knowing what they are building,” one said.
“Some projects are Saddam’s, some are Belgasem’s, others are Khaled’s [another son] — all projects are divided between them,” a Benghazi contact with close ties to Haftar’s inner circle told me. An entrepreneur from western Libya who does business in the east confirmed this: “Turkish and Egyptian companies have to subcontract to either of two companies — one belonging to Saddam, the other to Belgasem. All Libyan companies working in construction have to contract with these two companies.”
Businesspeople and militia leaders from western Libya have flocked to the east and courted Haftar’s sons. So have Western diplomats. Before the reconstruction bonanza, there had been no public meetings between Western representatives and Haftar’s sons. Diplomats had met with Haftar himself for years but steered clear of the parallel eastern government, and were reluctant to be associated with the Haftar family’s blatant nepotism.
From April onward, however, meetings with Belgasem, Saddam and Khaled Haftar became part of the routine schedule of Western diplomats visiting the east. The French ambassador also led a delegation of businesspeople to meet with Belgasem, and others are likely to follow suit. “Internationals are now completely resigned to normalizing relations with a mafia state,” one frustrated diplomat in Tripoli said.
In their public communication on Libya, Western governments had long emphasized the need for a transparent management of public funds. But they have yet to raise the questions of where the reconstruction funds are coming from and how they are being used. When I suggested to a European ambassador that meetings bestowed legitimacy on the Haftar sons’ apparent ambitions to consolidate their family’s rule, he defensively argued that he had merely met Belgasem in his official capacity, not as Haftar’s son.
There are significant differences between Libya’s competing power structures — between Haftar’s brutal despotism and Dabeiba’s shrewd juggling of competing factions. When it comes to the pillage of state resources, the Haftars’ operations stand out for their far greater scale and brazenness. But there are also striking parallels.
One is nepotism. It is no coincidence that the eminence grise in Tripoli is Ibrahim Dabeiba. The Dabeiba family owes its influence to the rise of Ibrahim’s father, Ali, under Gadhafi. Ali Dabeiba — the prime minister’s cousin and brother-in-law — became spectacularly rich as a civil servant, at the head of a state agency in charge of infrastructure projects. He, his sons and relatives came to own an empire of offshore accounts, companies and real estate abroad.
Today, Ibrahim is the family’s key political player, and he has spoken derisively to foreign diplomats about Abdelhamid Dabeiba’s political acumen. But other relatives and in-laws also hold official positions and wield influence. Entrepreneurs in Tripoli complain that doing business with state institutions requires backing from Ibrahim Dabeiba, other members of the prime minister’s inner circle, or one of the handful of militia leaders that prop up the Dabeiba power structure.
The brazen looting of state wealth by a select few requires repression, though this takes very different forms in east and west. In Tripoli, security services controlled by militia leaders harass and arrest journalists, civil society activists, and even ordinary people who vent their anger on social media. In areas controlled by Haftar, speaking out can get you not only arrested but also tortured and killed. Society has been cowed into silence. “It feels like Libya in the darkest days of the 80s and 90s,” a western Libyan entrepreneur who does business in the east told me.
Can the two systems coexist indefinitely? The rift between Siddiq Kabir and the Dabeibas has fuelled tensions among rival coalitions of militias in western Libya — including competing groups deployed at the Tripoli central bank. In mid-August, Kabir and the U.S. embassy denounced an attempt to take over the central bank by force, pointing to threats made by militias aligned with Dabeiba that had prompted a countermobilization by opposing forces.
More importantly, the arrangements bridging east and west appear to be nearing a breaking point. The voracity of the leading protagonists shows no signs of abating. The NOC recently accorded a share of production in several oil fields to a newly formed Libyan company of unknown ownership but rumored to function as a front for Saddam, which has already begun selling its own oil.
Moreover, senior financial officials allege that a multibillion-dollar gap has accumulated over the past two years between the value of the crude oil lifted from Libyan ports and the transfers of revenue into the NOC’s account at Libyan Foreign Bank, a central bank subsidiary. Ever bolder schemes may come light — but every new scheme could be a step too far and unravel the tenuous relations among the Dabeibas, the Haftars and Kabir.
In the meantime, the Haftars’ greatly improved access to funds threatens to destabilize the balance of power. Saddam has told close associates that he is seeking to turn western Libyan factions against each other and buy the support of selected militia leaders — a task made easier by the money he now has at his disposal. His father has informed Western diplomats that he intends to make another attempt to seize Tripoli. The Haftars’ continuous acquisitions of military hardware leave little doubt that he means it. Recently, the Italian authorities intercepted a shipment of Chinese combat drones on their way to Benghazi — part of a transaction that allegedly involved crude oil sales.
For the time being, Turkey’s military presence in western Libya poses a formidable obstacle to such ambitions. So does the self-interest of militia leaders, regardless of whether they thrive or languish under the Dabeibas — all know that a Haftar takeover would immediately make them dispensable. But with the sudden accession to wealth and power, as well as the courtship by foreign emissaries, may come illusions of omnipotence that carry the risk of disastrous miscalculation.
***
Wolfram Lacher is a senior associate at the German Institute for International and Security Affairs and the author of “Libya’s Fragmentation”
___________________
