The fund hibernated for a decade – a stroke of luck, in many ways, because other Libyan institutions that had not been sanctioned during that period suffered from political manoeuvring and graft in the years following the revolution.
After the Security Council lifted its restrictions, the Central Bank of Libya, the National Oil Corporation and other pillars of the state apparatus were dogged by allegations of corruption and misappropriation. The LIA was not, at least not on the same scale, as the sanctions froze its assets.
Today, the LIA is worth approximately $70 billion, according to the latest valuation released by the fund in October 2024, up from $40 billion at its founding in 2006. Unofficial estimates have suggested its value is even higher. The fund’s true value remains a mystery, either because the fund lacks knowledge of the full scope of its assets or because the LIA is unwilling to disclose it.
The fund has worked with a variety of international auditors with the aim of producing a full audit of its holdings, but it has not been completed. At $70 billion, the LIA would be the second largest sovereign wealth fund in Africa and the thirty-fourth largest in the world.
Approximately $33 billion of its total assets are frozen, according to the LIA, with the non-frozen amount representing assets located inside Libya.
Libya thus finds itself in the unusual circumstance of being in ownership of sums of money that are reportedly equal to almost two years’ worth of the national state budget – and more than many countries’ annual GDP – which are nevertheless sitting in various frozen accounts around the world.
The Central Bank holds $17-20 billion of LIA assets in foreign accounts.34 It manages these funds as its own, a practice that the Panel of Experts says is non-compliant with the UN sanctions regime.35 Sources in the LIA were unable to confirm whether the funds held by the Central Bank constitute part of the $33 billion the LIA says are frozen.
D. Recent Political and Economic Tumult
If the LIA emerged from the turbulence following the revolution relatively unscathed, the same cannot be said of most Libyans. Despite the country’s oil wealth, the state has failed to provide essential services to its citizens – except for a tiny set of elites.
Today, the economy continues to be heavily dependent on oil revenues, making up 97 per cent of exports, but Libya’s leaders have barely made any effort to diversify for the future.
Meanwhile, the country overspends relative to its oil revenues, while billions of dollars remain unaccounted for due to an opaque oil economy that since 2021 operates, essentially, on a barter system. Billions of dollars invested in infrastructure improvement designed to raise oil production have shown no return. Poverty rates are climbing and unemployment – especially youth unemployment – is soaring. Libyan banks, meanwhile, suffer liquidity shortages and civil servants do not get paid on time.
By late 2024, the dire economic outlook had piqued the concern of outside countries, which had grown especially worried about mismanagement in the National Oil Corporation and the Central Bank of Libya; these institutions, together with the LIA, constitute the three pillars of Libya’s economy.
In particular, a dispute between Libya’s rival authorities over control of the Central Bank triggered alarm at the UN Security Council. Greater foreign scrutiny of Libyan financial affairs, including from the U.S. Federal Reserve, resulted in calls by the U.S. for a third-party oversight mechanism to oversee Libyan central bank transactions.
Meanwhile, Libya has slid back into political dysfunction, with two rival governments feuding over control of the country. Neither party was interested in overcoming the years-long deadlock to move toward holding elections. Libya’s elites quarrel regularly, including over budget allocations, but they have also been able to avoid conflict by resolving their differences through transactions serving both sides’ self-interest.
III. Libyan Views on the Sanctions Regime
Libyan officials and the LIA have long demanded reform of the sanctions regime, arguing that the restrictions have compromised the fund’s growth and are punishing Libya for actions taken by Qadhafi almost fifteen years ago. The Libyan public, however, tends to see the sanctions as a welcome safeguard, protecting national wealth from instability and graft.
A. Libyan Investment Authority’s Stance
The LIA’s long-running complaint about the sanctions regime has been that it has prevented the fund from achieving its main goal of preserving and building the wealth of the Libyan people.
As a former LIA executive told Crisis Group, “opportunities to grow [the] LIA have been squandered”. He contrasted the LIA’s growth to an estimated $70 billion to that of Qatar’s wealth fund, which started at the same time as the LIA with an undisclosed value in the tens of billions, grew to $60 billion in 2008 and today is worth over $500 billion. He and current LIA staff have called for reforms to the sanctions regime so as to prevent the “further dissipation” of assets.
According to the LIA, sanctions have jeopardised the fund in five main ways:
First, a large amount of the LIA’s assets invested before the sanctions came into effect reached maturity and have been sitting in overseas financial institutions as cash, since sanctions had, until the reforms of January 2025, forbade these from being reinvested.
This money, estimated to be in the ballpark of $20-33 billion, lost value over time because of inflation, even though interest rates in recent years have risen. Making matters worse, some accounts holding cash from matured bonds were subject to negative interest rates for a period of time, magnifying the financial losses.
Secondly, even when assets are not held in cash, the sanctions prevent the LIA from trading or otherwise adjusting its investments, which in the fund’s case are a diverse set of holdings including stocks, bonds, real estate and other assets.
As the Panel of Experts has pointed out, only activities connected with the “routine holding or maintenance of frozen funds” are allowed; active management of frozen assets is not.
A financial expert called the LIA’s situation “not very fair”, as shareholders who invest in publicly traded companies do so on the understanding that they can sell their shares if business deteriorates or economic circumstances become unfavourable.
The LIA, on the other hand, is denied the opportunity to divest from a failing asset. “Reinvesting the money would be responsible management of the assets”, an LIA staff member told Crisis Group, “but this is not happening”.
Staff at the fund also point to opportunities they have missed over the last decade due to being blocked from buying stocks as markets surged.
Thirdly, the LIA continues to pay professional fees to outside firms, including for the management of assets and legal services. The sanctions regime permits the payment of “reasonable professional fees” for the “holding and maintenance” of frozen funds.
While financial professionals are barred from managing LIA assets in the usual sense of buying and selling assets to achieve better returns for their clients, in many cases they charge the LIA the same fees that they assessed before the asset freeze.
In a striking example highlighted by the Panel of Experts on Libya, fund managers holding a frozen portfolio of the Libyan African Investment Portfolio, a sanctioned subsidiary of the LIA – received $178.89 million in management fees between 2011 and 2023. During that time, the portfolio grew by only $3.29 million.
The LIA also complains that custodian banks and asset managers contracted to manage billions of dollars do not provide them with information about their frozen assets or even answer their calls. “They won’t even respond to simple requests”, an LIA manager said.
Fourthly, the complexity of international sanctions and their licensing procedures makes the LIA’s work more onerous, often at the expense of the fund’s growth. LIA staff describe the difficulties of navigating not just the UN sanctions but also sanctions regimes designed to implement the UN sanctions in various national jurisdictions.
While licences could give the LIA permission to pursue certain activities, LIA employees told Crisis Group that getting them is time-consuming, in part because they have to seek authorisation not only from the Council but also from EU countries, the U.S., the UK and other states.
Firms overseeing LIA funds sometimes failed to transfer dividends, interest income and cash into the investment authority’s frozen accounts due to concerns about the absence of particular licences.
Fifthly, the LIA says the sanctions taint its reputation and impose heavy compliance and legal burdens on international firms doing business with the fund. As a staff member of the Libyan African Investment Portfolio explained, “It’s not comfortable to be an investor given the sanctions constraints”.
An investment expert went further, saying a sanctioned institution “is like a minefield. You don’t just try to avoid the mines, you stay as far away from the minefield as possible”. Sanctions reform, LIA staff say, would soften these perceptions and make it easier to work with partners.
The LIA crafted the investment plan that it submitted to the Council in 2024 with the goal of tackling these various challenges. The plan made five requests to reinvest assets and otherwise adjust the LIA’s holdings, to the tune of around $8 billion. Among the proposals put forward were requests to reinvest cash held at the Euroclear bank, bonds that have matured and cash resulting from matured securities.
The fund also sought permission for the Arab Banking Corporation – or Bank ABC, a bank headquartered in Bahrain – to trade equities and securities, while maintaining the asset freeze, and for the LIA to close its accounts with the HSBC bank, as that bank had requested. In defence of the plan, its authors detailed hundreds of millions of dollars in losses due to sanctions-related effects.
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