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Libya's Oil Economy Under Siege: Smuggling, Corruption, and the Haftar Imperative

  //business-finance.news-articles.net/content/202 .. ggling-corruption-and-the-haftar-imperative.html
  Published in Business and Finance on Thursday, November 13th 2025 at 11:02 GMT by Foreign Policy

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Libya’s Oil Economy Under Siege: Smuggling, Corruption, and the Haftar Imperative

The fragile post‑Gaddafi state of Libya has been mired in a protracted civil war that has, for the past decade, turned the country’s most valuable resource—its vast oil reserves—into a battleground for power, money, and legitimacy. The Foreign Policy article “Libya’s Oil, Energy Smuggling, and Corruption: Haftar’s New Game” (published November 13, 2025) offers a deep dive into the mechanisms of illicit revenue that have bolstered Khalifa Haftar’s Libyan National Army (LNA) and the broader ramifications for the country’s political economy.

1. Haftar’s Grip on the North‑East: From Oil Fields to Control

Haftar’s forces seized control of most of the eastern coast—an area that contains roughly 60 % of Libya’s crude output—after a 2018 military offensive. The article explains how the LNA has systematically commandeered the state‑owned oil company, the National Oil Corporation (NOC), effectively sidelining the internationally recognized Government of National Unity (GNU). By controlling the NOC’s pipelines, refineries, and export terminals, Haftar has turned Libya’s oil wealth into a personal fortune and a means of sustaining his military machine.

According to the piece, Haftar’s allies—particularly the "Libyan National Army Economic Security Group" (ENSG)—have established an intricate network of clandestine contracts that route oil through shell companies in Malta, Cyprus, and the UAE. These entities, registered under the names of LNA supporters, export crude on “illegal” or “gray” routes that evade customs checks and international sanctions. The article cites a 2023 investigation by the International Consortium of Investigative Journalists (ICIJ) that revealed a $1.2 billion “black‑market” pipeline in 2021 alone.

2. The Smuggling Apparatus: Infrastructure, Technology, and Corruption

The smuggling system relies on a blend of old‑school ingenuity and modern logistics. The article details how the LNA uses “black‑tube” pipelines—unregistered and unpatrolled—to bypass state‑controlled chokepoints. Once oil reaches the ports of Benghazi and Tobruk, it is shipped in tanker vessels that often fly the flags of “flag‑of‑convenience” states. The LNA’s maritime squadron—comprised of ex‑Libyan Navy officers—has been instrumental in escorting these vessels through the contested waters of the Gulf of Sidra.

Corruption is woven into every layer of this operation. The article recounts a 2024 report by the United Nations Office on Drugs and Crime (UNODC), which documented that approximately 35 % of the revenue from smuggled oil was laundered through money‑laundering havens in the Caribbean. Moreover, key officials within the NOC have been repeatedly found to hold dual roles as members of Haftar’s political advisory council, effectively merging state and personal interests.

3. The Wider Impact: Economy, Governance, and the International Community

The illicit oil economy has stunted Libya’s recovery. By siphoning off revenues that would otherwise support public services, Haftar’s smuggling operations have contributed to chronic shortages in electricity, healthcare, and public infrastructure. The article quotes an interview with a former Libyan minister who lamented that “the national budget is not a budget any more; it is a personal ledger for Haftar.”

The GNU, meanwhile, has struggled to assert fiscal control. In 2025, the United Nations Security Council passed Resolution 2341, calling for the imposition of targeted sanctions on individuals and entities linked to Haftar’s oil operations. The Foreign Policy piece examines how the sanctions, though a symbolic blow, have been largely ineffective because of the smuggling network’s ability to shift operations across jurisdictions. The article argues that a coordinated, multi‑agency approach—combining intelligence from Interpol, customs enforcement by the European Union, and legal action by the International Criminal Court—is essential to dismantle the apparatus.

4. Regional and Global Actors: Allies, Opponents, and the Role of Energy Politics

Beyond Libya, the article underscores the involvement of several regional actors. The United Arab Emirates, for example, is cited as a major financier of Haftar’s war effort, providing arms and logistics in exchange for oil rights. In contrast, Egypt has been working quietly with the GNU to secure its own oil supply lines, thereby limiting Haftar’s ability to sell oil in the Mediterranean.

The international community’s energy politics also come into play. Europe, still grappling with post‑pandemic energy demands, has shown a willingness to engage with Haftar’s network to secure a reliable crude supply. The article references a 2023 memorandum of understanding between the European Commission and a Libyan shell company that allegedly routes oil to EU refineries under the pretext of “energy security.” The author calls this a “classic case of double‑talk” that threatens to undermine the UN’s anti‑corruption efforts.

5. Calls to Action: Reform, Accountability, and Humanitarian Relief

In the concluding sections, the Foreign Policy article outlines a multi‑pronged strategy for addressing Libya’s oil‑related corruption crisis:

1. Strengthening the NOC’s Governance – Reinstating a fully independent board with international observers, ensuring transparent bidding for oil contracts, and implementing blockchain‑based tracking for all shipments.
2. Expanding Sanctions and Enforcement – Enabling the EU and the United States to jointly target financial institutions that facilitate Haftar’s smuggling routes, coupled with stricter customs inspections at key ports.
3. Supporting Civil Society – Funding Libyan NGOs that monitor oil revenues and hold local officials accountable, thereby creating a bottom‑up pressure mechanism.
4. Humanitarian Relief – Channeling a portion of the recovered oil revenue into rebuilding the electricity grid, hospitals, and schools, thereby restoring basic services that have been eroded by the illicit economy.

Final Thoughts

Libya’s oil smuggling, corruption, and Haftar’s dominance illustrate the destructive synergy between natural resource wealth and political instability. The Foreign Policy article paints a stark picture of how a single individual’s appetite for power can undermine a nation’s economic prospects, strain international relations, and exacerbate humanitarian suffering. Ultimately, it argues, dismantling this illicit network requires an equally comprehensive, coordinated response that places accountability, transparency, and the Libyan people at its center. The article concludes with a sobering reminder: “Unless Libya’s oil revenue is returned to its rightful custodians, the nation’s future will remain a hostage to the ambitions of a few, while the majority languish in uncertainty.”