This article is a summary of our primary article: “Scramble for Libya: Qatar and the UAE’s economic ambitions in Libya?”
Prior to the 11 September oil ports seizure, a video was posted on 20 August 2016 by Akakus (a Libyan channel) of Haftar pleading to the international community for military aid. This excerpt echoes Muammar Gaddafi’s calls during the 2011 Libyan Revolution. It appears to indicate that Heftar believes he is in control of Libya’s wealth.. not the parliament, nor the provisional government, and certainly not the National Oil Company.
Khalifa Heftar made a video plea to International countries and international companies for help. This video was made within days after it was reported that the French Foreign Intelligence DSGC had abandoned operations in Libya. In exchange for the ‘international countries and companies’ support, Mr. Heftar noted they would be assured “a place to deal with us to invest in Libya in all activities without limits.” One presumes he is talking about future Libyan government contracts – that is, IF he remains in control.
“There is oil in Ajdabya. We are in Libya for sure there are great capabilities (resources) and such resources will be enjoyed by the Libyan people after quietness (peace) and then it will be enjoyed by anyone who will help us against Daesh and all kinds of terrorism wherever it is.
All these sides from countries and companies and anyone who will help us, he will for sure be in a place to deal with us to invest in Libya in all activities without limits.”
The question is what about those “countries and companies” who DO NOT help – are they barred from “a place to deal with us to invest in Libya in all activities without limits.”
Sounds almost like economic extortion, doesn’t it?
Contrary to his previous statements, we are told by NOC’s Mustafa Sanalla actually “the main ports are controlled by the forces of the army led by Field Marshal Khalifa Haftar.“ If we accept that Heftar with “no plans” to leave is in control of the oil – the life blood of Libya, then based on his history of intransigence in every decision he makes – acting as a petulant child refusing to compromise – then we must conclude that the Libyan oil that Mr. Heftar controls – flows at the will of Mr. Heftar.
Truth be told – the warning of threats have already begun:
As Heftar retains control of the oil ports – his determination to threaten has already been noted. Azza Maghur warned based on her interpretation of statements by one of Heftar’s ‘Men’ – HoR President Agilah Saleh that unless the “agreement among the key figures in both the HoR and PC along with the CBL and NOC, is reached with regard to exports and revenue – disagreements may arise at any time.”
Disagreements may arise at any time… So is the international community willing to accept Mr. Heftar in control of the flow of their highly desired light sweet crude?
And what exactly has Mr. Heftar planned for Libya’s assets? This is motivation of this op/ed – what is the economic plan?
Finally, did you notice Mr. Heftar has completely sidestepped the transparency mechanism of the tendering process when he offered up Libya’s assets? Indicative of Mr. Heftar’s Libya?
Other allegations about Mr. Heftar and control of the Libya economy have included his UN documented financial benefactor – the UAE.
The UAE & the Libyan Economy
Allegations have surfaced on the uae71.com website claiming that “Abu Dhabi is eying a full grip on Libyan economy” to complete dominance of two of the most important industries in Libya, the Libyan media and the economy.
With recent developments in Libya including Haftar’s seizure of Libyan oil ports in East Libya and the UAE’s confirmed military support of Heftar, both in supplying weapons and aerial support at present and in 2014 questions can be raised about the UAE’s motives in Libya. Our PDF copies: Middle East Observer & Libya Observer
It should be mentioned that the claims concerning the UAE’s economic interests in Libya are not original, as Qatar was the original country who had political & economic motives in Libya. Our PDF: “Le Qatar tire son épingle du jeu libyen” Le Monde
The following is a summary of our next op-ed which examines a recent UAE71.com article which details a plan for the UAE to economically control Libya. Our article addresses the merits of the claims, how the plans may be implemented and the possible motives of the UAE and Qatar, including economic and political influence.
The plan reported on uae71.com consists of establishing a bank with several branches throughout Libya. The CEO of the bank shall be none other than Aref Ali Nayed, Ambassador of the Al Thinni government (HOR) to the UAE. The bank shall have an “announced” capital of 164 million U.S. Dollars.
To achieve their alleged ambition to control the Libyan economy, a group of “foreign currency businessmen” working with Aref Ali Nayed will “control the value of the Libyan dinar.” Step two will be to create a specialized company in ports administration in Libya “a concealed part of Dubai’s counterpart” or a subsidiary which shall control the import and export processes of Libya. The bank will purchase as much property as it can, including property in specified free-zones. The real estates will then be owned by multinationals, all of which would be “all officially owned” by the UAE. The article then states that “if Libya seized the lands [owned by the bank] under the pretext of the great interest of the public” the UAE will file a lawsuit in any country where Libya has investment assets so that it can receive compensation “worth even 1000% more than the real prices of the properties.” The UAE’s motive is said to be in order to “curtail any ongoing projects in those cities.”
The creation of the Bank is allegedly to be announced by the end of 2016, and it shall open its first branch in March 2017.
Although the accusations are grave and seem absurd on face value, the plan is fairly simple to implement and plausible in reality. The question is how and why.
How the plan would be implemented
The UAE’s influence over Libyan politics
A foreign power can influence a country’s economy by influencing its domestic policy. This type of influence is discussed by Naomi Klein in her documentary “Shock Doctrine” which explores the link between politics of the military ‘strongman’, their economic policies and US foreign policy. Watch for the Chile example about ‘strongman’ Augusto Pinochet within the first 10 minutes. It seems particularly applicable to the current Libyan ‘strongman’ situation.
In examining the UAE’s ambitious foreign policy in several jurisdictions including Egypt and Tunisia, Libya is just another military front in their highly publicized campaign against the Muslim Brotherhood. International papers have confirmed that the UAE has repeatedly interfered in the domestic policy of several countries in order to represent the UAE’s interests.
Those allegations are that the UAE has now been linked to coups, unrest, and the destabilization of governments in 7 countries and 8 administrations. So far, the accusation of funding coups or political influence leveled at the UAE includes 7 countries and 8 administrations are: Turkey & Egypt & Tunisia & Tunisia & Tunisia & Palestine: in the West Bank & West Bank & Gaza & Gaza & Saudi Arabia & Yemen & Libya, Libya, Libya, Libya, Libya, Libya, Libya, Libya & Libya.
Evidence purports to show the UAE paying British and American journalists to publish articles representing their anti-Muslim brotherhood views. In furtherance of their ambition to eliminate the Muslim Brotherhood, the UAE has attempted to interfere directly in the politics of the Tunisia by “attempting to repeat the Egyptian scenario” and financially supporting Essebsi and the Niddaa Tounes party against the democratically elected Ennahda. The Guardian confirms that the UAE then attempted to influence foreign and domestic policy of the British government under David Cameron against the Muslim Brotherhood. However, the most overt and well-documented interference of the UAE in the domestic policy of a foreign nation was the UAE’s influence on Egyptian politics by alleged funding Egypt’s coup and financially supporting President Sisi after the ousting of democratically elected President Morsi.
With the aforementioned evidence presented, accusations that the UAE is undermining Libya’s transition to democracy in order to represent the UAE’s interests by influencing Bernardino Leon of the UN, allegedly controlling 70% share of the Libya Media by funding of US$74.5 million with reports of Libyan journalists planting stories to undermine the GNA, and financing General Heftar’s operations in eastern Libya are therefore credible.
Reports claim that the UAE intends on influencing Libya’s domestic policy through Mohammed Dahlan. The UAE influence on Libyan journalists was to exploit the current economic difficulties including the power outage. According to the reports, the journalists are to plant stories against the UN backed government, accusing some of the cabinet of supporting the Muslim brotherhood. If true, by undermining the transition to democracy and Libya’s reunification, the UAE could fuel the economic difficulties in Libya to increase the support for the bank and the 164 million U.S dollars.
As Libyans stood in line for hours unable to obtain any deposits from the banks due to the lack of funds in the bank, one may presume that a highly liquid bank in Libya with 164 million US dollars will be welcomed by the Libyan people.
This video is reported outside a Tripoli bank on 26 October 2016.
Step 1: Controlling Libyan currency
Today’s black market currency use is exacerbated by the liquidity crisis in Libyan banks. On the 21st of August 2016, al Awsat reported that 24 billion U.S. dollars has been withdrawn from Libyan banks by people and businessmen, nearly causing its collapse. Today, the value of the Libyan dinar has dropped where “one-dollar had cost 2.2 dinars a year ago. Today it costs more than 5 dinars. Uncertainty and fear have wiped away more than half of the dinar’s value in 12 months.” If the allegations are true, controlling the value of the dinar through the black market would afford the UAE the opportunity to receive more dinars for each dollar they exchange. By controlling the black market, the UAE and Aref Ali Nayed would theoretically be able to purchase more land while using less dollars. In other words, the real estate would be cheap for the bank to purchase if the bank holds dollars and uses the black market. The same is true if the multinationals “officially owned by the UAE” use the black market to obtain Libyan dinars in order to buy property. The fact that Aref Ali Nayed has deep ties to the UAE in implementing their foreign policy would allow some to speculate whether the foreign multinationals all officially owned by the UAE could work with Aref Ali Nayed in order to obtain a better deal for exchanging their US Dollars.
Secondly, controlling the Libyan dinar affords the Libyan black currency businessmen the opportunity to sell the Libyan dinar at a higher value so that foreign companies not associated with businessmen (who are associated with Aref Ali Nayed and the Emirates) are deterred from investing. This assertion is in line with the UAE’s alleged motive to “curtail any ongoing projects in those cities.” The UAE and the UAE companies would be the only companies operating in Libya, thus monopolizing the UAE’s economic power in Libya.
With Libya’s black market currency trading going on today, one may speculate whether the plan has begun to be realized.
Step 2: Control over Libyan ports
Secondly, if the plan were true, the port administration company concealed under a “Dubai counterpart” would more likely than not be a company created as a subsidiary of Dubai Ports World or DP World. 80% of DP World is owned by the Dubai government through its investment company Dubai World and DP World operates imports and exports processes in “40 countries spanning six continents,” including the ports in neighboring the countries to Libya, Egypt and Algeria.
Step 3: Purchasing Libyan property through multinationals
Third, the bank shall sell the land and property to the multinationals “all officially owned” by the UAE. In corporate terms, “all officially owned by the UAE” implies that the UAE would own a controlling interest in the multinationals. A controlling interest signifies that the UAE would own the majority of the shares to control the multinationals or own the greatest interest in voting shares to impact decisions taken by the board of the multinationals. Through the ADIA and Mubadala, the Abu Dhabi government owns controlling shares in companies and multinationals around the world in a variety of industries, which can operate in the Libyan free zones (oil & gas, maritime, mining, and manufacturing). Included in the list of oil companies the Emirates has a controlling or 100% interest in is “Spanish” company CEPSA and Vienna-based company Borelis AG.
With a controlling interest in the multinationals, the UAE can control board decisions and operations of the companies, from how the UAE shall be paid any dividends or profits as a shareholder, to which properties to purchase in Libya. The UAE may also control how the board votes on the decision to sue in order to obtain “1000%” of the value paid for the property.
Step 4: Great return on property investment through Libyan Laws on Eminent Domain
Although the concept of receiving 1000% greater of the actual value of the property sounds ridiculous, it is actually easily achievable and legally plausible.
“Seizing the land for the greater interest of the public” implies eminent domain. Eminent domain is the legal doctrine whereby the government seizes private property from owners for the greater interest of the population, usually to provide public services or establish areas for public use. Legal systems provide owners with protection by granting them just compensation for the seizure of the land. Through eminent domain under Libyan law presented in Article 31 of the Libyan Constitution of 1951 and Article 814 of the Libyan Civil Code, the Libyan government will justify the seizure of the land or property owned by the UAE for the greater interest of the Libyan people. In order to recover the land from the legal owners, the Libyan government would have to pay fair compensation to the owners of the property. As the owners of the property, the UAE can easily obtain 1000% of the actual value of the property if:
Significant developments for the property/real estate lead to an increase in value of the land greater than 1000%
- The UAE develops the property and/or adds significant improvements to the land. In this case, the Libyan government shall be forced by law to compensate the owner of the land (the multinational or the Bank). If the land has been enhanced by the construction of buildings or factories, the Emirates would be paid for all enhancements and the value of the land. If they own all of the neighboring property, they can easily increase the value of all of the surrounding land. If the UAE develops all of the neighboring land and increases the value of the land neighboring the property which the Libyan government wishes to claim, the value of the property can easily reach greater than 1000% of the “real value” paid for the property.
Lack of arm’s length transaction for the sale of the property would allow the UAE to obtain 1000% increase in the value if the property is sold
- The land will more likely than not be sold at an extremely discounted price from the bank founded by the Emirates and the multinationals owned by the Emirates due to the relationship between the UAE controlled multinationals and the Bank. The UAE can then develop the land as mentioned above. With the improvements to the land, the multinationals can expect to receive over 1000% of the value of the land when Libya attempts to reclaim the real estate due to the great discount in the price paid and the ability to develop the land at a low price (low cost of development) due to control of the black market currency.
Control of the black market currency would theoretically afford the UAE the opportunity to obtain 1000% the value at resale
- By controlling the value at which dollars are purchased on the black market, each dollar can be used to obtain a large amount of Libyan dinars. If the UAE exchanges their dollars for dinars on the black market they control, they can easily pay for the land at a cheap price. This increases the chance that they can obtain 1000% greater than the value which they paid for the property.
If executed, the net result is that the plan would be a great return on investment for the UAE.
But what are the UAE’s motivations?
From an economic standpoint, economic influence in Libya would allow for a great return on investment. The return on investment would:
- Allow the ADIA and Mubadala to secure dividends (payments) through the multinationals it owns as controlling shareholders. This would solve the well-known economic decline/loss the UAE is currently suffering from due to loss in oil revenues.
- Allow the UAE to achieve a return on its Egyptian investment (recover the money it paid to Egypt) for funding Egypt’s coup and for the aid it paid to Sisi. This is founded on the claims that Egypt’s interests in assisting Haftar is founded on its interests in securing a claim in the Libyan oil to solve its energy crisis.
The economic reasoning behind the UAE relates to its looming debt. “Riddled” with debt at 140% of its GDP, the economic slow-down in Dubai has not gone unnoticed by the international community. Dubai also has a 20 billion US Dollar debt due to major banks in Abu Dhabi and the UAE Central Bank in 2018 which has already been financed before in 2014.
According to Reuters, “The widening deficit reflected a drop in oil and natural gas income to 17% of GDP from 26.6% of GDP.” With the drop in oil prices, Abu Dhabi’s budget deficit has widened from 7.2% of the GDP in 2014 to 13.2% of the GDP in 2015. The Abu Dhabi Investment Authority was once valued at 700-750 billion US dollars. In 2016, Fitch predicts that the assets will fall from 502 billion US dollars to 475 billion US dollars, and billions will be used to pay their debt. Abu Dhabi government deposits in UAE banks fell 16% in 2015 alone.
The political motives behind the plan make the allegations even more legitimate. By achieving political control over Libya, the UAE may eliminate Qatar’s influence on the Islamists militias in Libya. Through Heftar’s success, the UAE may successfully suppress the Islamist threat. Since the Arab Spring, the UAE has been menaced by the threat of democracy. Suppressing the Islamist threat allows the UAE to prevent any threats to its hegemony, whereby the leaders in the UAE justify and consolidate their power by asserting that Islam and democracy are incompatible.
The article concludes that none of these interests are original, as Qatar was the country who originally had political and economic motives in Libya.
The Brookings Institute’s latest publication proposes a division of Libya into two co-federal states as a solution to its instability. Since the New York Times published a detailed investigation revealing that think-tanks such as Brookings Institute are lobbyists for foreign powers and seeing as Brooking’s Institute’s received 14.8 million US Dollars from Qatar in 2013 for a 4 year donation, speculation has been passed as to whether Qatar and the UAE’s are working together to split Libya in order to achieve both Qatar and the UAE’s economic ambitions.
As Libya’s banks are desperate for liquidity, and Heftar has seized the oil ports in Libya, the question to ask is whether the UAE’s plan is currently being implemented.
This article is a summary of our primary article: “Scramble for Libya: Qatar and the UAE’s economic ambitions in Libya?”
Parts of this op/ed article is reproduced in accordance with Section 107 of title 17 of the Copyright Law of the United States relating to fair-use and is for the purposes of criticism, comment, news reporting, teaching, scholarship, and research.