Scramble for Libya: the UAE and Qatar’s Economic Ambitions in Libya?

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“UAE aims to control Libya's economy through secret bank managed by AL-Thanni government's ambassador to UAE, Aref Al-Nayed: The UAE fears recovery of Libya's economy” The Libya Observer

“UAE aims to control Libya’s economy through secret bank managed by AL-Thanni government’s ambassador to UAE, Aref Al-Nayed: The UAE fears recovery of Libya’s economy” The Libya Observer

We refer you to our short summary of this article.  “Scramble for Libya: the UAE and Qatar’s economic ambitions in Libya?  A Summary”

 

Allegations have recently surfaced from uae71.com about detailed plans for the UAE to economic ambitions within Libya. We address the merits of the claims, how the plans may be implemented and the possible motives behind the plan. This op-ed discussion concludes that the claims of the UAE’s economic ambitions are not original, as it is alleged that Qatar originally had political and economic motives.

 

The Plan

According to The Libya Observer, claims have surfaced on UAE71.com of detailed plans for the UAE to secure economic interests in the Libyan economy. First, the plan consists of opening a bank in Tripoli which shall have “officially” 164 million U.S Dollars in capital.  The bank shall have several branches located in different cities in Libya.  At the helm of the bank is Libyan Ambassador to the UAE Aref Ali Nayed, who was designated to be the CEO.  The creation of the bank will be announced before the end of 2016 and the bank will allegedly open in March 2017.

“UAE aims to control Libya's economy through secret bank managed by AL-Thanni government's ambassador to UAE, Aref Al-Nayed: The UAE fears recovery of Libya's economy” The Libya Observer

“UAE aims to control Libya’s economy through secret bank managed by AL-Thanni government’s ambassador to UAE, Aref Al-Nayed  The Libya Observer

Reporting on the UAE71’s article, the The Libya Observer states that “The first step of controlling the Libyan economy is by setting up a group of foreign currency businessmen in the black market because only through them Al-Nayed can control the value of the Libyan dinar.”   According to the article,

“The second step will be by creating a company specialized in ports administration in Libya – a concealed part of Dubai’s counterpart – to control the importation and exportation processes in Libya.”  

The article continues about the ports that are targeted are the ones in

“Zuwara, Tobruk, Benghazi, Sirte, Al-Khumus, Misrata, Tripoli, and Derna.  After that, the bank will buy as many as it could from the real estates in Libya, especially those in the free zones, like the free zone in Al-Marisa, Benghazi, the free zone in Zuwara- Ras Ajdair, and the free zone in Misrata.”

The most serious allegations concern what the UAE would do if they decide to reclaim the land purchased by the bank and owned by the multinationals.

 “The real estates will be owned by multinational firms, but all officially owned by the UAE, so if Libya seized the lands under the pretext of the great interest of the public, then the UAE will file suitcase in any country where Libya has investment assets so that it gets compensations worth even 1000% more than the real prices of the properties, all because the UAE wants to curtail any ongoing projects in those cities. . .”

The grave allegations are a great cause for concern at present. The concerns for the implementation of the plan are not without merit.  With Libya’s feeble economy due to its previous low oil revenue and lack of cash reserves in the banks, an injection of 164 million US dollars into Libya’s economy is highly attractive. The Libya Observer states that “according to experts, finishing up the projects in the Libyan free zones can considerably attribute to a boost in trade, and industry given the geographical position it is located in and the moderate climate as well as the long coast and the oil and gas resources it has got.” Libya’s geographic location and moderate climate is evidently attractive to “investors.”

The detailed facts leave readers wondering how & why the plan could even be implemented.

 

How could the Plan be implemented?

Political influence: precursor to economic control?

Could the UAE’s current military operations fortify its attempts to politically influence Libya?

Claims of influencing the domestic policy of other nations in order to favor the Emirates interests is not unheard of, as evidence of multiple attempts to influence domestic and foreign policy through direct and indirect means in several countries are well documented in major newspapers, such as the The Guardian. These include:

  1. Undermining the UN-brokered peace talks in Libya through the UN mediator, Bernardino Leon
  2. Influencing the U.S. and UK. media against Qatar and the Muslim brotherhood
  3. Financial and military support to General Heftar
  4. Funding Abdel Fattah Al Sisi’s prior to the coup in Egypt and after the coup
  5. Attempting to influence the Nidaa Tounes party to oust the democratically-elected Ennada party in Tunisia

Given the history of the Emirates with Bernardino Leon and the history of meddling in domestic policy of various countries, including the U.K., claims that the UAE is paying Libyan journalists to undermine the Libya’s GNA becomes increasingly more valid.  Moves to undermine Libya’s transition to democracy also conform to UN Envoy Leon’s actions to hinder the democratic process in Libya.

By successfully influencing Libyan politics in their favor, the UAE may then successfully carry out their economic interests.

 

Precursor to economic control (1) – Undermining the UN-brokered peace talks in Libya through the UN mediator, Bernardino Leon
The UAE & the Conflict of interest with UN’s Bernardino Leon hindering Libyan reunification at the UAE’s request – “following Your request.”

Quite possibly the most blatant and widely covered scandal involving evidence of the UAE’s meddlesome foreign policy in Libyan affairs (The New York Times, The Guardian  and Middle East Eye articles) was the email hack that revealed the conflict of interest of Bernardino Leon.  The UN Mediator Bernardino Leon was appointed by the UN to negotiate a peace deal between both sides of the Libyan civil war which began in 2014. However, UN Envoy Leon spent the summer of 2014 “negotiating a £35,000-a-month job with [the UAE who] supports one side in the civil war he was trying to end.”    In the email, whose full contents can be viewed at the following link, Bernardino Leon writes to the UAE Foreign Minister:

“Note: all my movements and proposals have been consulted with (and in many cases designed by) the HOR and Aref Nayed and Mahmud Jibril (with whom I speak on a daily basis) following Your request.”

It is worth mentioning that international press confirms that the HOR is supported by the UAE, and that one prominently mentioned as within the Leon email that “all my movements and proposals have been consulted with (and in many cases designed by)” has also been designated as the CEO of the UAE bank in Libya mentioned above, Aref Al Nayed, is the Ambassador to the UAE.

According to The Guardian article, “just five months after he was appointed as its mediator in Libya, he sent an email dated 31 December 2014 to the UAE’s foreign minister, Sheikh Abdullah bin Zayed, from his personal account.  In the email, he tells the UAE that, because of the slow progress of peace talks, Europe and the US were asking for a

‘plan B … a classical peace conference … This is, in my opinion, a worse option than a political dialogue … because it will treat both sides as equal actors.’”  

By calling it the “worse option” this implies that Leon he had no intention of treating either sides of the civil war as equals in the negotiation process.

According to The Guardian, Leon explains that his plan was to “’break a very dangerous alliance’ between the wealthy merchants of Misrata and the Islamists that keeps the GNC afloat.  He says he wants to reinforce the HOR, the body backed by the UAE and Egypt.”   According to an article in the Middle East Eye:

“Leon’s plan as set out in the email was to reconcile Hafter with the Misratan militias and make the Muslim Brotherhood-dominated GNC ‘disappear’. . . Nearly a year after this email was sent, the UN-led peace process is a state of disarray.  In late September, Leon announced that a Libya peace plan had been finalised and a draft agreement put to the parties for consideration.

Effectively sidelining the GNC to an advisory role rather than decision makers, Tripoli rejected the agreement. There were mixed reports about whether Tobruk, which came under increasing pressure as its initial mandate expired on 20 October, had approved the draft or not.”

According to Mohamed Eljarh, a Libyan academic researcher and activist, Leon kept the two sides “separated” where the parties had limited face-to-face dialogue.

By limiting the GNC to an “advisory role,” preventing the two sides from meeting and limiting face-to-face dialogue, Tripoli’s interests were failed to be taken into account.  This is most likely the reason for the rejection of the agreement.
As Leon’s plan was to break the alliance between Misrata and the Islamists to reinforce the HOR, Tripoli’s rejection effectively implies that Leon’s plan had worked. Preventing the sides from meeting face-to-face and sidelining Tripoli is deliberate in order to represent the interests of the UAE.  These actions appear to be in accordance to the email above.

 

UAE officials themselves recognized their actions – again in leaked emails…

Even with the Bernardino Leon scandal, the irony is that UAE officials themselves recognized their actions (page 145 & 146) in the systematic undermining of reconciliation and democracy in Libya.   The UN published in 2016 a detailed paper reporting listing the UAE’s violation of UN Security Council Resolution 1970.9 prohibiting selling and transferring arms by supplying weapons, helicopters, and munitions to Libya.  An article published by the New York Times states that “Ahmed al-Qasimi, a senior Emirati diplomat wrote in an email on Aug. 4 to Lana Nusseibeh the United Arab Emirates’ ambassador to the United Nations” that “’the fact of the matter is that the U.A.E. violated the U.N. Security Council Resolution on Libya and continues to do so.”

The New York Times further states:

“In the emails, the Emirati diplomats frankly acknowledge their government was shipping arms to its Libyan allies in violation of the United Nations embargo — a policy they say is overseen at the ‘head of state level’ — and they strategize about hiding the shipments from a United Nations monitoring panel. . . Answering questions and complying with procedures required by the United Nations resolution ‘will expose how deeply we are involved in Libya,’ Mr. Qasimi wrote, adding, ‘We should try to provide a cover to lessen the damage.’”

The emails therefore reveal the UAE both recognizes their violations and attempts to hide their actions from the U.N. after the fact with Mr. Qasimi proposing to create “a cover to lessen the damage.”

All the while Libya descended into chaos, Leon was negotiating housing allowance, and he claims he was “unable to find anywhere suitable to live in Abu Dhabi with his 360,000 dirham (£63,600) a year housing allowance.” None measured up to his own home in Madrid with the allocated allowance. “The Saadiyat properties he’s interested in rent between AED 500,000 and 600k per annum” (136000 -163400 US dollars per annum).

 

Precursor to economic control (2) – Influencing the U.S. and UK. media against Qatar and the Muslim brotherhood
The UAE’s Influence over the Media: British, American and Libyan journalists & American think tanks
David Cameron and the UAE’s attempt to influence in British Foreign policy

The UAE’s campaign against the Muslim Brotherhood is at the heart of its dispute with Qatar, who supports the Muslim Brotherhood. In its attempts to undermine the Muslim Brotherhood, The Guardian reports that internal UAE documents reveal that the UAE threatened David Cameron with a stop of intelligence and “inward investment” if David Cameron did not act against the Muslim Brotherhood. Complaints to David Cameron by the UAE were made in June 2012, the same month as the results for the second round of Egyptian presidential elections where Mohamed Morsi of the Muslim Brotherhood came to power. In return for the U.K.’s cooperation against the Muslim Brotherhood, the UAE promised “lucrative arms and oil deals for British businesses which would have generated billions of pounds for the jet divisions of BAE Systems and allowed BP to bid to drill for hydrocarbons in the Gulf.”

The UAE internal documents, the briefing notes, “were written in June 2012 for the crown prince by Simon Pearce, a Manchester City board director who also handles UAE’s global image. In the notes, the plan appears to be to offer a series of carrots for British business and the country’s military in return for action against the Brotherhood.”

In the 2012 notes reported by The Guardian, Pearce warned of “the supposed infiltration of the BBC’s global news channel by Islamist sympathisers.” He stated that “70% of global reporting emanates from the UK and 70% of it is negative”, and requested that the Crown Prince demand the U.K.’s Prime Minister’s “help … with the BBC in particular.” The notes therefore reveal the Emirates willingness and motives behind influencing major news networks such as the BBC.

The failure for the British to act resulted in a temporary exclusion of BP from bidding on an onshore oil concession in 2012, and the UAE declined to buy BAE’s Typhoon fighter jets in 2013.

After the refusal to purchase Typhoon fighter jets, David Cameron announced a review of the Brotherhood’s activites in the UK. The UAE was the first to be seen about the matter, and Khaldoon al-Mubarak, the UAE ambassador to the UK, met with Jenkins.   However, The Guardian reports that the U.K “’prioritised al-Qaida and direct terror threats to the UK’ over the actions of the Brotherhood.” The Guardian reports that as the UAE was upset with the priorities set by the U.K., dozens of British military advisers to the UAE armed forces returned to the U.K. mere months later after their contracts were not renewed.

The Guardian article illustrates the extent the UAE will take to influence domestic policy in the favor of the UAE’s motives by using “carrots,” economic threats and influence over the media.

 

The UK’s Quiller Consultants & the UAE sponsored media campaign to postion Qatar as a financier of terrorism in more leaked emails…

First reported in the Mail, the Middle East Eye published an article on a report stating that the UAE paid a UK public relations and political lobbying firm Quiller Consultants £60,000 pounds (93,000 US Dollars) a month for six years to publish a series of articles accusing Qatar of funding terrorism.  The New York Times has also confirmed the UAE’s aim to brand Qatar as “a godfather to terrorists everywhere.”

In the contract between the UAE and Quiller, it is stated that Quiller would work in the UK “to promote and achieve the foreign policy objectives of the UAE”, adding “all the activities as part of this engagement will be carried out in strict confidence.” The desire to remain anonymous was a priority, as

“emails between senior UAE officials and Quiller reveal how Abu Dhabi insisted their lobbying must remain secret out of fear they would be shown to be ‘meddling in UK domestic affairs.’”

According to the Middle East Eye promoting and achieving “the foreign policy objectives of the UAE” constituted lobbying the British government “to hold a review into the activities of the Muslim Brotherhood.”  According to David Rose, Quiller had

“successfully targeted top British newspapers” while keeping the UAE’s involvement secret.  Quiller’s key conduit was none other than the infamous Simon Pierce. Journalists included Andrew Gilligan from the Sunday Telegraph. “The Telegraph then embarked on a two-month campaign against Qatar in which they published 34 articles, including eight front-page headline stories, that accused Doha of financing terrorism.”

Through Quiller, the UAE allegedly influenced the U.K. media against Qatar. These allegations are not without merit, as the UAE is also said to have influenced U.S. media.

 

The New York Times on the UAE and Qatar “buying influence” through American think tanks

In a New York Times article published on 6 September 2014 titled “Foreign Powers Buy Influence at Think Tanks,” an investigation by the NY Times revealed “more than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities.”

According to The New York Times, the scholars of the research groups are pressured to represent conclusions of the government’s financing, including implicit agreements to avoid criticizing the donor governments. “In their contracts and internal documents, however, foreign governments are often explicit about what they expect from the research groups they finance.”

“The arrangements involve Washington’s most influential think tanks, including the Brookings Institution, the Center for Strategic and International Studies, and the Atlantic Council.  Each is a major recipient of overseas funds, producing policy papers, hosting forums and organizing private briefings for senior United States government officials that typically align with the foreign governments’ agendas.”

The New York Times reports that the UAE is a major supporter for the Center for Strategic and International Studies who quietly donated “more than $1 million to help build the center’s gleaming new glass and steel headquarters not far from the White House.”

The article concludes that foreign powers, including the UAE and Qatar, are using the power to contribute to the think tanks in the attempts to influencing US policy through think tanks.  The article then states that:

“The two Persian Gulf monarchies are also engaged in a battle with each other to shape Western opinion, with Qatar arguing that Muslim Brotherhood-style political Islam is the Arab world’s best hope for democracy, and the United Arab Emirates seeking to persuade United States policy makers that the Brotherhood is a dangerous threat to the region’s stability.”

According to the article, both the UAE and Qatar have allegedly attempted to influence US Foreign policy through think tanks.

 

UAE, Egypt, The Muslim Brotherhood and U.S. think tanks

According to David Kirkpatrick from the New York Times, the UAE retained the American consulting firm in Camstoll Group.  It is noteworthy to mention that Camstoll Group is staffed by former employees of the Treasury Department. In its public disclosure forms, whose link was posted in the New York Times article but is subsequently no longer available on the Foreign Agents Registration on the U.S. Department of Justice’s website, showed “a pattern of conversations with journalists who subsequently wrote articles critical of Qatar’s role in terrorist fund-raising.” Based on the PDFs published by the justice department, the Intercept reports that Camstoll was paid by the Emirates $4.3 million U.S Dollars as a retainer agreement, and an additional 3.2 million in 2013.  The Intercept also mentions that Camstoll secured the contract with the UAE less than one week after its formation, and that its sole founder and CEO, Matthew Epstein met with Abu Dhabi “as they plotted to cut off Iran’s financial and banking transactions.”  These facts raise the question of whether Camstoll was formed for the purpose of acting as a Foreign Agent of the UAE.

Camstoll Group on behalf of the well endowed client, UAE:

“spent enormous of amounts of time cajoling friendly reporters to plant anti-Qatar stories, and they largely succeeded. Their strategy was clear: target . . . writers such as the Daily Beast‘s Eli Lake, Free Beacon‘s Alana Goodman, Iran-contra convict Elliott Abrams, The Washington Post‘s Jennifer Rubin, and American Enterprise Institute’s Michael Rubin . . . They also targeted establishment media figures such as CNN’s Erin Burnett, Reuters’ Mark Hosenball, and The Washington Post‘s Joby Warrick.”

Lake, a reporter who is said to be paid by Camstoll Group, “published a widely cited The Daily Beast article depicting Qatar as friends of the terrorists.” For more on the Camstoll Group and the Emirates, please read the article on The Intercept.

Relating to the UAE’s funding of think tanks to further its political ambitions in Egypt (see below), The New York Times, Michele Dunne, head of the Atlantic Council’s Rafik Hariri Center for the Middle East, “signed a petition and testified before a Senate Foreign Relations Committee urging the United States to suspend military aid to Egypt, calling Mr. Morsi’s ouster in summer of 2013 a ‘military coup.’” Bahaa Hariri, the contributor for the creation of the Rafik Hariri Center, called the Atlantic Council to complain to the executives “with direct knowledge of the event.” Four months after the call, Ms. Dunne left the Atlantic Council.  Her replacement was “Mr. Francis J. Ricciardone Jr., who served as United States ambassador to Egypt during the rule of Hosni Mubarak, the longtime Egyptian military and political leader forced out of power at the beginning of the Arab Spring.   Mr. Ricciardone, a career foreign service officer, had earlier been criticized by conservatives and human rights activists for being too deferential to the Mubarak government.”

With the Emirates as a major contributor to Atlantic Council, one may speculate the Emirates role in removing Ms. Dunne from her position.
Given the evidence of “buying influence” of British, American journalists and American think tanks one could make a agrument of a UAE concerted campaign to influence British and American foreign policy with respect to Qatar, the Muslim Brotherhood and other objectives.

 

Claims of UAE’s influence over the Libyan media

With the allegations of the UAE’s influence over British and American journalists and lobbyists in The New York Times and The DailyMail, allegations of the UAE’s influence in Libyan media appear as the next objective in line – therefore with  merit.  The Middle East Observer referred to a recent study stating that the Abu Dhabi controls 70% of the Libyan media.  This claim is reinforced by further evidence published detailing a breakdown of contributions from Abu Dhabi to Libyan news channels totaling US$ 74.5 Million so far.  According to Al Alam, the UAE paid the following Libyan channels:

  • Channel 218, located in Amman Jordan, received US$32 million
  • Channel “Roha al Watan,” located in Amman, Jordan, received US$26.6 million
  • Channel Libya 24, located in London, England, U.K received US$7.9 million
  • Al Wast news paper and Radio Wasat, located in Cairo, Egypt received US$5 million
  • News paper Bawab Al Afrikia, located in Cairo, Egypt received US$2.2 million
  • Al Hadth Newspaper, located in Tunis, Tunisia, received US$800 thousand

It’s noteworthy to mention that The Middle East Observer states that Mohammed Dahlan manages the media in Libya.  According to claims first made in UAE71.com and later in an article on June 20, 2016 published by The Middle East Observer, Libyan journalists attended a meeting headed by Mohammed Dahlan in Amman, Jordan.  Attendees of the meeting included:

  • “The Libyan writer and journalist “Mujahid Al-Busaifi”,who is the executive director of the TV Channel 218
  • “The Libyan ambassador to the UAE ‘Arif Al-Nayed’”
  • “The Libyan journalist and owner of Libya Al-Hadath Channel ‘Mahmoud Al-Misrati and the Libyan businessman and former owner of Al-Ahli Club in Tripoli “Ismail Al-Shtewi’”
  • And unidentified Egyptian attendee

According to The Middle East Observer, “The meeting discussed the reasons behind the unsuccessful attempt to overthrow the Presidential Council (PC) of the Government of National Accord (GNA) supported by the United Nations and some western countries reported the UAE71.  The website claimed that the strategies, which hoped to exploit the power outage situation, inflation and the lack of liquidity, were previously discussed in Cairo last April to incite the Libyan people against the PC in Ramadan.”  The allegations therefore state that last April, a meeting took place involving Mohammed Dahlan which discussed plans to overthrow the UN Government of National Accord.  This implies that Mohammed Dahlan is involved in a plan to derail Libya’s transition to democracy.

Concerning the events in discussion, Libya has suffered a grave power outage which has yet to be explained. Former Minister of Health Fatima Hamroush posted on her facebook June 18 2016 about the current power outage in Tripoli. Images show that the power cables are not merely cut, but power pylons have been knocked to the ground and destroyed. The pylons appear severely bent out of shape, which disqualifies any claims that it may have been destroyed by wind during the heat of the summer.  With the current liquidity and black market currency crisis in Libya (see below), one may speculate whether Mohammed Dahlan has been involved.

At the meeting with Dahlan, The Middle East Observer report that uae71 noted that new initiatives were decided upon which shall focus on certain areas which “will include focusing on diminishing the popularity the PC members as Ahmed Mitig, Abdul-Salam Kajman, Fathi El-Majbary and the Minister of Defense, Mahdi AL-Barghathi.” As evidence confirms that the UAE has attempted to influence the U.K and U.S. foreign policy by using journalists and think tanks, these accusations are unsurprising.  Plans also include

“circulating rumors and false news on both Mitiq and Kajman that they have both struck deals with different parties that would not benefit the Libyan economy; the first with Italian oil and gas companies, and the latter with ambassadors and Western corporations.”

Finally, the initiatives aim “to claim a link AL-Barghathi as Defense Minister and accuse him of being manipulated by the Muslim Brotherhood to weaken his status and to show that his main goal is to destroy the operation AL-Karama (Dignity) led by Khalifa Heftar.” Given the UAE’s confirmed support to the HOR and Heftar in Libya’s civil war (see below), and the well-documented campaign against the Muslim Brotherhood (see The Guardian and Bloomberg), Mohammed Dahlan’s alleged plans would undoubtedly be in accordance to the UAE’s initiatives.

With the similar ambition to interfere in politics in Egypt (see below), the top secret document cited in the Middle East Eye article states that the UAE should target Egyptian media and think tanks to further their motives. The article states that:

the Emirates should recruit and finance Egyptian think tanks, universities and media outlets, the document says. It goes on to state that these direct investments should have a clear strategy and vision and that every down-payment should be tested for the benefits it will bring Abu Dhabi.

Again, the article is highly detailed and contains grave claims. Given the 70% control over the Libyan media and 74.5 million U.S. Dollars given to Libyan journalists and media outlets, the accusations of Dahlan and the Emirates plot of derail the GNA and undermine Libya’s democracy are seemingly not without merit.

 

Precursor to economic control (3) – Financial and military support to Heftar
Funding & military support to the General Hafter

A former member of Gaddafi’s military circle, General Khalifa Hafter returned to Libya in 2011 to assist in the uprising against Mummar Gaddafi after having spent years living in Virginia, USA. After Heftar’s failed coup attempt in February 2014, Heftar launched “Operation Dignity” or “Operation Karama” in May 2014. According to Camille Tawil’s Article in the Terrorism Monitor, at demonstrations that followed the launch of the operation in support of Heftar, “some of the banners lifted during these demonstrations . . .  carried slogans claiming that ‘The Muslim Brotherhood equals al-Qaeda.’”  The article then later states that

“It is alleged that the UAE offered Heftar backing with 800 million dollars, which includes paying money to armed groups willing to join Operation Dignity.” 

With the UAE’s well-documented anti-Muslim Brotherhood campaign both domestically and internationally, eliminating the Muslim Brotherhood in Libya can be considered as another battle in the UAE against larger campaign.  In confirmation of claims to the UAE’s funding, Afro Middle East Center in its article titled Political fallout from Gaddafi’s ousting,” elaborated on the UAE’s involvement and support of Heftar by stating the following:

“Heftar’s coup attempt in February 2014 was funded by the UAE through these figures. Following Libya’s low-key response to Heftar’s coup attempt, the UAE began funding his ‘Operation Dignity’ (launched in May 2014) to the tune of over US$800 million. In addition, the al-Qaqa and al-Suaiq brigades use armoured personnel carriers and ammunition manufactured in and procured from the UAE. (It is interesting to note that with Libya awash with weapons, the UAE promotes its interests there by funding the purchase of ammunition and paying soldiers’ salaries, rather than by supplying them with new arms.”

The supply of ammunition, weapons, and helicopters by the UAE to Heftar is referenced in the UN Report which can be found here. (page 145, 146)  As mentioned above, the UN report details the UAE’s violations of UN Security Resolution 1970.9.

According to Tawil, the aid also includes Egyptian backing, and the “aid plan includes a requirement that forces loyal to Heftar will take control of oil exporting terminals along the Libyan coast and that the exported oil will be bought through the government backed by Heftar and not the one based in Tripoli and backed by the Islamists.” These requirements could explain the reasoning behind the leaked voice recordings which “appear to show cooperation between Egypt and the United Arab Emirates to transfer weaponry to Libya.”

Airstrikes in Libya by the UAE and Egypt have been confirmed by The New York Times in an article published on August 24, 2014, which states that “twice in the last seven days, Egypt and the United Arab Emirates have secretly launched airstrikes against Islamist-allied militias battling for control of Tripoli, Libya. . .” The AMEC report explains why the accusations that the UAE bombed Tripoli in August 2014 are believable.  It explains:

Heftar’s claiming responsibility for the August air strikes on Tripoli was disingenuous, and was an attempt to create panic among rival militia groups which control the area around the airport. The efficiency and timing of the attack were far too sophisticated for Libya’s air force, now controlled by Heftar, which comprises less than a dozen poorly-equipped craft. The UAE, on the other hand, has the region’s best-equipped air force (excluding Israel). With over sixty F-16 Block 60 fighter planes, French Mirages, various soviet craft, well-trained pilots, and a few Airbus 330 refuelling jets, the UAE has the capacity to dominate the skies over a wide area.”

But what is the purpose of supporting Heftar?

As Le Monde has reported, Heftar’s failure to give the GNA a vote of confidence is actually blocking the democratic process. The reason why the Gulf States’ actions hinder the democratic process is elaborated below, which include the threat of democracy to their monarchy and evidence of economic interests.

 

Precursor to economic control (4) – Funding Abdel Fatah Al Sisi’s prior to the coup in Egypt and after the coup
UAE “investor” status and interference in Egyptian politics

According to the Guardian, the UAE is considered “one of Sisi’s biggest financial backers.”  The Telegraph reports that the UAE and Saudi Arabia prepared a 20 billion U.S. Dollar aid package following the victory of Abdel-Fatteh Sisi in Egypt, where he won a whopping 97% victory in the elections. The Middle East Eye reports an additional pledge of funds:

“At an economic conference in Sharm el-Sheikh in March, the prime minister of the UAE and ruler of Dubai, Sheik Mohammed bin Rashid al-Maktoum, revealed the UAE had already given Egypt $13.9bn and he pledged $3.9bn more. The real amount of aid Sisi got from the Emiratis is thought by analysts to be closer to $25bn, around half of the total Gulf aid to Egypt.” “A government source was quoted in the Al-Masry Al-Youm newspaper as saying that the Saudis had already contacted the interim government about providing assistance to Egypt, on the condition that Sisi emerged victorious from the vote.”

Assistance was conditioned on whether Sisi was victorious on the vote. However, the UAE’s involvement in Sisi’s victory is said to be greater.

A voice recording evidence released suggests that the UAE funded the army prior to the army seizing control of Egypt via a coup. The recordings state that 50% of aid sent to Egypt by the UAE was used to finance the Egyptian military.  In furtherance of the argument, the UAE is said to have told the Egyptian military to reject US/EU-brokered negotiations that might have led to a reconciliation between the regime and the Brotherhood. The negotiations were brokered by none other than Bernardino Leon and Mahmoud Jibril. Leon’s confirmed relationship with the UAE further strengthens the argument that the UAE supports the Sisi’s military coup to power. Additionally, the fact the military coup ousted the President Mohamed Morsi of the Muslim Brotherhood and the fact that the Emirates and Saudi Arabia are against the Brotherhood, a motive to fund the military and financial support Egypt exists.  This is especially true since Sisi followed the Emirates and Saudi’s lead in declaring the Muslim Brotherhood a terrorist organization.

 

Aid to Egypt: Return on investment for the UAE?

A Middle East Eye article dated 21 November 2016 discussed the plans in Egypt to carry out the interests of the UAE. With Egypt’s crumbling economy, the UAE was considered Egypt’s “largest foreign direct investor.”   The Middle East Eye article states that “the paper spells out in blunt terms the Emirati ambitions to control Egypt.”  The demands of the UAE would be carried out by Egypt in return for the investments.

“The strategy document outlines three phases of investing in Egypt which will start early next year.  In the third phase, the Emirates will seek to move from financier to “full partner.”

The article describes the “three phases” as “three conditions for continuing to bail out Sisi’s government.” Does full partner imply sharing power and sovereignty over Egypt?

The document states that the “direct investments should have a clear strategy and vision and that every down-payment should be tested for the benefits it will bring Abu Dhabi.”

Similar to confirmed initiatives the UAE had to control the media and influence domestic policy in the U.K. and the U.S., The Middle East Eye states that the UAE “should recruit and finance Egyptian think tanks, universities and media outlets . . .”

But what is the effect?

In effect, creating a sphere of influence in Egypt would lead to strengthening the UAE’s influence over neighboring states such as Libya.  According to Camille Tawil,

“Slogans such as this give the impression that Heftar’s supporters see him following the road taken by Egypt’s Field Marshal Abd al-Fattah al-Sisi in Egypt. Al-Sisi justified his actions against former president Muhammad Mursi by saying that he was given the people’s authority to go after the Muslim Brotherhood by the mass demonstrations against the movement in the streets of Egyptian cities in June and July 2013. Similarly, Heftar has said that the demonstrations in Tripoli and Benghazi have justified his pursuit of the Islamists in Operation Karama.”

Both Egypt and Heftar have a relationship of mutual support. According to Afro Middle East Center:

“like Sisi, Heftar couches his operations in terms of counter-terrorism, and actively seeks Egyptian assistance in his fight against Islamists. In numerous statements he has reiterated his support for Sisi, and called on Egypt to deal with issues related to the Libyan-Egyptian border as it sees fit. He even welcomed Egyptian air strikes in Libyan territory.”

The question is why does Egypt support Heftar?

Egypt’s economic interests in East Libya.   While Heftar rages his Operation Dignity campaign in East Libya, Egypt’s motivations behind assisting Heftar are economic.  According to an article published on the Afro-Middle East Centre website, Libya’s oil reserves in the East of the country are viewed as a solution to Egypt’s energy crisis. This provides an explanation to Sisi’s offer to Heftar to send troops to the Red Valley and Dak regions of Libya where the oil is located. Assumptions have been drawn that Egypt’s interests in securing Libya’s oil were the motives behind military initiations as Sisi “warned against the dangers from Libya in his first televised speech after his presidential nomination.”

Since Heftar has already seized the oil ports in East Libya, the question is whether the plan has been implemented.

The question is why would the Emirates implement such a plan?

In the Middle East Eye article cited above, a leaked highly confidential document revealed that the UAE is Egypt’s largest “investor.”   At present, Egypt seeks a 12 billion U.S. Dollar loan from the IMF as the Egyptian economy is currently crumbling. By assisting Heftar financially and militarily to secure the oil reserves to solve Egypt’s energy crisis, the UAE may achieve a return on their investment in Egypt once Heftar annexes East Libya to Egypt to solve its oil crisis. The return on investment in Egypt can be construed as:

  • Securing Sisi’s control to prevent a resurfacing of the Muslim Brotherhood in Egypt
  • Regaining the billions in aid and grants given to Egypt
  • Reinstate economic stability to ensure the viability of the Emirati companies which are currently operating in Egypt. (See below for information on Dubai Ports World in Egypt)

 

Precursor for economic control (5) – Attempting to influence the Nidaa Tounes party to oust the democratically-elected Ennada party in Tunisia
The UAE’s attempts to “repeat the Egyptian scenario” in Tunisia

According to an article published in the Middle East Eye:

“The United Arab Emirates has threatened to destabilise Tunisia over concerns the country’s leadership is not serving the interests of Abu Dhabi, a senior Tunisian source told Middle East Eye.”

The Middle East Eye reported that calls to investigate the UAE’s role in Tunisia have been made after the UAE was accused by a “high-profile Tunisian broadcaster” of attempting to crack down on the Islamist Ennahda party. Journalist Sofian Ben Farhat stated that the UAE encouraged Essebsi, head of the Nidaa Tounes party to seize power from the Ennahda party, the Islamists party with ties to the Muslim Brotherhood. Ennahda party has been in power from 2011-2014:

“Farhat claims the president (Essebsi) disclosed during a private conversation that Emirati officials asked him to “repeat the Egyptian scenario” in return for guarantees of financial aid.” The “Egyptian scenario” refers to the funding of Abdel-Fattah al-Sisi.  Although reports during his campaign revealed the current President Essebsi received two armoured cars from the Emirates, Essebsi is said to have refused to “’follow the Egyptian model’ in exchange for aid.”  According to another article:

“President Essebsi’s refusal to work with the UAE is said to have led to Abu Dhabi to view his ruling Nidaa Tounes party with suspicion, according to Middle East Eye’s source in Tunisia. The UAE would now like to replace the Tunisian leadership with an alternative leader who would be more amenable to UAE interests, the source added while not specifying if Abu Dhabi would prefer a civilian or military replacement.”

Given the UAE’s despise of the Muslim Brotherhood and their support to Sisi in Egypt, the claims that the UAE is trying to influence Tunisian politics are very plausible.

 

 

Implementation of the Plan: How the UAE may economically control

Step 1: Manipulating the Libyan currency by controlling the black market

“Black market” manipulation of the Libyan currency sounds suspicious and impossible.  However, currency black markets are a common phenomenon with dramatic repercussions on the country’s livelihood and economy.  According to Investopedia,  “the black market in currencies refers to the illegal or parallel market in foreign exchange in various countries around the world.  The currency black market forms part of the underground economy by virtue of operating outside legal banking channels.”

People resort to the black market for several reasons including “weak economic fundamentals, such as a high rate of inflation and limited foreign exchange reserves.”  Foreign exchange reserves can be defined as the amount of foreign currency that is kept in the central bank.

According to Bloomberg “so-called black markets flourish at times when there’s a shortage of greenbacks and are one indicator of how much a currency should be allowed to depreciate to reach its fair value.”

Black market currency trading is currently going on in Egypt. According to an article in Reuters published “the gap between the official and black market rates, which briefly narrowed with the devaluation, is now wider than ever, with dealers buying and selling dollars for 20 percent or more above the official rate of 8.78 pounds.” Bloomberg reported in an article published on July 26, 2016 that the dollar could be sold on the black market at 46% higher than the official rate in Egypt.

The reason for the black markets’ popularity is that the holder of a strong currency such as the U.S. Dollar can obtain more value in exchange for a U.S. dollar because the black market sets the price slightly higher than the official price of the currency set by the central bank. A banker in Egypt interviewed for the Reuters article stated that “no one sells dollars to the banks any more. They all prefer to go to the black market which will pay them more.  The dollars don’t come into the banking system any more and the central bank’s dollar reserves are not enough to support the country’s import needs.”

With an increase in the use of a black market in Egypt, “people with dollars are shunning the official financial system, starving it of foreign currency. This is putting yet more pressure on the pound, with potentially dire consequences for inflation, investors’ confidence and economic growth.”

From the Reuters article, the effects of a black market are apparent. With a use of the black market, the central bank’s dollar reserves are lowered and a country cannot support its import needs. A rise in inflation will occur and market volatility is high. With market volatility and lack of foreign currency reserves, investor confidence is low and economic stability and growth is hindered.

As we speak, Libya’s economy currently suffers due to uncertainty created by political instability. Libya’s current liquidity crisis signifies the lack of funds or “little cash” within Libya’s banks. According to Adam Tarhouni, stores in Libya lack goods and Libyans “queue outside banks, while the bank vaults sit empty.” Uncertainty and fear has driven Libyans to turn to its foreign currency black market. In an article published 21 July 2016, Tarhouni writes “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.” As of July 2016, the value of the Libyan dinar had declined by 66% over the course of a year. The black market can be said to effectively destroy the purchasing power for those who hold Libyan dinars, which is the Libyan population.

In a statement made on 19 October 2016, SRSG Martin Kobler stated:

“Daily life for Libyans is becoming more difficult. With oil production well below its potential, inflation of the Libyan Dinar is at nearly 20%, food prices are increasing and the lack of liquidity mean that cash is becoming scarce.”

So logically, what would be the effect be of the new bank opened by the UAE containing 164 million US Dollars?

As the bank would be the only bank containing liquid assets in Libya, the bank would be in great demand due to the dire desperation of the people. With fear and uncertainty, the desire to return to living normal lives will drive Libyans to accept the opening of the bank by taking loans and opening deposit accounts.

If the plan is true, why would MVP Aref Ali Nayed and his cronies wish to control the black market currency?

In the event that the plan is true, setting up a black market control of the currency would afford the UAE several advantages.

First, enabling the Aref al Nayed to control the currency would allow them to control how much purchasing power they would have in Libya.  By using the black market, they could receive a large amount of Libyan dinars in exchange for the dollars they wish to use for investments, such as the “real estate” purchases mentioned in the plan.  Land purchases would therefore be inexpensive for the UAE if they purchase the land with dinars they obtained by exchanging dollars on the black market they control.

Secondly, running a black market for foreign currencies would deter foreign investors, making the UAE companies and foreign multinationals to whom the UAE is a controlling shareholder the only foreign investors willing to enter Libya.

Theoretically, the result would be that the UAE companies and multinationals whose majority shareholder is the Emirates would have initially no real foreign competition in the Libyan market, and they could theoretically use their companies to purchase the land at any price without any competition or demand driving the price higher.

 

Step 2: Controlling Libya through port development: possible future operations for Dubai’s DP World?

The second step in the plan is said to be the creation of a “company specialized in ports administration in Libya – a concealed part of Dubai’s counterpart – to control the importation and exportation processes in Libya.” A “concealed part of Dubai’s counterpart” can be construed as a translation of a subsidiary owned by a parent company.

Listed on its website, DP World or Dubai Ports World “is a leading enabler of global trade and an integral part of the supply chain . . .” with a “portfolio of 77 operating marine and inland terminals supported by over 50 related businesses in 40 countries across six continents.”

The controlling shareholder of DP World is Dubai World Corp with 80% ownership. Click here for a list of shareholders of DP World. The Dubai World Corp is owned by the Dubai government.

DP World is best known for the DP World Controversy, where its attempts in 2006 to take over control of operations of six US Ports raised criticism. Critics believed that a foreign company owned by a foreign country was deemed a threat to national security. (See The New York Times article for more information)

With its operations in a variety of areas, DP World operates a variety of port operations “from marine and inland terminals, maritime services, logistics and ancillary services to technology-driven trade solutions.”

One of the 40 countries DP World operates in Egypt. According to Bloomberg:

“DP World Sokhna operates the Sokhna Port in Egypt. The company handles maritime traffic into and out of Egypt. Its facilities include a container terminal, a general cargo/Ro-Ro terminal, a bulk terminal, and a livestock terminal. The company offers logistics and warehousing services, including packing and labeling, distribution, handling returned products and repairs, customer service, final assembly and customer invoicing, blending and mixing, quality control, and testing and sterilizing; and clearance and distribution services. The company was formerly known as Sokhna Port Development Company and changed its name to DP World Sokhna in January 2009. The company was founded in 1999 and is based in Cairo, Egypt. DP World Sokhna operates as a subsidiary of Egyptian Container Handling Company S.A.E.”

On its website, DP World Sokhna describes itself as a port that sits on “one of the world’s busiest maritime trade routes – from Asia to the Middle East and beyond, to Europe.”

Its operations in North Africa are not limited to Egypt, as DP World also operates in Djen-Djen and Algiers, Algeria. DP World began managing control of the Port of Algiers in March 2009 in a joint venture agreement with EPAL and Algiers Port Authority.

With its port administration operations in several neighboring North African countries, Libya seems like the new El Dorado. DP World currently controls the “maritime traffic in and out of Egypt” and it therefore controls imports and exports. By controlling the ports in “Zuwara, Tobruk, Benghazi, Sirte, Al-Khumus, Misrata, Tripoli, and Derna,” the company specialized in ports administration and “a concealed part of Dubai’s counterpart” DP World, the ports administration will have a controlling stake over the flow of imports and exports of Libya.

Assumptions have been drawn about DP World’s economic interests and the UAE’s foreign policy. Claims have been made about the motives behind the UAE’s exploits in Yemen and the interest of DP World in Aden’s ports. According to Bill Law of The Middle East Eye:

“Previously the huge DP World port container company, based in Dubai, had a deal with Aden and former president Saleh but pulled out in 2012 when his successor Hadi tried to renegotiate terms. . . However in October last year DP World unveiled a plan to resuscitate the deal: ‘We are exploring areas where we can help our near neighbours in their initiatives to restore critical marine and trade infrastructure at Aden and look forward to developing our discussions in the immediate future,’ was how Sultan bin Sulayem, chairman of DP World put it.”

With DP World’s heavy ambitions, one may conclude that they are the “Dubai counterpart” mentioned in the allegations.
But why would DP World wish to operate in Libya?

Although its outlook has been forecasted by Fitch as “stable,”   DP World’s rating has only improved from “BBB-” to “BBB.”   As we all learned from the 2008 financial crisis, BBB-ratings are the lowest credit rating that can be given.    A low credit rating means that a borrower (DP World) will be unable to pay its creditors and will have a higher likelihood of default. As noted “These rating agencies are paid by the entity that is seeking a credit rating for itself or for one of its debt issues.”    See below for more on Dubai and the Emirates’ financial woes.

Fitch stated that the reasoning behind the upgrade of the credit rating is due to “the group’s solid and stable cash flow generation.”

The above statement indicates that the amount of money that is coming into the country is “solid and stable.” The real question is whether they need Libyan ports to continue the steady cash flow.
 The question is how could they control the port’s administration company if it is “concealed”?
Like many of its other companies owned by the UAE government (see below), DP World may become a controlling shareholder in newly-formed port administration company. By controlling its board, it may control directors’ payouts, operations, allocation of funds, etc (see below for the definition of “controlling interest”).

 

Step 3: Real estate acquisitions by the Bank and the UAE’s foreign multinationals ownership of the property

In Step 3 of the plan:the bank will buy as many as it could from the real estates in Libya, especially those in the free zones, like the free zone in Al-Marisa, Benghazi, the free zone in Zuwara- Ras Ajdair, and the free zone in Misrata. The real estates will be owned by multinational firms, but all officially owned by the UAE. . .”

Motivation to buy properties in free zones: UAE operations in mining, oil & gas and shipping

Banks often buy property in order to resell the property or lease the property.  The reasoning for buying properties in the free zones relates to the benefits. According to the Encyclopedia Britannica:

“The primary purpose of a free-trade zone is to remove from a seaport, airport, or border those hindrances to trade caused by high tariffs and complex customs regulations. Among the advantages of the system are the quicker turnaround of ships and planes through the reduction in formalities of customs examinations and also the ability to fabricate, refinish, and store goods freely.”

With a removal of border controls, free zones are therefore highly attractive for manufacturing companies. In a free zone, the property owned by the banks would be resold or leased to a company which is permitted to operate in the free zone in accordance to the free zone rules.

Misrata free zone website, free zone companies are allowed to operate in the following industries:

  • Constructing establishments and facilities needed for industrial, commercial, and service-providing activities;
  • Carrying out transit trade activities;
  • Performing industrial and other different transforming operations which may change, modify and/or prepare goods and products to meet trade exchange and market demand;
  • Conducting manufacturing operations such as mixing, cleansing, wrapping, adding, refilling and re-packing;
  • Providing insurance, banking and financial services and any other logistics needed for investment at MFZ;
  • Supplying oil and gas fields with logistical support;
  • Engaging in tourism- and service-oriented activities; and/or
  • Storing goods; which include transit goods, products ready for export, and goods imported and/or manufactured at MFZ.

 

“Multinational firms, but all officially owned by the UAE:” The UAE’s current controlling ownership in foreign multinationals
Why is controlling ownership important?

Controlling interest is defined as:

“Controlling interest occurs when a shareholder, or a group acting in kind, holds a majority of a company’s stock. By definition, this figure is 50% of the outstanding shares, plus one. However, controlling interest can be achieved with less than 50% ownership in a company if that person or group owns a significant proportion of its voting shares as in many cases, not every share carries a vote in shareholder meetings.”

Controlling interest grants the holder “significant influence over the actions of the company.”   Holders of lower than 50% of the shares can therefore influence the decisions of the company. This can be “single shareholders with as little as 5-10% ownership.”

So how can the shareholder with a controlling interest affect the operations of a company?

Those who own a controlling interest within a company “can push their own seats on the board or enact changes at shareholder meetings by publicly lobbying for them, giving them control.”

Push their own seats on the board implies selecting directors who the shareholder controls. The directors will then vote in favor of the interests of the shareholder. This includes decisions on important business decisions such as paying out dividends (earnings from the company) to shareholders, where the company shall establish its next branch or when a lawsuit should be brought on behalf of the shareholders.

If the UAE owns a controlling share of a company, it theoretically controls the actions of the board and voting on the board’s decision on whether the company should engage in certain operations/activities. For this case, these activities include:

  1. Purchasing property in Libya and whether the company should commence operations in Libya
  2. How the company shall address lawsuits (who they will sue)
  3. How the Emirates as a shareholder will be paid by the earnings of the company

Which companies would operate in the Misrata freezone?

  • Mubadala
  • IPIC
  • The multinationals

According to Bloomberg.com, Mubadala Development Company PSJC is a sovereign wealth fund of the Government of Abu Dhabi which operates in a diversified number of industries, including “aerospace, financial services, healthcare, information and communication technology, investments, logistics and transport, metals and mining, and real estate.” Through its subsidiaries, it invests in a number of industries:

  1. Mubadala Petroleum – Oil and gas
  2. Advanced Technology Investment Company – Semiconductors
  3. Masdar – Renewables

For real estate investments, Mubadala Development Company targets “commercial, residential and leisure real estate investment opportunities.” Other operations include aluminum.

Bloomberg notes that Mubadala Petroleum has an additional office in Singapore, while Mubadala has opened an office in Rio de Janeiro after absorbing Eike Bautista’s assets.

Acquisition of Brazilian Billionaire Eike Bautista’s assets: The Growth of Mubadala’s ownership stake in foreign oil, ship building, mining and coal firms

After Mubadala took a loss from investments with Brazilian Billionaire Eike Bautista, The Wall Street Journal reported that Bautista’s settlement with Mubadala resulted in an agreement “to acquire stakes in Mr. Batista’s shipbuilding, oil, mining and coal firms, according to documents sent to Brazil’s market regulator, known as the CVM.”

To Mubadala, “Mr. Batista is transferring a 26.45% stake in his coal firm CCX Carvão da Colômbia SA, 21.04% of mining company MMX Mineração e Metálicos SA, 11.47% of the oil firm formerly known as OGX and a 28.79% stake in shipbuilder  OSX Brasil SA . . .”

Bloomberg also reported that Bautista’s shares in Prumo Logistica SA will be transferred to Mubadala.  With Transfigura Beheer BV and Mubadala Development Co. agreeing to buy a controlling stake the iron-ore port in Rio de Janero, Mubadala is keen to develop its investments in the iron industry. This is not the oil precious metal industry Mubadala operates in, as its highly diverse in Aluminum and Gold.

With Misrata’s specialization in Libya’s iron and maritime industry, one can see how Misrata free zone is an attractive destination for iron companies such as MMX and OSX Brasil to extend its operations.

 

Libya’s oil: Will the IPIC and Mubadala be the next investors in Libya?

With the largest oil reserves in Africa, Libya’s oil and gas reserves make it a prime target for foreign multinationals. Given the planned merger between the Emirates International Petroleum Investment Company (IPIC) and Mubadala, the operations and market share is only set to get bigger.

Although Mubadala has a diversified portfolio of investments in several industries, IPIC is predominately specialized in the oil & gas. IPIC has ownership in several different oil companies around the world, including 100% ownership both in CEPSA and Nova Chemicals. It is noteworthy that CEPSA currently has operations in Algeria, including oil exploration. Is Libya the next frontier?

Notable other companies include Vienne-based Borealis AG. Borealis AG is described by Bloomberg as a provider of “chemical and plastics solutions for the infrastructure, automotive, and packaging markets.” These are the same operations that are permissible in the Misrata free-zone (see above for lists of operations). IPIC owns 64% of Borealis AG. The 36% of Borealis AG’s remaining shares is owned by an oil & gas company, OMV Aktiengesellschaft (OMV). What is shocking is that IPIC owns 24.9% of OMV’s shares. Given the definition of controlling interest, IPIC is therefore a powerful shareholder in OMV. Theoretically, IPIC could control all decisions on the board of Borealis AG through its large stake in OMV and its controlling share ownership in Borealis AG.

With its operations in 120 countries and 5 continents, Borealis AG fits the definition of a multinational.

With wholly owned companies and an extremely high ownership stake in companies such as Borealis and OMV, it is not unreasonable to believe that the board of directors on all companies may operate in the interests of the UAE.

 

Tourism and hotels: Will Libya be seeing the UAE’s Marriott any time soon?

The Abu Dhabi Investment Authority (ADIA) is the sovereign wealth fund of Abu Dhabi. In spite of its low ranking in transparency (6/10), the ADIA is ranked the third largest sovereign wealth fund in the world after Norway’s Government Pension Fund Global and China’s China Investment Corporation.

Over the past few years, the ADIA has developed its ambitious real estate portfolio to acquire a controlling stake in multinational hotel chains. In 2009, the ADIA acquired 10.9% ownership in the Hyatt from purchasing shares on an exchange.  In 2013, the Standard reported that ADIA purchased 42 regional Marriott hotels from Royal Bank of Scotland. In 2015, the ADIA acquired 50% ownership in three hotels the Grand Hyatt Hong Kong, Renaissance Harbour View and Hyatt Regency Tsim Sha Tsui.

In addition to its well-publicized bidding war for the Maybourne Hotel Group, the ADIA also recently acquired medium size hotels, including the Courtyard Marriott.

In 2013, ADIA purchased Tourism Asset Holdings (TAHL) properties, which includes “Novotel and Ibis Darling Harbour in central Sydney, Novotel and Ibis at Sydney Olympic Park, and Novotel Canberra.”

 

What is the possible outcome of multinational ownership?

According to the plan first reported on uae71:

“The real estates will be owned by multinational firms, but all officially owned by the UAE, so if Libya seized the lands under the pretext of the great interest of the public, then the UAE will file suitcase in any country where Libya has investment assets so that it gets compensations worth even 1000% more than the real prices of the properties, all because the UAE wants to curtail any ongoing projects in those cities, indicated the sources.”

Through hotels and multinationals that operate in industries such as oil &gas, iron, and shipping, one can imagine that the UAE would be capable of indirectly purchasing Libyan real estate and property.
Disguised as multinationals, the UAE would indirectly own the companies, while retaining a control of the board of directors to make major decisions regarding the multinationals’ operations within Libya.

legally-plausible

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.

If representatives of Libya attempted to sue any of the multinationals in order to obtain the land under eminent domain, the multinationals will counter sue for 1000% times the value of the property jurisdictions where Libyan assets are held, i.e., London, England, UK or Italy.  The UAE would base its lawsuit on the right to fair compensation for the property owned. Under the doctrine of eminent domain, the Libyan government would have to pay fair value of the property in order to seize the land. The UAE can easily obtain 1000% of the actual value of the property through fair/just compensation if:

  1. Significant developments for the property/real estate lead to an increase in value of the land greater than 1000%
    1. 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.
  2. 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
    1. 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.
  3. Control of the black market currency would theoretically afford the UAE the opportunity to obtain 1000% the value at resale
    1. 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.
Due to the current financial hardship of many Libyan families, it is credible to believe that Libyans will be willing to sell the land at an extreme discount today.
Theoretically, buying all of the real estate and property in Libya would be a highly lucrative long-term investment. The UAE will “curtail any ongoing projects” by making the land extremely expensive Libyans will be unable to afford the land with the weak dinar value.

 

 

Motivations behind intervention in Libya and Egypt

The fact is that UAE’s plan is too detailed and specific to not raise suspicion, from the date of the announcement of the creation of the bank and to the amount of starting capital. The question is why the UAE want to carry out the plan.

Reason 1: UAE – Economic Empire in decline?

The UAE’s economic woes have not gone unnoticed by the international community. In an article in Courrier International titled “Emirats arabes unis. Dubaï, la fin de l’âge d’or ?” (“United Arab Emirates. Dubai – The End of the Golden Age?”), Courrier International explores the current situation in Dubai. According to Head Economist of the Middle East at HSBC, Simon Williams commented on Dubai saying “a notable slow-down is in progress and it is not close to stopping. This is due in part by the fall in oil prices.” In effect, the article states that foreigners have already “taken flight.”

On a social level, expats are selling their belongings and fleeing the country, leaving the luxury cars at the airport. This is reminiscent of the 2008 financial crisis in Dubai. Currently,  Dubai is “riddled” by debt, where the debt is valued at 140% of its GDP. In 2018, Dubai will be required to pay 20 billion to the National Bank of Abu Dhabi and the UAE Central bank for financial aid bailout during Dubai’s 2008 financial crisis. The 20 billion US dollars was already due in 2014, however the UAE Central Bank and Abu Dhabi agreed to refinance the debt.

Suppose Dubai fails to pay on its 2018 debt deadline. The true question is how much of the 20 billion US dollar debt that Dubai owes to Abu Dhabi and the UAE Central Bank is registered as uncollectable on their financial statements.

Abu Dhabi, the capital and source of the nation’s financial strength, is now in decline. According to Bloomberg, “about half of Abu Dhabi’s economy comes from oil.” The article explains that the low oil revenues have caused a budget deficit in the Emirates. Fitch reports that the “2015 budget deficit has widened to 13.2% of GDP from 7.2% of GDP in 2014.” In other words, the widening of the budget deficit means that the UAE’s expenditures are greater than its earnings.

Once valued at over 700 billion, Fitch predicts that the value of the ADIA’s assets will fall from 502 billion US dollars to 475 billion US Dollars in 2016 alone. The billions are allegedly going to be used to pay its looming debt.

In addition to the predicted drop of 27 billion in 2016, Bloomberg states that long-term investment gains fell in 2015 “as a result of ‘strong returns from the mid-1980s and 1990s falling out of the rolling averages.’” A long-term investment is an investment which an investor holds and relies on deriving profits from in the future or over the course of a few years. Long-term investments are often considered reliable.

In another article, Bloomberg states that Abu Dhabi cut its spending by 1/5th in 2015 and will cut its spending additionally 17% in 2016. Government deposits in banks fell 16% according to Fitch, meaning that the amount of money/funds the government keeps in the bank has fallen 16% in 2015 alone. Due to the budget deficit Abu Dhabi — holder of about six percent of global oil reserves — is cutting spending and tapping cash reserves to help plug a budget deficit after the slump in crude.”

As the Wall Street Journal has reported, the truth of the matter is that the employees at the ADIA are themselves unaware of the true value of the assets of the sovereign wealth fund. The ADIA already ranks low in terms of transparency, and the value of the sovereign wealth fund may in fact be lower.

With the alleged billions in aid to Egypt and an estimate of 22.8 billion US dollars on military expenditure in 2015 and harsh austerity measures to a highly socialized country, the uncertainty of oil prices looms in the air – Libya is therefore seen as an extremely lucrative investment.

 

Investment in Egypt and Libya: Long-term investment

Having been described as the “Paymaster,” the Middle East Eye detailed how the UAE has placed many conditions on the financing grants to Egypt under Sisi with an attempt to influence Egypt’s domestic policy.

“Those conditions are: removing the petrol subsidy over the next three years by respectively cutting it by 30 percent, 30 percent and then 40 percent annually; demanding that the Emirates should set the strategy for the price of the Egyptian pound in comparison with the US dollar, which would be tantamount to controlling Egypt’s monetary policy; and cutting bureaucracy. Each of these are domestic policies.”

Theoretically, the conditions on the grant can be construed as a method to cover their expenses for the investments. Removing petrol subsidies would cut government costs and ensure revenues.

Economic motives explain the reason why Sisi is aiding Heftar. As mentioned above, the oil in East Libya may be a solution to the Egypt’s energy crisis. Placing the condition that Heftar must control the oil fields in East Libya in order to receive the 800 million dollars from the Emirates can lead people to believe that the Emirates is funding Heftar to secure their long-term investment in Egypt. From an economic standpoint, funding Heftar and Sisi can be viewed as a measure to solve the UAE’s financial woes (see above) and shortage of revenues from oil sales and a method of recovering the funds it spent to influence Libya and Egypt politically.

 

Reason 2: Political motives

(1) Democracy undermines hegemony in the Gulf States

The overthrowing of several single party states within the Middle East and North Africa during the Arab Spring drove Abu Dhabi fear for the livelihood of its absolute monarchy. According to the Afro-Middle East Center,the leaders of the Gulf kingdoms base their legitimacy on their Islamic credentials, and on the notion that Islam and democracy are incompatible.” They instill the concept that Islamic and democracy does not work and therefore their rule is legitimate. Political parties that propose an Islamic form of democracy such as the Muslim Brotherhood in Egypt, the JCP in Libya and Ennahda Party in Tunisia, effectively undermine the hegemony of the rulers.

In theory, a functioning democracy with a satisfied population possesses a threat to a neighboring state with an absolute monarchy. With the Muslim Brotherhood elected in Egypt, the threat to the hegemony only strengthened. This became more apparent as the Islamists became a “dominant force” in Libya. Additionally, the support to the Nidaa Tounes party in attempts to remove the Ennahda party is merely another campaign in the UAE’s attempt to eliminate Islamic democratic parties.

 

(2) Gulf State rivalry

Although the UAE is currently has the most ambitious foreign policy, the ambitious foreign policy first began with Qatar’s support and funding to the Muslim Brotherhood, most notably in Egypt. The New York Times reports that both Qatar and the UAE have been supplying weapons to rivals in Libya since the fall of Gaddafi, and that the two currently engage in a “proxy war” which “has helped inflame the fighting.” Confirmed by the New York Times, “The U.A.E. is backing former fighters for Col. Muammar el-Qaddafi and members of his ruling elite, while Qatar is backing a coalition that includes militant Islamist groups.”

According to David Kirkpatrick’s article in the New York Times:

“Propelling the barrage of accusations against Qatar is a regional contest for power in which competing Persian Gulf monarchies have backed opposing proxies in contested places like Gaza, Libya and especially Egypt. In Egypt, Qatar and its Al Jazeera network backed the former government led by politicians of the Muslim Brotherhood. Other gulf monarchies long despised the Brotherhood because they saw it as a well-organized force that could threaten their power at home, and they backed the military takeover that removed the Islamist president.”

UAE’s ambitions in Egypt, Libya and Tunisia can be seen as an attempt to curtail Qatar’s ambitions. This serves as an explanation for the payments made by the UAE to Quiller to publish accusations against Qatar and the UAE’s support of Sisi against Morsi and the Muslim Brotherhood.

 

(3) UAE’s attempt to limit Qatar’s political & economic ambitions in Egypt & Libya

The UAE’s political and economic ambitions in Libya and Egypt are not original, as Qatar had the same ambitions years before.

Since its creation in 1996, Qatar’s Al Jazeera News has long covered the political affairs in the Middle East. However, when the 2011 Arab Spring occurred, Al Jazeera, Qatar’s “most prized non-financial asset” began supporting the Muslim Brotherhood. Prominent Middle East scholar Alain Geish called Al Jazeera the “mouthpiece for the Brotherhood.

This fact is reinforced by the Qatar’s financial aid to President Mohamed Morsi, whose party the Muslim Brotherhood came to power after the 2012 elections. After a meeting with President Morsi, Prime Minister Hamad Bin Jassim Al-Thani stated that the Egyptian government would receive 2.5 billion U.S. Dollars from Qatar, 2.0 billion of which would be a deposit and 0.5 billion would be a grant.

 

Evidentially, the UAE’s influence on the media and financial contributions to governments is not original, as Qatar was the first to play the game for the same reasons.
Qatar has been said to desire political influence over the Arab World.  According to Le Monde:

“L’objectif du Qatar est de promouvoir le pays et de prendre un rôle plus actif dans le système international, notamment en Afrique du Nord car avec la chute du regime de Hosni Moubarak en Egypte, le pays ne peut plus jouer son rôle de leadership dans le monde arabe et le Qatar entend jouer ce rôle”, analyse Ibrahim Sharqieh.

According to Ibrahim Sharqieh, “The objective of Qatar is to promote the country and to take a more active role in the international system (field), notably in North Africa because with the fall of the regime of Hosni Mubarak in Egypt, whose country can no longer play its active leadership role in the Arab World, Qatar wants to play that role.”

The article notes plans to hinder the influence of other Arab countries, notably Saudi Arabia:

Selon Barah Mikaïl, “depuis 15 ans, le Qatar a l’ambition a minima de compter au rang de l’Arabie saoudite sur la plan diplomatique”. Or, “en se promouvant sur le plan régional, le Qatar exerce une compétition de facto avec l’Arabie saoudite”, estime Ibrahim Sharqieh.

“According to Barah Mikaïl, ‘for 15 years, Qatar has had the ambition to minimize the influence of Saudi Arabia on the diplomatic range.’ Now, ‘in promoting itself on a regional level, Qatar is competing with Saudi Arabia,” according to Ibrahim Sharqieh.

 

Economic plans in Libya and Egypt where Qatar attempted to exercise influence has also been apparent.
In Libya, Qatar’s  economic plans have been noted.  According to Le Monde:

Mais, la dynastie des Al-Thani a également quelques ambitions économiques, notamment dans le secteur pétrolier où la Libye est un producteur majeur. “En fournissant du carburant aux rebelles, les Qataris ont fait savoir qu’ils détenaient un savoir-faire pétrolier à mettre à disposition des Libyens. Peu de pétrole est exploité en Libye : le Qatar s’est donc mis en posture de médiateur pour écouler le pétrole libyen”, analyse Barah Mikaïl. Le Qatar se positionne ainsi pour la période de reconstruction, faisant valoir ses atouts et boostant ses perspectives. En offrant 400 millions de dollars aux Libyens lors de la réunion du groupe de contact sur la Libye, le 5 mai, le Qatar attend certainement un retour sur investissement, estime M. Mikaïl. Il pourrait en effet bénéficier de la reconstruction du pays pour s’imposer dans l’exploitation du pétrole et du gaz libyens, mais aussi renforcer ses positions en Afrique.

“The Al-Thani Dynasty has some economic ambitions, notably in the petroleum sector where Libya is a major producer. ‘In furnishing oils to rebels, the Qataris have come to know that they possess a savoir-faire in the oil and gas industry to make available to the Libyans. Very little oil is exploited in Libya. Qatar therefore poses itself as a mediator to sell Libyan oil’ . . . Qatar has also positioned itself for the reconstruction of Libya, evaluating its asses and boosting its prospects. By offering 400 million dollars to Libyans during a meeting with the contact group about Libya in May 5th, Qatar is certainly awaiting a return in investment, M. Mikaïl believes. It (Qatar) would in effect benefit from the reconstruction of the country to impose for the exploitation of Libyan oil and gas, as well as to reinforce their positions in Africa.”

Listed on page 189 of a book about Qatar written by French journalists Christian Chesnot and Georges Malbrunot titled “Qatar Les secrets du coffre-fort,” Qatar’s economic ambitions in Libya resemble those of the UAE’s current interests:

« Certes, son [l’Emir de Qatar] rêve secret d’établir un grand port en Libye pour acheminer le gaz qatarien vers le Maghreb ne s’est pas réalisé. Depuis longtemps en effet, les dirigeants qatariens avaient en tête de construire une réplique libyenne  de leurs installations de Ras Laffan. Ils avaient sollicité des partenaires européens, pour la logistique d’un tel investissement qu’ils étaient prêts à financer. Mais cela ne s’est pas fait. »

Certainly, the Emir of Qatar’s secret dream was to establish a grand port in Libya to carry the Qatari gas towards the Maghreb was never achieved. For a long time, the Qatari rulers have had it in their minds to construct a Libyan replica of their installations in Ras Laffan. They solicited European partners to do the logistics of the investments that they [the Qatari rulers] were ready to finance. But this [their dream] never occurred.”

Qatar’s ambition to exploit oil within in the Africa, both sub-Saharan Africa and the Middle East may already be underway as Qatar currently invests in Morocco. In the Jeune Afrique article, Qatar “already holds a 15% stake in Total E&P Congo and 20% in Total E&P Mauritania, as well as in pipelines in Egypt.”
With Qatar’s previous economic and political ambitions in Libya and Egypt, the UAE’s motives listed above are not original. Knowing the UAE’s support for Sisi in its anti-Muslim Brotherhood campaign, one may speculate whether the timing of the UAE’s support for Heftar was a reaction to Libya Dawn’s declaration to create a separate government which Qatar is allegedly behind.

 

We refer you to our short summary of this article.  “Scramble for Libya: the UAE and Qatar’s economic ambitions in Libya?  A Summary”

 

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.

 

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