Chatham House: Libyan war economy impeding government performance

Chatham House, the Royal Institute of International Affairs, is an independent policy institute based in London.

The 38-page report ‘‘Libya’s War Economy: Predation, Profiteering and State Weakness’’ authored by Tim Eaton, says that Libya suffers from interlinked political, security and economic crises that are weakening state institutions, damaging its economy and facilitating the continued existence of non-state armed groups.

The continuing rivalry between several authorities competing for control of the country has resulted in fragmentation and dysfunction and a war economy dependent on violence and in constant flux.

There had been some progress last year following a reduction in human smuggling, a tripling in oil revenues, and increased local action against fuel smuggling. But despite this, the dynamics that have supported the war economy’s rise remain.

The report said that Libya’s war economy is highly damaging for the future of the state for several reasons: first, it provides an enabling environment for networks of armed groups, criminal networks, corrupt businessmen and political elites to sustain their activities through illicit sales and predatory practices. Their operations are closely linked to the dispensation of violence, and are thus a spur for further conflict.

Second, the war economy perpetuates negative incentives for those who profit from the state’s dysfunction.

Only effective governance, supported by a durable political settlement, can tackle the foundations of Libya’s war economy.