How reconstruction efforts in Libya's east are cementing the Haftar clan's ambitions

Over a decade of turmoil following Libya's civil war has left nearly a third of Benghazi, the de facto capital of the east, in ruins, with much of the city’s historic buildings as well as strategically important administrative and business hubs reduced to rubble.

Over the past two years, however, the old, war-scarred city has become unrecognisable to its residents. Almost everyone who visits Benghazi is in awe of the dramatic reconstruction taking place.

The city’s urban landscape has been reshaped through a combination of construction and demolition, giving it a new, distinct feel.

However, experts believe “sinister motives” lie behind the city’s recent facelift, as it is driven by the investment and military influence of Khalifa Haftar’s sons who are using these efforts as a strategic means to further entrench their roots in Libya.

Saddam, Belgacem, Khalid, and al-Sadiq, the sons of Haftar, commander of the Tobruk-based Libyan National Army, and the new powerbrokers of eastern Libya, have complete authority over the reconstruction efforts of Libya’s eastern and southern regions.

This includes an “open-ended budget” and “the legal power to expropriate properties at will,” according to Faraj Ali al-Amari, a former advisor on technical affairs and reconstruction to the Presidential Council and a member of the Public Projects Authority’s board.

“These reconstruction efforts are certainly haphazard,” al-Amari told The New Arab. “They address the current bottleneck rather than comprehensive and scientifically planned reconstruction that would achieve coherent development goals.”

Salima al-Barassi, 45, and her family were forcibly evicted from their home in the Juliana area, where they had lived for more than three decades, without compensation. Their home, along with other areas like Sabri, Souq Al-Hout, Lethama, and Jamal Street - all prime coastal locations overlooking the Mediterranean - had been earmarked for redevelopment in Benghazi.

“Officials came to our house with stacks of papers and files, demanding that my father vacate the premises because our home was included in the new redevelopment plan,” said al-Barassi. “They only gave us two days to leave.”

This is the reality for many residents of Benghazi and other cities in eastern Libya who have been forcibly removed from their homes for similar reasons.

“Our home was three stories tall, covering 250 square meters, fully equipped and recently renovated,” she told The New Arab. “We had to abandon it suddenly, without any compensation, and resorted to renting in the city’s outskirts.”

Despite hundreds of these reports, economic expert and finance and banking specialist Jamal al-Shibani, on the other hand, views the ongoing reconstruction as part of broader development projects that benefit citizens.

“Reconstruction across various sectors attracts investors and provides job opportunities for young people,” he said.

“What we’re witnessing in the east, with road paving, bridge construction, and street expansion, will alleviate traffic congestion and facilitate better communication between areas and cities.”

Murky funding

Massive reconstruction projects worth billions of dinars are underway in Libya’s eastern cities, overseen by the Libyan Development and Reconstruction Fund headed by Belgacem Haftar.

The fund was established in response to the September 2023 Derna floods, which killed over 5,000 people. The political and financial disputes of Libya's two competing governments stalled initial response efforts.

Prime Minister Abdul Hamid Dbeibah, head of the Government of National Unity (GNU), allocated two billion dinars ($420,000) for the crisis, while the east-based parliament, the civil façade behind Haftar’s rule, assigned ten times that figure to the reconstruction committee formed by the parallel government.

In early 2024, the Libyan House of Representatives passed Law No. 1, transforming the committee into the Libyan Development and Reconstruction Fund led by Belgacem Khalifa Haftar.

The new body absorbed the powers of all previously formed government committees and had the authority to expropriate property for public benefit, provided fair compensation was offered, as required by law.

However, many Libyan citizens and investors have been forcibly stripped of their properties, lands, and businesses under the pretext of redevelopment, often without receiving the fair compensation mandated by law.

The law vaguely stated that the fund's revenue streams include a dedicated budget from parliament, as well as grants, loans, and contributions from both local and international institutions. This has raised significant questions about the sources of financing for these megaprojects, whose costs are estimated to be in the billions of dollars. 

According to al-Amari, there is considerable opacity surrounding the entities involved in these projects, particularly Egyptian and Emirati companies.

“The monthly reports issued by the Central Bank of Libya have not disclosed any financial allocations or expenditures to the fund,” he told The New Arab.

“The undisclosed funding sources might include surplus balances and funds previously borrowed from the Central Bank of Libya in Benghazi, during the tenure of the interim government led by Abdullah al-Thinni, or from the profits reaped by eastern Libyan authorities through the smuggling of oil and fuel, sold from ports under their control.”

"Reconstruction financed in this manner constitutes a significant waste of public funds and further entrenches corruption and embezzlement in Libya"

The financing could also stem from loans the Libyan government borrowed from commercial banks, secured by guarantees from the Central Bank, he added.

In July 2022, Dbeibah and Saddam Haftar, son of Khalifa Haftar, reached a deal appointing Farhat Bengdara, an ally of the latter, as head of the National Oil Corporation (NOC), replacing Mustafa Sanalla.

This move followed Haftar's partial blockade of oil production, which aimed to pressure Dbeibah to step down. The agreement, backed by international actors, sought to stabilise Libya by reshuffling key positions within the Government of National Unity (GNU) and placing Haftar allies in influential roles

“Perhaps the funds were directly obtained by the eastern authorities from the National Oil Corporation or through undisclosed methods involving the Central Bank of Libya,” al-Amari told The New Arab.

Earlier this year, Sadiq al-Kabir, Libya's former Central Bank governor, fell out with Dbeibah over the GNU’s unsustainable spending and its circumvention of the bank’s oversight.

To regain influence, al-Kabir aligned with Haftar's camp in the east, a move that has accelerated a shift in financial control, with eastern forces gaining influence over banks and access to significant assets from the Central Bank in Tripoli.

The Presidential Council in Tripoli, allied with Prime Minister Dbeibah, issued a decree removing al-Kabir in August, following escalating criticism over his management of oil revenue, and appointed Mohamed Abdul Salam al-Shukri, a former deputy governor, as his replacement.

Al-Kabir fled the country, citing threats and attacks from militias. In response, Haftar's forces halted oil production and exports in areas under their control, which include most of Libya's oil fields and terminals, a move that has significantly reduced the country’s oil output, driving up global oil prices above $80 per barrel.

“A reconstruction financed in this manner constitutes a significant waste of public funds and further entrenches corruption and embezzlement in Libya,” al-Amari said.

Oil tankers and Egyptian companies

“There are oil tankers leaving ports in eastern Libya under military supervision and protection, destined for the black market,” political analyst Nasser al-Haddar told The New Arab. “Scrap metal is also being smuggled and sold, as evidenced by the ships departing from Benghazi’s ports to unknown destinations.”

This large-scale operation has reportedly funnelled billions of dollars into reconstruction projects in cities like Benghazi, Derna, Al-Bayda, Ajdabiya, Al-Marj, Tobruk, Kufra, and now the entire southern region.

Egyptian companies have secured the lion’s share of these lucrative contracts, the latest being Arab Contractors and companies owned by Egyptian investor Naguib Sawiris, according to al-Haddar.

But why do Egyptian companies dominate these contracts, despite bids from numerous foreign firms, including American, Japanese, Korean, and German companies?

“The Russian and Egyptian intervention in Libya has been substantial, particularly with President Abdel Fattah al-Sisi’s support for the eastern camp with military equipment, machinery, and personnel during the 2019 campaign to capture western Libya,” political researcher Nasser al-Hawari said.

“Sisi made it clear when he announced, 'Sirte is a red line for Egypt’s national security.' It is only natural that such support would have pre-agreed returns in the form of reconstruction projects, investments, and contracts in Libya.”

He further elaborates that Egypt has been deeply involved in backing the military project in Libya by all possible means.

This was evident during military parades in eastern Libya, in which the Libyan army under Haftar flaunted the new equipment and machinery now at their disposal, despite Libya still being under Chapter VII of the United Nations Charter.

“The embezzled funds and unpublicised investments are all being funnelled into purchasing weapons and bolstering Haftar’s military power and his continued presence,” al-Hawari said.

This article is published in collaboration with Egab.