The Logical Consequence of Looting in Libya

Things for anti-Qaddafi forces in Libya have gone from difficult to worse. Yet even after Director of National Intelligence James Clapper made the mistake of telling the truth about Qaddafi’s strength, there has been little discussion about this report from James Risen and Eric Lichtblau (one exception is Dan Drezner).

Here’s part of what Clapper said (the White House has backed away from his comments and Lindsey Graham has called for his resignation for telling the truth).

“Over time I think the regime will prevail,” acknowledged Clapper. “With respect to the rebels in Libya, and whether or not they will succeed or not, I think frankly they’re in for a tough row.”

Clapper added he did not believe Kadhafi, who has earned a reputation as a maverick, planned to step down after more than four decades in power.

“I don’t think he has any intention of leaving,” Clapper said. “From all evidence that we have, which I’d be prepared to discuss in closed session, he appears to be hunkering down for the duration.”


Libyan air defenses, including radar and surface-to-air missiles, are “quite substantial,” Clapper explained.

“A very important consideration here for the regime is, by design, Kadhafi intentionally designed the military so that those select units willed to him are the most luxuriously equipped and the best trained.”

With that assessment–which was echoed in testimony by the head of DIA–in mind, consider Risen and Lichtblau’s description of the way Qaddafi has prepared himself financially to weather a rebellion. They describe that he has hoarded away “tens of billions” in Libya which will make the financial sanctions we’re using against him pretty useless.

The money — in Libyan dinars, United States dollars and possibly other foreign currencies — allows Colonel Qaddafi to pay his troops, African mercenaries and political supporters in the face of a determined uprising, said the intelligence officials, speaking on the condition of anonymity.

The huge cash reserves have, at least temporarily, diminished the impact of economic sanctions on Colonel Qaddafi and his government. The possibility that he could resist the rebellion in his country for a sustained period could place greater pressure for action on the Obama administration and European leaders, who had hoped that the Libyan leader would be forced from power quickly.

In other words, in addition to the tens of billions in assets Europe and the US have frozen, Qaddafi has still more loot available within his country, inaccessible to international sanctions. And that is one thing (the superior Russian arms he has that Clapper mentioned are another) that will allow Qaddafi to wait out the rebels.

Take a step back and think about the implications of this.

According to the story, Qaddafi probably started hoarding money in the 1990s. After the West lifted sanctions on Qaddafi in 2004, the process accelerated.

He has built up Libya’s cash reserves in the years since the West began lifting economic sanctions on his government in 2004, following his decision to renounce unconventional weapons and cooperate with the United States in the fight against Al Qaeda. That led to a flood of Western investment in the Libyan oil and natural gas industries, and access to international oil and financial markets.Colonel Qaddafi, however, apparently feared that sanctions would someday be reimposed and secretly began setting aside cash in Tripoli that could not be seized by Western banks, according to the officials. He used the Libyan Central Bank, which he controls, and private banks in the city. He also directed that many government transactions, including some sales on the international oil spot market, be conducted in cash. “He learned to keep cash around,” said the person with ties to Libyan government officials, who asked to remain anonymous for fear of putting them in jeopardy.

Then, in the weeks before the uprising broke out in Libya, Qaddafi continued to move money around to keep it accessible.

And with it, he is able to outfit and pay his elite troops, mercenaries from other countries, and loyal supporters. He can let oil just sit in the ground (as it did during the previous sanction period), because he doesn’t need to sell oil immediately to get money.

Because Qaddafi managed to loot shrewdly, he is largely immune from our non-military efforts to prevent him from committing genocide against his own people. His looted riches make him the match of most of his country, even backed by the international community.

And the thing is, we knew Qaddafi was doing this looting. Some of the State Department cables describe the shell games he used to get money out of the country, such as this one from 2006.

All of the Qadhafi children and favorites are supposed to have income streams from the National Oil Company and oil services subsidiaries. Saif is involved in oil services through One-Nine Petroleum and other Qadhafi family members and associates are believed to have large financial stakes in the Libyan Tamoil oil marketing company based in Europe and Oil Invest. AbdelMagid al-Mansuri, the former “director” of One-Nine Petroleum, was responsible for the ill-executed “U.S.-Libya Economic Forum” held at the Corinthia Hotel December 2004. The Forum was viewed as a blatant attempt to tie up lucrative percentage deals for Libyan elites looking for representative relationships with U.S. companies. During 2004, the internet-based publication Libya al-Yown distributed information tracing a large number of sweetheart deals to One-Nine’s Oil and Gas division XXXXXXXXXXXX in Scotland, home to a well-connected Libyan expatriate community. It is believed that millions of dollars are distributed to politically connected Libyans and Libyan expatriates via the XXXXXXXXXXXX. XXXXXXXXXXXX

And per the NYT story, DOJ has documents tracking how Qaddafi and top officials stashed money in Switzerland.

Justice Department documents show that Libya had worked with Swiss banks to launder international banking transactions for years, with “hundreds” of senior Libyan officials allowed to surreptitiously move money.

We watched as one man everyone knew to be brutally crazy stole his country’s riches and put them aside for the moment when he would need them. Having watched him do so, we are now limited in the means by which we can pressure him.


This is the logical consequence not just of Qaddafi’s looting, but of the looting elites have been doing more generally. To the extent money buys arms and–particularly with the proliferation of mercenaries–armies, and to the extent our multinational system makes it easy for the elite to hide money yet keep it accessible, any member of the elite with the ability to steal this much money could do the same thing.

And yet our society continues to just sit there and wink as elites here, in Libya, and around the world prepare for the time when they need to pay an army to kill their own people.

  1. MadDog says:

    OT – President Obama, at his press conference just now, responded to a question by ABC’s Jake Tapper regarding the treatment of Bradley Manning.

    Basically, President Obama said that he had discussed this with the DOD and had been assured that Bradley Manning’s treatment was in accord with DOD policies. President Obama also stated that Bradley Manning’s treatment was partially in response to concerns about Bradley Manning’s wellbeing.

  2. earlofhuntingdon says:

    Like that old orange juice commercial has it, privately paid armies aren’t just in North Carolina anymore. Anyone on the Forbes 400 could do it: a facebook founder could buy a small one, the Kochs and the Waltons something much bigger.

  3. eCAHNomics says:

    I predicted in an earlier thread that O would switch back to Gaddafi now that it seems like he’s winning. U.S. always is more comfortable with a dictator, esp one they think they can manipulate.

    • onitgoes says:

      I saw your earlier comment and agreed at the time. Know it sounds like monday morning quarterbacking, but I always expect O to support Gaddafi, esp if G remained “connected.” G was willing to kill his citizens to stay on top, so from O’s persepective: what’s not to like?

      • eCAHNomics says:

        Whoever haz the oil in Libya is the one O will support, with a tilt toward Gaddafi.

        O haz bc so completely predictable it’s not even a fun game anymore.

    • Stephen says:

      I keep reading it is the British who were receiving most of the oil from Libya. There could be a mad scramble to renegotiate oil contracts. The leverage could be pretty substantial in Qaddafi’s favor. “Chinese Premier on line one sir.” To hell with those unfaithful imperialist dogs.

      • eCAHNomics says:

        There’s no honor among thieves.

        Read once in a book (which doesn’t make it true, but sounded plausible) that the Brits woulda been better off under Mossedeq, as he wanted only half the Iranian oil ind for Iran, the other half BP could still have. Once the U.S. got involved, it took something like half, BP got 1/4, can’t remember who the other 1/4 went to.

  4. calculator says:

    So Qadaffi has hoarded diners. Dollars also? Euros also? There must be some currency that he has not hoarded. Libya imports most of its food. The UN should force Libya to pay for food with a currency it has not hoarded.

  5. Robespierre says:

    “And yet our society continues to just sit there and wink as elites here, in Libya, and around the world prepare for the time when they need to pay an army to kill their own people.”

    So it is and has been, and people need to keep aware that they may someday face these kinds of challenges. But I am still made hopeful by words from a man of peace:

    “When I despair, I remember that all through history the way of truth and love has always won. There have been tyrants and murderers and for a time they seem invincible but in the end, they always fall — think of it, ALWAYS.”
    ~ Mahatma Gandhi

  6. Stephen says:

    I am assuming she dreads spinning this all in the near future for public consumption. Make up your mind Barry.

    • eCAHNomics says:

      Hillary doesn’t dread any such thing imo. She would be much more comfortable with Gaddafi in charge, so she’ll just change her public statements, just as she has done in the past. (Oh, so maybe I wasn’t fired on when I was leaving the plane in wherever…)

  7. stratocruiser says:

    Reminds me of a somewhat painful lesson I learned in my late teens. “If she’ll cheat with you, she’ll cheat on you.”
    If Kadaffi (Guadaffi, Khaddaffi, Khguaddaffghi?) is a brutal thug in the 90’s, why expect anything else a decade later. Now, do we have to go up against our own equipment if we contemplate military action?
    Were we smart enough to install a remotely-activated bomb hidden in the bowels of his fighters? I doubt it.
    These murderous potentates seem to have learned the real lesson of Egypt. Don’t let the demonstrations get started.
    I have been seeing this all my life. Tienenman Square, Kwan-ju, Ruanda, Sabra/Shatila, Checkoslovakia, Hungary, “Never again” my ass

    • mzchief says:


      I will never forget the Tienanmen Square incident as the Chinese government immediately attempted to recall one of the post-docs to mainland China. The lab head was quick on the uptake and skillfully prevented it through a “save face” maneuver as we thought they’d simple kill the person and the whole family if the person returned under those conditions.

  8. mgloraine says:

    Can’t do a no-fly zone, eh? So what happened, did we run out of drones or something?

    Or is the problem that Israel is backing Ghadafi and we dasn’t go against the Likud?

    • Stephen says:

      Me thinks drones are ez pickens for fighter jets. Apparently Qaddafi has a fairly substantial ground to air missile defense system but I think it is probably more viable to run fighters against drones, that are like ducks in a barrel.

        • Stephen says:

          At first, I thought a strong showing of U.S. and British fighter jets in Libyan air space would promote more, if not all, Libyan fighter jocks to park and run as some did at the beginning, without a shot fired, but I didn’t consider the Libyan missile defense system that is triggered by ground forces. I think now fireworks would have been inevitable using that strategy.

    • eCAHNomics says:

      A no fly zone involves a lot of bombing before it can be effective.

      Bombing involves a lot of “collateral damage.”

      • mzchief says:

        The US wants to justify fighting a war to establish a no-fly zone but the evidence is that the private mercs had already been sent in by multiple banksters posing as sovereigns (can provide citations). Jeebus. Will the UN take the same approach to impose a no-fly zone? I would like to see an retrospective/analysis of that.

        Unfortunately, I think that “collateral damage” is actually well understood by Mammon-Is-God speculators. According to KrisAinCA March 10th, 2011 at 11:00 pm @ 120 “currency speculators are already slamming the Asian markets. 30 minutes after the quake.” Howevah,

        if an earthquake flips its wings in Japan, does the Eurozone go bankrupt, especially in the month when its most insolvent countries face billions in debt rollover requirements, tens of billions in maturity funding needs, even more in deficit funding requirements… and no cash?

        (excerpt “Will The Japanese Earthquake Be The Straw That Breaks Europe’s Back?,” by Tyler Durden on 03/11/2011 09:01 -0500)

        Seems to me the reign of terror by the banksters on Mother Nature and the peoples of the Big Blue Marble couldn’t end fast enough.

    • TarheelDem says:

      Tell me what you think a drone would do to enforce a no-fly zone, and how that would help. Are you assuming that drones have air-to-air missile capability?

      • mgloraine says:

        No, I was envisioning the targeting of SAM sites and planes on the ground. The Libyan air force doesn’t have that many planes. But I’m no military strategist or tactician. It just seemed like a better use of those things than targeting “suspected militants” in AfPak.

        • TarheelDem says:

          The reason for my question is that I am not sure that a drone can carry heavy enough armament to to take out a SAM site or even to carry air-to-air missiles. If my memory is correct, drones were originally created for reconnaissance an only retrofitted for anti-personnel missions. No doubt there are efforts to move toward heavier armaments, but that increases the size of the drone and makes it more subject to interception.

          Key point: There are no technological silver bullets.

  9. TarheelDem says:

    Wasn’t Switzerland the first country to “freeze Libyan assets”, and didn’t they do it unilaterally? Either they did or they didn’t and spun the story.

    It is clear that the US is going to pretend to dither and let Europe take the risk of imposing a no-fly zone. If there is a US role, it will involve passing AWACS information to the European countries. Those aircraft carriers will respond when there is an attack on cargo planes delivering humanitarian supplies. No not “humanitarian supplies” but humanitarian supplies. The Obama administration really does not want to get engaged in this fight.

    It is unlikely that Muammar Gaddafi will remain in power. Already, it looks like Saif al-Islam Gaddafi is exerting operational control over the government. The old man might find it convenient to “retire” after things settle down, assuming that Clapper is proved correct.

    The fact is that the more Gaddafi extends his troops to the west and east, the fewer remain to keep the lid on Tripoli. And no one knows how many folks in Tripoli might lose their fear by then.

  10. shekissesfrogs says:

    Craig Murray has some enlightening posts. He says that his contacts have told him that Berlusconi is apoplectic that his secret cash skimming of the oil deals will come to light and that he might not survive the backlash.

    He thinks that Libyans need to be left to their write their own destiny:
    Whether It Matters When Arabs Die Depends On Who Is Killing Them

    The Libyan National Council recognised by France includes some good men but also includes Gadaffi’s former interior minister and former head of the national security service. These are people drenched in the blood of dissidents. You can be quite sure that the rush by Western governments to pick a side is related to positioning by oil interests seeking to benefit from those who take over power.

    None of which is to excuse Gadaffi or demean the thousands of ordinary people genuinely fighting for freedom. They should be supported. But anyone who believes the NATO governments are acting from humanitarian concern is a fool. This is their chance to capture and tame the Arab revolution. The African Union was quite right to reject outside intervention.

    He and Ruth, a commenter speculate about the captured special forces.

    And now we have a posse of the SAS and MI6, motoring around the Libyan desert pretending to be Fitzroy Maclean, before ignominiously being captured, detained and thrown back as of no value.

    What on earth were they playing (I use the word advisedly) at? WHat on earth came over Hague to authorise this extremely daft blunder into a highly delicate situation? The one thing we do know is that the cover story is nonsense. They were not there to establish contact with the rebel leadership. Our Ambassador, Richard Northern, already had close contact with the rebel leadership and indeed was able to phone the rebel leaders up and beg for the release of our crack squad. Hague had not even thought it necessary to tell our Ambassador about the operation. […]

    Very interesting comment here by Ruth which I am elevating to the main body of the post[…]

    The Guardian quite clearly states that the SAS men had been in the country for two days. Most reports say that they landed in the dark in the early hours of Friday morning. First reports stated they were picked up on Saturday by the rebels. All the reports I have read state that they were found a few kilometres from Benina, Benghazi’s airport. Ramjah, the big arms depot supplying the rebels, is a few kilometres from Benina in the very same direction. The depot exploded at 7pm on Friday. There had been no planes in the vicinity.

    I am pretty secure in my contention that this was a raid, not a search for a meeting. It appears it may be physically possible that the mission was successful and the target the arms dump. No more than a possibility, but a great deal more plausible than the Hague explanation.

    [O]ne distinct possibility is that weapons were sold to Libya which the government doea not want people to know about. The US did not join in Bliar’s Libya love-fest. A very large percentage of British manufactured arms include components made under license from the US, with strict controls on to whom they can be sold on. We wouldn’t want that kind of stuff turning up in any arms dumps.

    Funny that Clapper brings up Russian Arms deals.

  11. ottogrendel says:

    “They describe that he has hoarded away “tens of billions” in Libya which will make the financial sanctions we’re using against him pretty useless.”

    Sanctions usually hurt the people not the leaders. Often, to weaken the people is precisely why they are imposed. It was in this way that the US used them against the Iraqis. So maybe sanctions against Libya weaken the people opposing Qaddafi, he puts the rebellion down and stays in power, and keeps selling oil to Europe. Meanwhile, the US gets to pretend they made an effort to correct Qaddafi’s abuses and were on the side of democracy.