How Did Tehran Enter the Palestinian Arena?

The Story of the Iranian Roar, from Khomeini's Storm to Sinwar's flood (Final Part)

A photo released by Iran's Nour News of a previous meeting between Khamenei and Sinwar
A photo released by Iran's Nour News of a previous meeting between Khamenei and Sinwar
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How Did Tehran Enter the Palestinian Arena?

A photo released by Iran's Nour News of a previous meeting between Khamenei and Sinwar
A photo released by Iran's Nour News of a previous meeting between Khamenei and Sinwar

A compelling story is often enough to send a journalist in search of the man who carries it. The search becomes even more urgent when that man carries two. That was the case many years ago when I set out to find Anis Naccache.

As a young Lebanese activist, Naccache joined Fatah’s student battalion and later worked under the patronage of Khalil al-Wazir — better known as Abu Jihad — a member of Fatah’s Central Committee. My curiosity was piqued when I learned that Naccache had served as an aide to the famed Venezuelan militant Carlos the Jackal during the kidnapping of OPEC ministers in Vienna on December 21, 1975. The world had never witnessed an operation of that kind.

Carlos became an international celebrity, much to the annoyance of the man who had dispatched him on the mission — Wadie Haddad, the head of external operations for the Popular Front for the Liberation of Palestine. I suspected that speaking with Naccache might also open a path to Carlos himself. It did. But Vienna was only part of Naccache’s story.

When anti-Shah demonstrations erupted in Iran in 1978, Naccache obtained Abu Jihad’s permission to train Iranian opponents of the Shah in camps operated by Fatah in Lebanon. He would later go further. In an interview I conducted with him, he claimed that the idea of creating the Islamic Revolutionary Guard Corps (IRGC) was born during a meeting in a Beirut apartment attended by a handful of individuals. The idea was later conveyed to the leaders of the Iranian Revolution, who embraced it on the principle that regular armies could not be trusted.

After the revolution’s victory, Naccache traveled to Tehran.

One day, in a small gathering, participants discussed the danger posed by Shapour Bakhtiar, the Shah’s last prime minister, who was living in exile. Some feared that enemies of the revolution might rally around him to destabilize, or even overthrow the new regime.
 

Former Iranian Prime Minister Shapour Bakhtiar in Paris the day after an assassination attempt against him in 1980 (AFP)
Former Iranian Prime Minister Shapour Bakhtiar in Paris the day after an assassination attempt against him in 1980 (AFP)

According to Naccache, the idea of eliminating Bakhtiar was raised. He revealed that a revolutionary court had sentenced Bakhtiar to death and that Ayatollah Ruhollah Khomeini had approved the sentence without publicly announcing it, effectively transforming it into something akin to a fatwa authorizing his killing.

Bakhtiar was living in France under heavy protection. Tehran had not yet developed teams capable of conducting foreign operations. Naccache said he volunteered for the mission with a small group. He obtained Bakhtiar’s telephone number, called claiming to be a journalist seeking an interview, and was surprised to receive an appointment. He visited the residence, conducted the interview, and studied the premises and the vulnerabilities in its security arrangements.

On July 18, 1980, Naccache and his team returned to assassinate Bakhtiar. A reinforced door prevented them from reaching their target. The operation left two policemen and a French woman dead. Naccache was wounded and arrested.

Throughout the 1980s, Iran’s demand for his release overlapped with a series of kidnappings of French nationals in Lebanon by shadowy organizations seeking to exchange them for Naccache. After ten years in prison, France eventually struck a deal and released him.

When I asked who in Iran had known about the assassination plan, he replied: “I informed Mohsen Rafighdoost, who was responsible for the Guards’ administrative staff, and Mohsen Rezaei, a member of its command.”

The Lebanese-Palestinian-Iranian overlap would emerge elsewhere. Imad Mughniyeh — known as Hajj Radwan and accused of involvement in attacks against Israelis, Americans, and Arab targets — had for a time served in Yasser Arafat’s security detail before joining Hezbollah, the centerpiece of Iran’s project in Lebanon and the wider region. Naccache told me that he had personally trained Mughniyeh at the latter’s request.

Naccache spoke with fascination and confidence about the Iranian project, and I listened carefully. He said the region would undergo profound transformations and that revolutionary Iran believed its responsibility began with “liberating the Middle East from American occupation, whether direct or disguised.”

According to him, leaders of the Revolutionary Guards believed that “the American thread” was what guaranteed the stability and survival of many regimes in the region, and that cutting that thread would transform the Middle East’s map and balance of power.

When I asked whether General Qassem Soleimani belonged to this camp, Naccache replied that he was among its leading figures and was working systematically to undermine the American presence throughout the region.

“The revolution never concealed its desire to expel America from Iran and from the region,” he said. “The first message was the seizure of the Americans in their embassy in Tehran. The second was the bombing of the Marine barracks in Beirut. Hajj Imad helped deliver other messages.”

He also argued that the program of tunnels, missiles, and drones was designed to reduce the strategic value of America’s regional allies by demonstrating that their territory was vulnerable and that alliance with Washington could not guarantee their security.

“If Israel is an American aircraft carrier,” he asked, “what remains of its prestige when every inch of it can be reached by the missiles of the Axis of Resistance?”

Naccache also maintained that Hassan Nasrallah’s personality had earned him the trust of Supreme Leader Ali Khamenei and elevated him to the role of a partner in shaping Iran’s Arab policies, particularly in countries bordering Palestine.

“Nasrallah and Soleimani,” he underlined, “are closest to the Leader’s heart.”

Perhaps the most striking thing I heard from Naccache was his prediction that “the major blow” was coming. “Sooner or later,” he said, “missiles will rain down on Israel from every direction. Many who emigrated there will regret their decision, and those doubts will open the door to the end of this entity.”

What I heard from Naccache was more explicit than what I later heard in the offices of Islamic Jihad, Hamas, or Hezbollah leaders, though it pointed in the same direction.

Ramadan Abdullah Shallah, the secretary-general of Palestinian Islamic Jihad, was equally convinced that the blow was coming. Khaled Mashaal was more cautious when discussing Iran’s role. Hassan Nasrallah, by contrast, never felt the need to conceal that Iran was Hezbollah’s principal source of weapons, funding, and strategic backing.

The historic handshake between Yasser Arafat and Yitzhak Rabin on the White House lawn following the signing of the Oslo Accords, under the auspices of US President Bill Clinton, in Washington in September 1993 (Getty Images)

Revolutionary Iran and the Palestinian Obsession

From the outset, Khomeini’s Iran sought influence in several regional arenas. None preoccupied it more than the Palestinian arena. Yasser Arafat, however, had no intention of placing the Palestinian cause in the custody of Iran’s revolutionary regime. Nor was he prepared to hand Palestinian decision-making to any power on earth.

To preserve the independence of that decision, he forged alliances, fought battles, and moved from one capital to another, resisting those who sought to turn Palestine into a bargaining chip in negotiations with the great powers. His long struggle with Syrian President Hafez al-Assad belonged to that category. “Palestine is a cause for me,” Arafat used to say. “For Assad, it is a card to be played.”

Arafat quickly concluded that the Iranian Revolution lacked what he described to some aides as “realism, careful calculations, and restraints.” He felt that some of its leaders were guided by illusions, particularly in their underestimation of both the United States and the Soviet Union.

Nor was he prepared to place the Palestinian revolution under the guardianship of Khomeini’s revolution. He sensed that the new Iran would soon find itself in conflict not only with its neighbors but with more distant powers as well.

Arafat’s appearance in Tehran six days after the revolution’s victory was historic, but it did not lead him to pledge allegiance to Khomeini as others did. He kept his distance.

When Iranian revolutionaries seized American hostages in the US embassy in Tehran, Arafat explored the possibility of mediation. Tehran rejected the idea. It reacted similarly when he attempted to mediate after the outbreak of the Iran-Iraq War. Iran therefore began searching for other Palestinian allies. In time, it also contributed to weakening Arafat’s authority. Then came a development larger than Khomeini’s Iran could comfortably tolerate.

On September 13, 1993, the Oslo Accords were signed. Yasser Arafat shook hands with Israeli Prime Minister Yitzhak Rabin on the White House lawn under the sponsorship of President Bill Clinton. Arafat had unleashed a second geopolitical earthquake, the first having been launched by Anwar Sadat.

His legitimacy remained intact. His image was inseparable from the first bullet fired by Fatah in the mid-1960s, an act widely credited with reviving the Palestinian cause. Iran felt threatened. It feared losing the bridge through which it hoped to reach the Sunni street and mobilize it against the “Great Satan,” not merely against Israel.

Tehran therefore intensified its investment in Palestinian Islamic Jihad and Hamas. Arafat’s calculations diverged not only from Iran’s but also from those of the so-called camp of “steadfastness and confrontation.”

The hostility directed toward him became intense.

During an interview in Damascus, Ahmed Jibril, secretary-general of the Popular Front for the Liberation of Palestine–General Command, accused Arafat of treason. I asked whether he had ever sent someone to assassinate him.

“No,” Jibril replied, “but every morning I turn on the radio hoping to hear of the birth of a Palestinian Islambouli.”

He was referring to Khalid Islambouli, the man who assassinated Egyptian President Anwar Sadat.

“I Have Lived Longer Than I Expected”

If Iran failed to draw Arafat beneath its mantle, it had greater success among Palestinian Islamists. Dr. Fathi Shiqaqi, the founder and secretary-general of Palestinian Islamic Jihad, opened the first window. The story began when Shiqaqi was a student at Zagazig University in Egypt. During the upheavals of 1978, fellow students asked him to prepare a ten-page paper on the events unfolding in Iran. The assignment captivated him.

He immersed himself in Islamic sources, Khomeini’s writings, and Muslim Brotherhood thought. He emerged convinced that the revolution in Iran was Islamic rather than sectarian.

Instead of a ten-page report, he produced a booklet titled Khomeini: The Islamic Solution and the Alternative. The booklet drew the attention of Egyptian authorities, who imprisoned him. He would later be jailed again and eventually leave Egypt secretly. He was arrested by Israeli authorities in Gaza in 1983 and again in 1986 before being deported from Palestine in August 1988.

The Israelis failed to appreciate that expelling Shiqaqi would strengthen his relationship with Iran and Hezbollah. Tehran welcomed him warmly. Khomeini received him in 1988 and pledged support for Islamic Jihad in both arms and funding. Thus Islamic Jihad became Iran’s first significant breakthrough into the Palestinian arena.

Ghassan Charbel, Editor-in-Chief of Asharq Al-Awsat, during an interview with the late Islamic Jihad leader Ramadan Shalah in December 2002 (Asharq Al-Awsat)

Following the Arafat-Rabin handshake, Shiqaqi contacted Ramadan Abdullah Shallah, who would later succeed him as leader of the movement. At the time, Shallah was living in the United States and pursuing an academic career.

“The time has come,” Shiqaqi told him. Shallah later explained to me that the phrase signaled a decision “to go further in jihadist action.” The era of suicide bombings was approaching.

On January 22, 1995, Islamic Jihad carried out a devastating double suicide attack at Beit Lid near Tel Aviv, killing 20 Israeli soldiers. Rabin vowed to punish those responsible, even if they were beyond Israel’s borders. It was widely understood that he had ordered Shiqaqi’s assassination. Only days later I visited Shiqaqi in his modest apartment in Damascus. “I am still young,” he said immediately. “It is not yet time for my memoirs. We still have much work ahead of us.”

When I asked about Rabin’s threats, he dismissed them.

“I believe I have lived longer than I expected,” he replied. “The blood of martyrs produces more fighters and escalates the confrontation. We are not concerned by such threats. In the end, as Imam Ali said, destiny is the guardian of life’s appointed term.”

The phrase stayed with me. So did the feeling that our first interview might also be our last. Israel does not easily forgive those who target its soldiers. Mossad’s reach is long, and Rabin was not a man likely to leave such a challenge unanswered.

On October 26, 1995, Mossad found Shiqaqi in Malta and killed him as he returned from Libya.

Ramadan Shallah later told me that Israeli intelligence had penetrated Libyan security and discovered the alias Shiqaqi was using: Ibrahim al-Shawish, a secret known only to Shiqaqi and Shallah.

Hassan Nasrallah and Ali Khamenei (Office of the Iranian Supreme Leader)

"If He Lives, He Will Become the Khomeini of the Arabs"

In Beirut, Hezbollah Secretary-General Hassan Nasrallah learned of Shiqaqi's assassination and immediately traveled to Damascus. He met Shallah and advised the movement to select a new secretary-general, just as Hezbollah had done after Israel assassinated its secretary-general Abbas al-Musawi, and to announce the successor's name in the statement mourning the previous leader.

According to Shallah, Nasrallah argued that doing so would help preserve the morale of the resistance camp. But, he added, Nasrallah did not interfere in the selection process itself, as that was an internal Islamic Jihad matter and the movement's allies trusted its choices.

Shallah also recalled that Shiqaqi greatly admired Nasrallah: "I was visiting Beirut at the end of 1989 when Dr. Fathi, may he rest in peace, returned from a Hezbollah event at which Nasrallah had spoken. At the time, Nasrallah was not yet secretary-general but a resistance official. Dr. Fathi spoke about him with tremendous admiration. I expressed surprise at the extent of his admiration, and in the presence of several brothers he said: 'If this man lives long enough, he will become the Khomeini of the Arabs.'"

I asked Shallah which model Palestinian factions drew upon when they began carrying out suicide operations. He replied that they had been inspired by the model pioneered by the Lebanese resistance when Abu Zaynab carried out the bombing of the Marine barracks in Beirut.

Hamas and the Road to Tehran

Despite Iran’s successes with Islamic Jihad, its greatest achievement was drawing Hamas into its regional program, exploiting the movement’s need for weapons and funding. Tehran had long sought an opening. Israel inadvertently provided one.

In late 1992, after members of the Qassam Brigades kidnapped and killed an Israeli officer, Israel deported roughly 415 Palestinian activists from Gaza and the West Bank, most of them affiliated with Hamas. Among them were future leaders such as Abdel Aziz al-Rantisi and Ismail Haniyeh.

Lebanon refused to receive them, and the deportees remained for months in the border area of Marj al-Zohour, transforming their tent encampment into a center for meetings, prayers, lectures, and solidarity visits.

The Revolutionary Guards and Hezbollah quickly seized the opportunity. They supplied food, medicine, and shelter. As relationships developed, they trained some of the deportees in explosives, secure communications, and combat tactics. Iran saw in Hamas a prize far larger than Islamic Jihad because of its much broader popular base. The relationship did not begin smoothly.

Some Hamas figures remained wary of Iran because of Sunni-Shiite sensitivities. Others hesitated to accept Iranian funding for fear that it would tie the movement to a political agenda rooted in Iran’s revolutionary worldview.

Over time, those reservations faded. Iranian support became institutionalized. When Hamas seized control of Gaza in June 2007 and expelled the Palestinian Authority, Tehran and Hezbollah recognized a major opportunity.

For Soleimani and Nasrallah, an autonomous Gaza offered the possibility of integrating Hamas into the concept of the “unity of fronts” and preparing it to participate in the long-awaited “major blow.”

The relationship would face serious tests, particularly after Hamas leaders left Syria rather than support Bashar al-Assad’s campaign against the uprising. Iranian and Syrian circles attacked Khaled Mashaal, accusing him of abandoning the resistance camp.

Iran reduced its support, though it never entirely severed assistance to the Qassam Brigades. Differences also emerged over Iran’s role in Yemen and allegations of Shiite proselytization there.

Yet Soleimani and Nasrallah remained committed to preserving the Palestinian component of the Axis of Resistance.

Gradually, relations recovered. Soleimani rewarded Hamas with an extensive program of financing, weapons transfers, local arms production inside Gaza, and advanced training. In 2012, Yahya Sinwar — released from an Israeli prison the previous year — was elected to Hamas’ political leadership in Gaza. Five years later he became head of the movement in the territory.

That same year, Ismail Haniyeh succeeded Khaled Mashaal as chairman of Hamas’ Political Bureau after Mashaal had held the post for twenty-one years.

The military wing gained increasing influence, particularly through Sinwar’s close relationship with the Qassam Brigades and their commander, Mohammed Deif.

An Iranian woman holds a poster featuring Ismail Haniyeh during his funeral procession in Tehran. The poster also depicts Qassem Soleimani, Abu Mahdi al-Muhandis, Fathi Shiqaqi, Sheikh Ahmed Yassin, Imad Mughniyeh and Mohsen Fakhrizadeh (AFP).

Sinwar’s Flood

On October 7, 2023, Sinwar and Deif realized their ambition. They launched what they called “Al-Aqsa Flood.” The following day, Hezbollah found itself under pressure to respond to the message sent by the architects of the operation and joined what it termed the campaign to support Gaza.

The world was startled by Israel’s vulnerability in the opening hours, especially after it became clear that the attack had left more than a thousand Israelis dead and scores taken hostage. But after the initial shock, Israel’s war machine awakened and opened multiple fronts.

Benjamin Netanyahu viewed the operation as bearing unmistakable Iranian fingerprints. The retaliation was severe, from Hezbollah in Lebanon all the way to Iran’s Supreme Leader himself. Sinwar’s Flood altered the face of Gaza and Lebanon. It also contributed to the downfall of Bashar al-Assad’s regime.

For the first time, American strikes hit Iranian nuclear facilities. Israeli aircraft dominated the skies over Tehran, while Iranian missiles struck targets inside Israel.

The Iranian roar eventually erupted into war, one that unsettled the region, rattled the global economy, and whose consequences remain unresolved.

 



From Wells to Budget: Where Does Libya’s Oil Money Go?

Tugboat Al-Hani begins operations at Zueitina port (National Oil Corporation)
Tugboat Al-Hani begins operations at Zueitina port (National Oil Corporation)
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From Wells to Budget: Where Does Libya’s Oil Money Go?

Tugboat Al-Hani begins operations at Zueitina port (National Oil Corporation)
Tugboat Al-Hani begins operations at Zueitina port (National Oil Corporation)

Libya depends on oil for nearly 98% of its income. Yet a central question persists: How are those revenues collected and spent in a country divided between rival governments? And why do Libyans complain of poverty when their country holds Africa’s largest oil reserves and produces and exports about 1.4 million barrels a day?

The process starts with the National Oil Corporation, which collects proceeds from crude oil and gas sales in US dollars and deposits them in accounts at the Libyan Foreign Bank. The money is then transferred to the Central Bank of Libya's accounts in Tripoli, recorded as state budget sovereign revenue, and converted into Libyan dinars.

The dollar trades at 6.36 dinars at the official rate, compared with 9.12 on the parallel market.

The Finance Ministry in Tripoli then issues spending authorizations under approved financial arrangements, after which the central bank releases funds to ministries and other state bodies through the main budget chapters.

Libya’s oil export revenues have swung sharply in recent years, ranging between $18 billion and $22 billion. They rose to about $18 billion in the first half of this year, nearly double the level in the same period last year, according to the Economy Ministry in the interim Government of National Unity.

Libyan oil expert Mohamed al-Shahati attributed the increase during that period to the war involving Iran.

Where is the breakdown?

Economists say Libya’s dependence on oil as its near-exclusive source of income lies at the heart of the crisis.

Ayoub al-Farsi, an economics professor at the University of Benghazi, said Libya showed how excessive reliance on natural resources could turn into a complex financial crisis when combined with political fragmentation and a lack of economic diversification.

“The Libyan economy is a clear example of how excessive dependence on natural resources can become a complex financial crisis,” he said, adding that political fragmentation and the absence of diversification had created conditions that directly affected people’s lives.

Al-Farsi, a member of the Central Bank of Libya’s Monetary Policy Committee, said the economy was built around a rentier-state model that depended almost entirely on oil exports to fund the treasury and provide foreign currency.

That dependence, he told Asharq Al-Awsat, had created deep structural distortions.

Agriculture and industry had been marginalized, the state bureaucracy had expanded to absorb workers into unproductive public-sector jobs, and the country had grown heavily dependent on imports for most consumer goods, he said.

Industrial activity remains limited, largely confined to the private sector and small-scale production. Critics also point to a market dominated by a small number of traders and importers, helping imported goods crowd out local production.

At protests across Libyan cities, the question is often the same: Where is the oil money going? Why are people struggling in an energy-producing country?

Al-Shahati said part of the answer lies in the difference between the value of the oil Libya produces and the amount that actually reaches the state treasury.

“Not every barrel produced in Libya is converted directly into a dollar entering the public treasury, because foreign partners have a share,” he told Asharq Al-Awsat.

Foreign companies have become production partners under various contractual arrangements, he said.

He also pointed to a stark contradiction: Libya produces oil, yet depends heavily on imports of gasoline, diesel, and other petroleum products to meet domestic demand.

That means a growing share of the country’s resources is converted into foreign currency to pay for fuel imports.

Al-Shahati said another problem was the lack of a regularly published, unified, and easy-to-read account that answers basic questions, such as: What was the total value of the oil produced? How much went to foreign partners? How much was exported for the state? How much went to the domestic market? And how much net revenue was actually available for public spending?

“The figures in circulation provide parts of the picture,” he said, “but they do not always show the full flow of revenues from the wellhead to the state’s public accounts.”

Libya’s oil fields are concentrated mainly in the eastern Sirte Basin, which holds about 82% of its oil reserves, as well as in the Murzuq Basin in the southwest and offshore areas along the coast.

Fuel and power crises

Those weaknesses in the oil revenue chain are unfolding as Libya grapples with a severe electricity crisis.

The country has suffered several “blackouts” in recent days, with some areas going without electricity for more than 17 hours a day.

Researcher Ezzedine Mokhtar sees the power cuts as one part of a wider pattern of recurring financial failures, including fuel shortages.

He blamed the hardship facing many Libyans on “corruption” and “unlimited spending” by two rival governments competing for power in the country’s east and west.

He also cited “oil smuggling through Arkenu, whose revenues go to specific individuals rather than the state treasury.”

Mokhtar said Libya’s subsidy system was another core problem, with more than 60% of the country’s budget going to fuel subsidies.

He called on the Tripoli government to phase out those subsidies gradually and to draw up a national plan to develop the workforce.

“We have no industrial skills in anything,” he said. “We import everything — yogurt, dairy products, fruit, vegetables, frozen fish, and even underwear. Everything comes from abroad.”

Libya ranks 10th globally in proven oil reserves, with about 48.3 billion barrels, according to Worldometer.

The UN Panel of Experts said in its latest report on Libya, covering October 2024 to February 2026, that Arkenu had moved at least $3 billion in oil revenues to bank accounts outside Libya between January 2024 and November 2025.

According to the report, Arkenu was established in 2023 as a private company and is indirectly controlled by Saddam Haftar, deputy commander-in-chief of the Libyan National Army. It faces accusations of “oil smuggling.”

Reuters previously investigated the company and concluded, based on shipping documents, London Stock Exchange Group data, and information from Kpler, that some oil revenues were being diverted away from the Central Bank of Libya.

How are revenues distributed?

Oil revenues are distributed across the four main chapters of the state budget, according to experts and economists.

Chapter One, salaries and wages, takes the largest share. It covers public-sector employees across eastern, western, and southern Libya through the unified national identification number system.

Chapter Two covers operating expenses for ministries and public institutions.

Chapter Three covers subsidies, including fuel, water, and electricity.

Chapter Four covers development and projects, including infrastructure, as well as allocations to the National Oil Corporation to sustain and increase production.

Al-Shahati said 26% of oil revenues went toward importing fuel products, equivalent to about $7 billion if crude traded at $70 a barrel.

This year, he said, the figure could rise to between $8 billion and $9 billion because oil prices had climbed above $85 a barrel and the gap between crude prices and diesel and gasoline prices had widened amid shortages.

He also pointed to higher domestic consumption driven by economic growth and a rise in smuggling.

A second problem, al-Shahati said, is the absence of an approved national budget, which would make it possible to determine how spending should be allocated among population groups and regions.

“What is clear is that the main cities control most spending,” he said.

He also pointed to “a large and obvious imbalance” in salaries across Libya’s three regions, job grades, and types of employment.

Those gaps, he said, risk widening financial divisions between social groups.

Even an agreement to unify development spending did not appear to be properly implemented because there were no clear standards and no comprehensive budget.

“There are no criteria for distributing oil revenues,” al-Shahati said. “The distribution process is random and unsustainable.”

Libya fell to 177th out of 182 countries in the 2025 Corruption Perceptions Index, from 173rd out of 180 countries in 2024, reflecting worsening corruption and no tangible improvement over the past two years.

Pressure on the local economy

A report by UN Secretary-General Antonio Guterres on Libya highlighted deep structural strains in the economy, driven by high public spending, near-total dependence on oil and gas revenues, and mounting pressure from food, fuel, and electricity prices.

The report, submitted to the UN Security Council on Aug. 17, covers the period from April 1 to July 28.

Citing the International Monetary Fund, it said Libya’s fiscal deficit reached 30% of gross domestic product last year, while public debt climbed to 146% of GDP.

Inflation also rose into double digits, eroding purchasing power.

The UN report noted unjustified increases in fuel consumption by military and security agencies and the energy sector, as well as repeated double purchasing.

The cost of institutional division

Libya’s political and institutional split and the presence of multiple authorities have made the economic crisis worse, al-Farsi said.

The distortions, he said, were no longer merely structural.

They had created parallel public finances and pushed consumer spending higher to meet the demands of rival authorities, sending salaries and subsidies to unprecedented levels.

Repeated shutdowns of oil fields in previous years, combined with lower actual revenues, pushed financial authorities toward deficit financing and higher public debt, al-Farsi said.

That flooded the market with money without a corresponding rise in domestic production.

Oil revenues reached $21.9 billion in 2025, according to the National Oil Corporation, up from $18.6 billion in 2024, an increase of 15%.

Al-Farsi said the deterioration in public finances had left monetary authorities in a difficult position and forced them into emergency measures to protect reserves and contain the deficit.

The result, he said, was a weaker national currency, liquidity shortages and a collapse in confidence.

Development tools had also been paralyzed.

“Monetary policy shifted from an instrument for stimulating growth and investment into a tool for managing daily crises,” he said.

Why has the crisis not been solved?

Economists point to several reasons.

Al-Shahati put “corruption spreading on an unprecedented scale” near the top of the list.

“Corruption is no longer confined to the margins,” he said. “It has come to dominate the core of public finances in key sectors, obstructing any attempt at reform.”

He also blamed the absence of an institutional vision following the breakdown of middle management, which had once linked fiscal and monetary policy to economic realities and provided unified political backing.

Policies, he said, had become detached from the economy and lost their ability to restore balance.

Conventional reforms that had worked elsewhere would not work in Libya, al-Shahati said, because the country lacked a central political authority capable of building an institutional vision and curbing corruption that had spread through both the state and private sector.

Al-Farsi said Libya could not escape its fiscal and monetary crisis without addressing the roots of the problem.

That meant unifying the management of public finances, curbing government spending, and launching genuine structural reforms that would gradually shift Libya from consuming oil rents to building a diversified economy.

Mokhtar also called on the Tripoli government to develop a strategic plan to make better use of human resources and support small and medium-sized industries.

For him, breaking Libya’s dependence on oil revenues is part of the way out.

Masoud Suleiman, chairman of Libya’s National Oil Corporation, said in media remarks last week that the country needed between $30 billion and $40 billion in investment to develop untapped oil and gas resources.

The corporation, he said, aims to raise production to 2 million barrels a day by 2030.


Bandar Abbas, Iran’s Trade Hub on Hormuz Thrust to Frontline of US War

Fishermen check their nets and small boats on the seashore in the port city of Bandar Abbas, in southern Iran on August 10, 2026. (AFP)
Fishermen check their nets and small boats on the seashore in the port city of Bandar Abbas, in southern Iran on August 10, 2026. (AFP)
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Bandar Abbas, Iran’s Trade Hub on Hormuz Thrust to Frontline of US War

Fishermen check their nets and small boats on the seashore in the port city of Bandar Abbas, in southern Iran on August 10, 2026. (AFP)
Fishermen check their nets and small boats on the seashore in the port city of Bandar Abbas, in southern Iran on August 10, 2026. (AFP)

With a long shoreline on the Strait of Hormuz, Iran's southern trade hub of Bandar Abbas has found itself at the frontlines of the war with the United States, with residents struggling to revive livelihoods battered by months of fighting.

Like elsewhere in Iran, economic strain has squeezed households since US-Israeli strikes triggered the Middle East war on February 28. But unlike much of the country, the port city of around half a million people has remained exposed to fighting even after an April 8 ceasefire brought relief elsewhere.

But despite a lull in hostilities in July, residents still feel squeezed. Saeed Tajik, 42, used to work at a shipyard before losing his job and turning to driving a taxi.

"The prices of housing and food have become extremely high. Almost all the basics -- rice, yoghurt, and oil -- have doubled," said Tajik.

Fuel shortages have long been common in southern Iran, where authorities restrict supplies in an effort to curb widespread fuel smuggling.

But now, "the queues have become longer ... it happens that we wait in the long line for fuel only to get told 'there is none' upon arriving," Tajik said as he drove past a station where motorists waited under the punishing summer heat.

Hormuz has emerged as a central flashpoint after an April ceasefire and June framework deal failed to resolve disagreements between Washington and Tehran over the future management of the strait.

During the war, US strikes hit bridges, highways and railway infrastructure around Bandar Abbas until mid-July, in what analysts saw as attempts to cut off the city and disrupt Iranian military logistics in the south.

- 'Nothing left' -

Inside the city, under a towering concrete statue of two armed men with their arms trained towards Hormuz waters, economic strains play out in long queues snaking outside petrol stations and soaring prices squeezing shoppers in local markets.

The city's repeatedly hit airport remained largely closed until August 15, leaving travelers facing arduous road journeys, sometimes combined with flights and boat crossings.

Outside the city, construction crews still toil under the sweltering summer sun to repair the Gachin bridge, split by a US strike, as cars rumble along a dusty detour below.

Along the waterfront, traditional wooden vessels known as lenjes sit moored alongside fishing and commercial boats, part of a centuries-old trading network linking southern Iran with Arab states across the Gulf.

Arash Tondro, 45, used his lenj to carry Iranian fresh and dried fruit to the United Arab Emirates and return with household goods and other imports.

"My income dropped to zero at the beginning of the war," said Tondro, who later rerouted some trade through Oman's Khasab port as regional seaways were disrupted and "many of the lenjes were hit by drones".

After the UAE suspended trade with Iran on Tuesday following a missile attack on a ship that Tehran denied carrying out, Tondro said he was again unsure how his work would be impacted.

"People in the south mostly rely on trade or fishing. If you take the sea and trade away from them, there is practically nothing left. We don't have agriculture here; whatever there is comes from the sea," he said.

- 'No sales' -

As night falls and August's oppressive heat begins to ease, fish vendors set up along a busy street, laying out shark, tuna and shrimp as the smell of the day's catch hangs in the humid air.

Among them is 22-year-old Anoush Mallah, who recently moved onto the street after soaring rents forced him to close his shop in one of the city's bazaars.

"Business has been terrible since the war started. There are no sales, it's very weak," he told AFP.

"People are short of money. The fishermen aren't going fishing either."

Many fishermen around Bandar Abbas only began returning to sea in recent weeks, after months ashore for fear of being caught in the crossfire of US-Iran fighting.

Diplomatic efforts have so far failed to end the war. For Mallah, the uncertainty only adds to the strain.

"Let it (the war) start and get some result; right now, we're just left in limbo," he said.


The Ethiopian Dam Dispute and Egypt’s ‘Right to Self-Defense’

Egyptian Foreign Minister Badr Abdelatty. Photo: Foreign Ministry
Egyptian Foreign Minister Badr Abdelatty. Photo: Foreign Ministry
TT

The Ethiopian Dam Dispute and Egypt’s ‘Right to Self-Defense’

Egyptian Foreign Minister Badr Abdelatty. Photo: Foreign Ministry
Egyptian Foreign Minister Badr Abdelatty. Photo: Foreign Ministry

Over the past two weeks, Egypt has repeatedly stressed its right to prevent any actions by Addis Ababa on the Nile River that could harm its water interests, stressing that it possesses the “right to self-defense” over Ethiopia’s Grand Ethiopian Renaissance Dam (GERD).

According to experts who spoke to Asharq Al-Awsat, Egypt’s signaling means that it “will not hesitate to use all legitimate means to safeguard its water security.”

They explained that the message is a stern warning to Ethiopia and suggests that Cairo is seeking to shift from a policy of protesting Ethiopian measures to preventive deterrence, aimed at stopping the establishment of a new status quo on the Nile.

New Egyptian Warning

Egyptian Foreign Minister Badr Abdelatty said that “Egypt will not allow the construction of additional dams ... that affect its water interests,” stressing Cairo’s commitment to a legally binding agreement that guarantees its water rights.

In a television interview on Wednesday evening, Abdelatty said that Egypt does not oppose African countries’ right to development, noting Cairo’s participation in dam and infrastructure projects in several Nile Basin states. However, he stressed the need to balance the right to development with the rights of downstream countries.

He also underscored Egypt’s commitment to protecting its water interests. “We have the right to self-defense to protect our interests and water security,” said the minister. “We will not accept any agreement regarding the Nile River unless it is legally binding,” he reiterated.

Mohamed Hegazy, a member of the Egyptian Council for Foreign Affairs and a former assistant foreign minister, says the right of self-defense is protected under international law after all peaceful means have been exhausted.

According to Hegazy, the core message is that Cairo still prefers agreement and negotiation, but it no longer accepts using negotiations to impose a fait accompli.

He argued that the most significant aspect of Abdelatty’s statements is that they send three simultaneous messages - Rejection of unilateral measures, rejection of additional dams, and insistence on the right of self-defense to protect water security.

Hussein El-Behairy, an African affairs expert at the National Center for Middle East Studies, said the minister’s recent statements reaffirm Egypt’s right to defend its historical and water rights in the Nile by whatever means the Egyptian state deems appropriate to preserve what Egyptians view as a matter of life and death.

Ethiopia’s Grand Ethiopian Renaissance Dam (GERD). Reuters

Escalating Egyptian Position

This is the third time Egypt has signaled the possibility of using its “right to self-defense” and preventing dam construction on the Nile.

On August 16, Egypt’s state news agency quoted an unnamed Egyptian official as saying that Cairo “will neither accept nor allow any party to control the flow of Nile waters to downstream countries,” stressing that the Egyptian state possesses multiple tools capable of protecting its people’s interests in the Nile.

The statement came in response to remarks attributed to Ethiopian Minister of Water and Energy Habtamu Itefa concerning the construction of additional dams on the Nile and control over water flows to downstream states, namely Egypt and Sudan.

Earlier, on August 4, Egyptian Minister of Water Resources and Irrigation Hani Sewilam stated during a press conference that Egypt “will not allow the construction of new Ethiopian dams on the Nile River.”

He said: “It is well known that Ethiopia has plans to build additional dams, but will the Egyptian state allow this? No.”

According to Hegazy, the ball is now in Ethiopia’s court. If Addis Ababa agrees to resume serious negotiations leading to a legally binding agreement on GERD, the crisis can be contained.

However, if Ethiopia continues to create new realities on the Nile, the scope for a diplomatic solution will narrow, making risk management and deterrence a more prominent part of Egypt’s strategy.

El-Behairy does not expect the escalation to pave the way for new negotiations on GERD unless the Ethiopian government is willing to make concessions in response to Cairo’s demands. These demands include reaching a legally binding agreement that guarantees Egypt’s water rights during periods of drought and severe drought, and providing Egypt with information regarding the operation of the dam in a manner that does not harm its water interests.