Three Precious Gifts to Tehran from Saddam Hussein, Osama bin Laden, and George W. Bush

(FILES) Photo taken 01 February 1979 at Tehran airport of Ruhollah Khomeini (C) leaving the Air France Boeing 747 jumbo that flew him back from exile in France to Tehran. Getty Images
(FILES) Photo taken 01 February 1979 at Tehran airport of Ruhollah Khomeini (C) leaving the Air France Boeing 747 jumbo that flew him back from exile in France to Tehran. Getty Images
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Three Precious Gifts to Tehran from Saddam Hussein, Osama bin Laden, and George W. Bush

(FILES) Photo taken 01 February 1979 at Tehran airport of Ruhollah Khomeini (C) leaving the Air France Boeing 747 jumbo that flew him back from exile in France to Tehran. Getty Images
(FILES) Photo taken 01 February 1979 at Tehran airport of Ruhollah Khomeini (C) leaving the Air France Boeing 747 jumbo that flew him back from exile in France to Tehran. Getty Images

Most people in today’s Middle East were born after 1979. Yet they often overlook how profoundly that year shaped their countries, their stability, and their daily lives. It unleashed storms, wars, and leaders whose ambitions and dangers far exceeded the borders from which they emerged. Some observers even see a direct link between that pivotal year and what is unfolding today around the Strait of Hormuz following the recent US-Israeli war against Iran and its military arsenal.

Few years in modern history can rival 1979 in significance or consequence.

That year, Khomeini returned to Tehran from exile in Paris. The reactor of the Iranian Revolution quickly began emitting its political radiation, especially after the institutionalization of the doctrine of Wilayat al-Faqih, the Guardianship of the Islamic Jurist.

The same year, Iraq’s presidential palace effectively fell into the hands of the country’s strongman, Saddam Hussein, who eased President Ahmed Hassan al-Bakr into retirement under the burdens of age—and perhaps regret.

In 1979, Egyptian President Anwar Sadat also signed the Camp David Accords with Israeli Prime Minister Menachem Begin in Washington under the sponsorship of President Jimmy Carter.

These developments soon intersected with a major international event. Soviet leader Leonid Brezhnev committed what many would later regard as the grave error of invading Afghanistan. The Kremlin walked into a trap. From among the fighters who flocked to that battlefield would emerge Osama bin Laden, the man who would inaugurate the new century with the attacks on New York and Washington, unintentionally paving the way for the removal of Saddam Hussein’s regime.

On January 16, 1979, amid mounting protests and demonstrations, Shah Mohammad Reza Pahlavi left Iran, entrusting the country to the government of Shapour Bakhtiar. Those around him tried to portray the departure as a temporary vacation. In reality, it was a one-way journey. America had abandoned its ally.

The decisive turning point came swiftly. On February 1, a plane from Paris landed at Tehran’s Mehrabad Airport carrying an extraordinary passenger: Ayatollah Khomeini, returning after fourteen years in exile. The massive crowds that greeted him delivered an unmistakable message. The Shah’s regime had fallen. The revolution had triumphed.

Ruhollah Khomeini (L) prays with the Iranian opposition leaders after receiving them at his Pontchartrain mansion, west of Paris, on November 6, 1978. (Photo by Joel ROBINE / AFP via Getty Images)

Decision-makers across the region watched carefully. Few were more alarmed than Saddam Hussein, then the powerful deputy leader of Baathist Iraq. Events in Tehran accelerated rapidly. The Islamic Republic was proclaimed. The doctrine of Wilayat al-Faqih was enshrined. The constitution incorporated language committing the new state to “exporting the revolution” under the banner of supporting the oppressed.

Saddam Refuses to Kill Khomeini

History could easily have unfolded differently.

During Khomeini’s years in Najaf, he was a difficult guest. Iraqi authorities frequently complained that he sought to evade the restrictions attached to his residency. After the Algiers Agreement of March 6, 1975, signed by the Shah and Saddam Hussein under the auspices of Algerian President Houari Boumédiène, both sides pledged to cease supporting each other’s opponents.

Iraqi officials repeatedly reminded Khomeini of the understanding. He effectively refused to commit himself to ending political activity against the Shah.

According to former Iraqi officials, Iraqi intelligence one day proposed arranging Khomeini’s assassination and blaming the Shah’s security services. Saddam’s response surprised them. He reportedly asked: “Do the people making this proposal not understand that Iraq does not betray its guests?”

Thus Khomeini remained alive.

Once the Iran-Iraq War began, however, eliminating him became an obsession for Saddam’s half-brother Barzan al-Tikriti, the head of Iraqi intelligence. Reaching Khomeini was difficult, though Iran in 1981 had not yet fully consolidated its security institutions.

Iraqi intelligence developed ties with the Kurdistan Democratic Party of Iran and with the Mujahedin-e Khalq. It helped coordinate operations that culminated in the devastating bombing of Iran’s parliament complex, killing dozens of senior figures. Soon afterward, Ali Khamenei was targeted by a bomb hidden inside a tape recorder, leaving him permanently injured in one arm.

Barzan remained determined to reach Khomeini himself. According to accounts from former Iraqi intelligence officials, Baghdad eventually recruited a cleric close to the Iranian leader and managed to plant a small explosive device inside Khomeini’s wool pillow. The bomb detonated when he was away from it. The attempt failed.

The Paris Interlude

Chance played an important role in Khomeini’s journey to power.

Forced to leave Iraq, he searched for a new place of exile. Years later in Paris, former Syrian Vice President Abdul Halim Khaddam recalled that Khomeini’s associates discreetly explored the possibility of relocating to Syria. President Hafez al-Assad was not interested.

Khaddam said Assad feared that hosting Khomeini could trigger not merely a political crisis with Iraq but perhaps even war between the two Baathist rivals. Khaddam advised Khomeini’s entourage to consider Algeria instead. They dismissed the idea, believing Algeria was too distant and likely to impose strict restrictions.

What surprised Khaddam was France’s willingness to receive Khomeini and provide him with a global platform.

During his stay in Neauphle-le-Château outside Paris, visitors streamed in from around the world.

Iraqi authorities sought to gauge his intentions. Khomeini had already demonstrated his ability to move Iranian public opinion through audio recordings that supporters distributed secretly inside Iran.

The Iraqi intelligence officer responsible for liaising with Khomeini during his years in Najaf was Ali Baweh, who had often facilitated his activities. Baghdad decided to send him to Paris. Former intelligence officials claim Baweh traveled with another man wearing a watch capable of recording conversations. Khomeini received them politely but showed no flexibility.

Asked about his plans after the Shah’s fall, he delivered an answer that landed like a bomb. After overthrowing the Shah, he said, the next objective would be “the overthrow of the infidel Baath regime.”

Saddam’s Obsession with Wilayat al-Faqih

When Khomeini appeared in Tehran surrounded by unprecedented crowds, Saddam understood that the storm would soon reach Iraq.

According to former presidential aides, the issue that troubled him most was not the revolution itself but the doctrine of Wilayat al-Faqih. Saddam believed it implied that a non-Iraqi cleric could demand the allegiance of Iraqi Shiites. To him, this represented a direct threat to Iraq’s sovereignty and cohesion.

He reportedly kept a booklet explaining the powers of the Supreme Jurist as understood by Khomeini and studied it carefully. By September 1980, Saddam had concluded that war was inevitable. He believed Khomeini intended to penetrate the Arab world by first bringing down Iraq. Waiting, in his view, meant eventually fighting Iran in the streets of Baghdad. Better to fight on the border.

Iraqi leader Saddam Hussein visits soldiers in northern Iraq. (Photo by Jacques Pavlovsky/Sygma via Getty Images)

Many who knew him believe this conviction also strengthened his determination to remove Ahmed Hassan al-Bakr and assume full power. Since the Baath Party’s return to government in 1968, Saddam had chosen to remain formally second in command, benefiting from Bakr’s legitimacy while gradually reshaping the military and state institutions around himself.
On July 16, 1979, Bakr finally departed. The age of Saddam had begun.

Former Foreign Minister Hamed al-Jubouri later recounted a revealing conversation with Bakr. When Jubouri once attempted to resign, Bakr reportedly pointed to the presidential chair and declared: “I would urinate on the presidency if it cannot even preserve the dignity of the president.”

Then, with tears in his eyes, he added: “Forget resignation. I cannot accept yours. Who can accept mine? We are prisoners. We do not possess the right to resign.”

“We Will Smash the Iranians’ Heads”

Saddam’s decision to go to war preceded his formal assumption of the presidency.
Salah Omar al-Ali, one of the veteran Baathist leaders who helped bring the party to power in 1968, recalled a revealing conversation during the Non-Aligned Movement summit in Havana in September 1979.

Iraqi President Ahmed Hassan al-Bakr and Saddam met Iranian Foreign Minister Ebrahim Yazdi. Despite tensions along the border, the atmosphere was constructive.
Hoping to reinforce that mood, Salah Omar al-Ali later spoke privately with Saddam and stressed the importance of peaceful solutions and economic development.

IRAQ - JANUARY 01: Iranian POW's waiting in line for food at the Ramadt detention camp under a smiling portrait of Iraq leader Saddam Hussein during the war between Iran Iraq. (Photo by Bill Foley/Getty Images)

Saddam listened attentively before responding.

“Pay attention, Salah,” he said. “This opportunity may come only once every hundred years. The opportunity exists today. We will smash the Iranians’ heads. We will recover every inch they occupied. We will restore the Shatt al-Arab.”

Then he added sharply: “I never want to hear you speak again about peaceful solutions, humanitarian solutions, or settling problems with Iran. Listen carefully. I will smash the Iranians’ heads and recover every inch from Khorramshahr to the Shatt al-Arab.”

A year later, he launched the war.

Saddam believed several factors worked in his favor. Khomeini’s revolution had turned America into Iran’s enemy. The Soviet Union feared revolutionary contagion among its Muslim republics. The Gulf monarchies felt threatened by Tehran’s ambitions.

He convinced himself that Iraq alone could break the revolutionary wave threatening regional stability. He miscalculated.

He assumed Iran’s post-revolutionary chaos would guarantee a quick victory. He failed to understand how rapidly Iranian nationalism would fuse with religious fervor once Iraqi troops crossed the border.

The war did not destroy the Islamic Republic. Instead, it strengthened it. Khomeini ruthlessly consolidated power and entrenched the rule of the Supreme Jurist. Saddam’s greatest achievement after eight years of war was a ceasefire. Iran survived. Iraq was exhausted.

The Kuwait Gift

In the years that followed, Tehran received another unexpected gift.

General Nizar al-Khazraji, Iraq’s chief of staff at the time, later described how he learned of the invasion of Kuwait in August 1990.

“I was asleep at home,” he recalled. “Early in the morning I received a call summoning me to General Headquarters. When I arrived, I was told: ‘We have completed the occupation of Kuwait.’”

Khazraji was stunned. Defense Minister Abdul Jabbar Shanshal was informed in exactly the same way.

Imagine, Khazraji said, an army being pushed into such an adventure without the knowledge of either its defense minister or its chief of staff.

A few days later Saddam explained that secrecy had been necessary to preserve surprise. He added that Kuwait had been liberated by forces reporting directly to him rather than to the regular chain of command.

Khazraji saw the decision as the product of arrogance born from Saddam’s belief that he had emerged victorious from the war with Iran.

The consequences were enormous.

The world’s attention shifted decisively from the “Iranian threat” to the “Iraqi threat.” Operation Desert Storm expelled Saddam from Kuwait and left Iraq wounded, isolated, and under sanctions.

Meanwhile, Iran caught its breath and resumed its long-term regional project.

The Gifts of Osama bin Laden and George W. Bush

Another chain of events that began in 1979 would transform the Middle East.

The Soviet invasion of Afghanistan triggered alarm throughout the West. Washington resolved to make Moscow pay dearly. Volunteers poured into Afghanistan from across the Arab and Muslim worlds. The United States encouraged the jihad against Soviet forces and supported many of the fighters.

Among them was a wealthy young Saudi named Osama bin Laden.

On Afghan soil, al-Qaeda was born.

ARLINGTON, VA - SEPTEMBER 12: President George W. Bush and Secretary of Defense Donald Rumsfeld survey the damage at the Pentagon building September 12, 2001 in Arlington, VA. (Photo by David Hume Kennerly/Getty Images)

On September 11, 2001, bin Laden carried the conflict to the American mainland. Civilian airliners destroyed the towers of the World Trade Center. Thousands were killed.
America had been struck at the heart of its power and prestige. The world waited for the response.

Under President George W. Bush, encouraged by military and security institutions and by the neoconservative movement, the United States first overthrew the Taliban and then invaded Iraq, toppling Saddam Hussein.

For the generals of Iran’s Revolutionary Guard, the scene was almost unbelievable.

The Taliban regime, hostile to Tehran, had fallen at American hands. Saddam’s regime, which Iran had failed to overthrow during eight years of war, met the same fate.

Iran neither obstructed these outcomes nor mourned them. Yet Tehran also saw American forces deployed on both its eastern and western frontiers.

A new phase in US-Iran relations began.

Qassem Soleimani and officers of the Quds Force focused on undermining the American military presence, especially in Iraq, while avoiding direct confrontation with Washington.

Without intending to, bin Laden had delivered Iran another extraordinary gift.

After the attacks on New York and Washington, the world became obsessed with al-Qaeda. Soon afterward, attention shifted toward Saddam Hussein, whose danger was magnified relentlessly by Western political and media narratives.

The result was that Iran moved out of the center of the international spotlight.

The Bush administration advanced numerous arguments to justify war against Iraq: alleged weapons of mass destruction, obstruction of international inspectors, and suspicions that Saddam had never abandoned nuclear ambitions.

Most consequential was the effort to suggest a connection between Saddam Hussein and al-Qaeda.

No meaningful partnership ever emerged between the Iraqi regime and bin Laden’s organization. Yet Saddam did make the mistake of exploring the possibility.

While bin Laden was living in Khartoum, Iraqi intelligence officer Farouq Hijazi met him through the mediation of Sudanese Islamist leader Hassan al-Turabi. The discussion was lengthy and difficult. After returning to Baghdad, Hijazi advised Saddam to close the file. Contacts ended.

But the allegation lingered—and helped justify the invasion.

Syria, Soleimani, and the Iraqi Prize

Another event left a lasting mark on the region’s future. Days before the American invasion of Iraq, Syrian President Bashar al-Assad flew to Tehran. Anxiety about the coming war dominated his discussions with President Mohammad Khatami and Supreme Leader Ali Khamenei.

Bashar Assad meets with Qassem Soleimani

Both sides agreed that if American forces consolidated their position in Iraq, Syria or Iran could be next.

The answer, they concluded, was to bleed the American presence through resistance movements. Qassem Soleimani participated in some of those discussions.
Syria subsequently facilitated the movement of fighters into Iraq, while Soleimani methodically built resistance networks.

Iran wagered on geography—and won.

It encouraged its Iraqi allies to participate in governing institutions and successive governments, especially after executive power became concentrated in the office of the prime minister, a position conventionally held by a Shiite politician.

When the last American soldier left Iraq in December 2011, Iran had become an indispensable actor in Iraqi affairs.

The fingerprints of Soleimani were visible throughout the Iraqi state. After his death, many of those networks remained under the stewardship of his successor, Esmail Qaani.

Then came another opportunity. In July 2014, Abu Bakr al-Baghdadi appeared in Mosul after the dramatic collapse of Iraqi army units. Soleimani moved immediately, dispatching weapons to both Baghdad and Erbil.

Grand Ayatollah Ali al-Sistani issued his famous call to arms. Iran later helped transform the resulting mobilization into the Popular Mobilization Forces, which eventually became an official institution under the authority of the Iraqi prime minister.

Iranian influence now extended across parliament, government, the military, and the PMF. From Iraq to Lebanon, from the Palestinian arena to Yemen, Tehran steadily expanded its reach.

The cumulative result is difficult to miss. Khomeini survived. Saddam’s war failed. Saddam’s invasion of Kuwait redirected international attention. Bin Laden’s attacks transformed global priorities. George W. Bush’s invasion removed Iran’s most formidable Arab rival. Each actor pursued his own objectives. Together, however, Saddam Hussein, Osama bin Laden, and George W. Bush delivered three of the most valuable strategic gifts the Islamic Republic of Iran has ever received.



Gaza’s Diabetes Patients Face a War Without Respite

Palestinian child Al-Baraa Abdel Aal, who has diabetes, was forced to use expired medication in Gaza (Asharq Al-Awsat)
Palestinian child Al-Baraa Abdel Aal, who has diabetes, was forced to use expired medication in Gaza (Asharq Al-Awsat)
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Gaza’s Diabetes Patients Face a War Without Respite

Palestinian child Al-Baraa Abdel Aal, who has diabetes, was forced to use expired medication in Gaza (Asharq Al-Awsat)
Palestinian child Al-Baraa Abdel Aal, who has diabetes, was forced to use expired medication in Gaza (Asharq Al-Awsat)

Diabetes patients in the Gaza Strip are fighting two battles without respite - the fallout from an Israeli offensive that began nearly three years ago despite a ceasefire announced almost a year ago, and a daily struggle to secure medication as Israel tightens restrictions on the entry of drugs and other medical supplies, despite appeals from UN and health organizations.

The war has forced people with chronic illnesses to use expired medication as access to safe treatment has dwindled.

Habib Abu Daqqa, 11, who was diagnosed with diabetes a year before the war, has spent more than three months at Nasser Medical Complex after falling into a coma following an injection of expired diabetes medication.

His mother, Maysaa Abu Daqqa, who also has diabetes, told Asharq Al-Awsat that her son has become severely distressed and needs regular, safe treatment before he can leave the hospital.

She resorted to the expired injection because of his condition, despite warnings from some doctors, while others had told her it could still be used. He subsequently developed diabetic ketoacidosis and was admitted to intensive care.

Before the war, she recalled, both had reliable access to medication and appropriate food and followed regular treatment and dietary plans. She attributed their deteriorating health partly to the period of famine in Gaza.

In 2024, the Palestinian Health Ministry estimated that around 350,000 people with chronic illnesses in Gaza lacked necessary healthcare, including about 71,000 diabetes patients, 225,000 people with hypertension and 45,000 with cardiovascular disease.

Al-Baraa Abdel Aal, 14, who has Type 1 diabetes, also required intensive care after medication shortages forced him to take expired drugs.

“Before the war, I had access to all kinds of medication, especially insulin,” Abdel Aal told Asharq Al-Awsat. Suitable food was also readily available.

“I spent eight days in intensive care. I saw death,” he recalled, adding that expired medication and substitutes left him severely fatigued.

Wafaa Washah, 36, a Jabalia refugee camp resident displaced to Khan Younis who has had diabetes for 13 years, explained that economic hardship and her husband’s unemployment had deprived her of suitable food and even clean drinking water.

She recounted that she nearly slipped into a coma several times after using expired medication because no alternatives were available. During the famine, shortages of food, particularly flour, left her suffering frequent dizziness and fever.

Farah Lafi, 19, noted that the crisis extends beyond insulin to glucose test strips needed for frequent blood-sugar monitoring. She estimated that expired medications retain only about 30% of their effectiveness, undermining patients’ daily activity and ability to function.

Ibrahim Dhair, a diabetes consultant at hospitals in southern Gaza, described diabetes patients as among those hardest hit by severe drug shortages. Much of the available medication is expired and can lead to complications including diabetic ketoacidosis and admission to intensive care.

Even when insulin is available, proper refrigeration poses another problem, he explained. Many residents live in tents without basic services, while extreme heat can spoil medicines that must be stored at specific temperatures.

Dhair added that doctors sometimes issue guidance on how to manage available medicines, but with stocks continuing to run out, he described the current situation as a crisis beyond the healthcare system’s capacity to handle.


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.