Gaddafi-Era Bombs Return to Haunt Libya’s Finances — What’s Behind the Fallout?

The Libyan Parliament has pushed back against renewed European efforts, led by the United Kingdom, to tap into Libya’s frozen assets, rejecting what it sees as attempts to exploit the country's wealth under legal pretexts. 

As Libyans are still waiting for the recovery of these funds, the move has sparked strong political and legal opposition in Tripoli, where officials insist the assets belong solely to the Libyan people and must remain untouched.

The British initiative was raised in the House of Lords on April 28, 2025, proposing to allocate part of Libya’s frozen funds to compensate victims of the Irish Republican Army, based on accusations that the former Libyan regime was involved in their deaths.

Libya’s foreign assets have been frozen since 2011 under UN Security Council Resolutions 1970 and 1973, intended to protect the funds from theft or misuse amid the chaos that followed the fall of Muammar Gaddafi’s regime.

These assets are estimated to exceed $200 billion, including bank deposits, bonds, stocks, and other investments, as well as 144 tons of gold—mostly frozen in European countries.

Parliamentary Rejection

These renewed efforts are based on longstanding accusations against Libya’s former regime of supporting armed groups in Northern Ireland. However, Tripoli insists that the current Libyan state cannot be held politically or legally accountable for the actions of the past.

Media reports indicate that between 1984 and 1987, Libya supplied the Provisional Irish Republican Army (IRA) with more than 120 tons of weapons, ammunition, and equipment.

Northern Ireland had been gripped by violence between Protestants and Catholics since the 1960s, prompting Britain to deploy troops to help restore order. Yet bombings, assassinations, and riots among all factions continued into the early 1990s.

Western reports claim the Libyan arms shipment prolonged the unrest for several more years until the 1998 Good Friday Agreement brought an end to three decades of bloody conflict.

At the time, following a wave of IRA bombings, Muammar Gaddafi declared: “The bombs that shake and break Britain are the bombs of the Libyan people. We sent them to the Irish revolutionaries so the British would pay for their past deeds.”

In response to the recent UK proposal, the Libyan House of Representatives, through Youssef al-Agouri, head of the committee investigating Libya’s frozen foreign assets, firmly rejected any attempt by the UK or other countries holding Libyan funds to seize or repurpose them.

According to Libya Akhbar on May 5, 2025, al-Agouri stressed that these assets belong to the Libyan people and must not be touched under any justification.

He asserted that any move to dispose of the funds would constitute a blatant violation of international law and directly contradict UN Security Council Resolutions 1970 and 1973, which clearly state that the assets are to remain frozen unless released with the consent of Libya’s legitimate authorities.

He warned that any unilateral action of this nature would be an attack on Libyan sovereignty and a violation of the Libyan people's rights.

Al-Agouri affirmed that the committee would take all necessary legal and political measures to protect the state’s assets and prevent their misuse.

He emphasized that any decision concerning these funds must be made with the approval of the Libyan people’s representatives and official institutions, within a framework that respects national sovereignty and the international community’s responsibilities toward Libya.

The committee is closely monitoring all international developments on this issue and warned against any unilateral decisions or measures that disregard Libya’s legal and political reality or undermine its economic rights, al-Agouri said.

Sovereign Rights

These assets are not merely financial holdings, but a reserve of sovereign rights that no party has the authority to violate, according to Libyan researcher Hassoun Barakat.

“As a fully-fledged member of the United Nations, Libya has the unconditional right to demand the return of these funds, and the international community should support this legitimate claim,” he told Al-Estiklal.

“Any complacency in addressing the issue could open the door to further violations that undermine nations’ rights to control their own wealth.

Academic researcher Sanussi Bseikri also noted that political considerations are deeply embedded in the issue of frozen assets, pointing to ongoing British pressure to use the funds to compensate victims of IRA attacks.

Speaking to Al-Estiklal, Bseikri stressed that Libya does not hold decisive control over these assets, as they are in the custody of foreign governments and subject to the UN’s classification system, which determines whether they remain frozen.

“Many experts believe these funds could have multiplied significantly if not for Western-imposed restrictions,” he said.

Bseikri emphasized that the primary beneficiaries of the current situation are the banks in the eight major countries where these assets are held—Austria, the UK, Canada, France, Germany, Italy, Luxembourg, and the U.S..

“Frozen accounts primarily affect the account holder, Libya, not the banks themselves, which continue to recycle and invest the funds.”

He also noted that the process remains shrouded in secrecy, with little transparency or reliable data. Bseikri argued that while Western justifications for withholding the funds may seem valid in principle, such as the lack of political stability, a unified government, or democratic transition, they ultimately appear to serve foreign interests above all.

Some claim the real problem lies in internal political conflict, with rival Libyan factions all vying for control of the funds to advance their own political or military agendas, further complicating their return to the state.

The political researcher stressed the need to convince the holding countries that Libya is capable of managing and using its assets effectively.

He also urged active engagement with the five permanent members of the UN Security Council, the U.S., China, Russia, the UK, and France, as they ultimately hold the power to influence the status of these funds.

“Such steps could mark the beginning of a way out of the crisis, but this requires Libya to present a credible image to the international community, starting with resolving internal divisions and achieving political reconciliation,” the researcher concluded.

Political Blackmail

The Voice of the People Party strongly condemned discussions in the British House of Lords regarding the use of Libya’s frozen assets to compensate victims of the Irish Republican Army (IRA), describing the move as “unacceptable political blackmail and an attempt to plunder the wealth of the Libyan people under false legal pretenses.”

According to Ean Libya, the party asserted that holding Libya accountable, more than four decades later, for the actions of a former regime constitutes “legal and political absurdity,” especially given the sweeping changes the country has undergone since 2011.

The UK itself played a role in dismantling Libya’s state institutions through its military intervention under NATO, which led to security chaos and internal conflict, for which Libyans alone have paid the price.

The party called on the countries involved in that intervention, chief among them the UK, the United States, and France, to offer fair compensation to the Libyan people for the human and material losses they have suffered since 2011.

It also urged all national forces to unite and reject any attempts to tamper with Libya’s frozen funds.

The party called for legal and diplomatic action to prosecute these countries before international courts, and to secure binding rulings that hold them accountable, ethically and financially, for the devastation inflicted on Libya.

Meanwhile, local news outlet Alsaaa 24 warned that the continued freezing of Libyan assets abroad, and unilateral moves by some states to seize or use them, “undermines the principles of international law and places Libya’s sovereignty and financial stability at risk.”

In an analysis published on May 3, 2025, the outlet noted that although more than a decade has passed since the fall of Muammar Gaddafi and the country’s political landscape has drastically changed, the assets remain frozen in clear disregard for Libya’s internal transformations and its people’s right to manage their national wealth.

“These funds are increasingly being exploited by some Western countries as a political bargaining chip, or as a tool to compensate victims of conflicts unrelated to the new Libya, raising serious questions about the true intentions of those holding them.”

The report highlighted repeated British efforts to legitimize the use of Libya’s frozen assets within the UK, under the pretext of compensating victims of IRA attacks.

“This proposal sets a dangerous precedent that violates the principle of sovereign immunity for states’ public assets.”

The outlet further emphasized that any use of Libya’s frozen funds without the consent of its authorities constitutes a clear breach of relevant UN Security Council resolutions and a violation of international legal norms protecting states’ ownership of their financial assets.

Politicizing the issue could erode trust in the global financial system and set a precedent that threatens the assets of other nations facing similar circumstances in the future.

“Libya is currently in a sensitive phase of political and economic reconstruction, and the frozen funds are a cornerstone of any future development plan,” according to the report.

Depriving the Libyan people of access to these assets, or manipulating them under political justifications, is a denial of basic rights and a setback to national stabilization efforts.

The report called on the United Nations, the African Union, and the Arab League to take a unified stance on the matter and exert real pressure on the relevant Western countries to immediately and unconditionally release Libya’s frozen assets.