Haftar’s Son Leverages $12 Billion Reconstruction Fund to Reshape Eastern Libya

Seated within the opulent confines of a heavily guarded Benghazi palace, Belgacem Haftar surveys a divided nation and makes a bold declaration: his reconstruction apparatus has achieved more in two years than Muammar Gaddafi managed in four decades of absolute rule.

At stake is the future of eastern Libya, a region devastated by the catastrophic September 2023 Derna floods that claimed an estimated 4,000 to 5,000 lives. Yet behind the concrete mixers and the scaffolding lies a calculated political manoeuvre. As the Director General of the Libya Development and Reconstruction Fund (LDRF), the 46-year-old son of military strongman Khalifa Haftar controls a multi-billion-dollar budget that is fundamentally altering the political economy of the North African state, consolidating his family’s grip on power while operating entirely outside the oversight of the internationally recognised government in Tripoli.

The Financial Engine of Eastern Libya

The transformation of Derna and Benghazi is being funded at a scale rarely seen in modern Libyan history. In June 2025, the eastern-based House of Representatives approved a staggering 69 billion Libyan Dinar (approximately 12.71 billion United States Dollars or 1.6 trillion Kenyan Shillings) budget for the LDRF, allocating roughly 23 billion dinars annually over three years. This financial behemoth operates as a parallel state treasury, bypassing the Central Bank of Libya and leaving international financial observers deeply alarmed.

Independent economists and regional security analysts have raised urgent concerns regarding the opacity of the fund. According to data tracked by regional researchers, the LDRF spent 12.8 billion dinars on infrastructure projects in 2025 alone. However, the exact origin of these funds—whether diverted from national oil revenues, foreign loans, or regional benefactors—remains fiercely contested. The lack of transparency has led critics to describe the LDRF as a financial black box designed to enrich loyalists and reward allied foreign contractors, particularly from Egypt and the United Arab Emirates.

A Blank Cheque Without Oversight

• Budget Allocation: The eastern parliament granted the LDRF a 69 billion dinar budget spanning 2025 to 2028.
• Project Scope: Over 155 distinct infrastructure projects have been launched, including the 2,000-unit Al-Salam housing complex in Derna.
• Casualty Context: The reconstruction follows Storm Daniel, which destroyed two dams and displaced over 40,000 citizens.
• Corporate Beneficiaries: Major contracts have been awarded to foreign entities, including Egypt’s Arab Contractors Company.

Anas El Gomati, director of the Sadeq Institute think-tank, warns that the eastern parliament effectively handed Belgacem Haftar a financial carte blanche. The absence of an independent auditing mechanism means the fund can execute megaprojects without public tendering or competitive bidding. This financial autonomy severely undermines the United Nations Support Mission in Libya (UNSMIL), which has repeatedly called for a unified national mechanism to direct recovery efforts and ensure democratic accountability.

The Post-Disaster Catalyst

The origins of Belgacem Haftar’s meteoric rise lie in the mud and ruin of Derna. On the night of September 10, 2023, extreme rainfall from Storm Daniel caused the catastrophic failure of the Abu Mansour and Belad dams. The ensuing deluge swept entire city blocks into the Mediterranean Sea. In the aftermath, the Haftar clan moved swiftly to commandeer the relief effort. By February 2024, the eastern administration established the reconstruction fund and installed Belgacem as its executive director.

Today, the results are highly visible. Bridges spanning the Wadi Al-Kouf, apartment blocks in the Al-Sabri district, and fully equipped hospitals are rising from the rubble. During a recent public address, Prime Minister Osama Hammad of the eastern-based Government of National Stability praised the Derna initiative as a national model for recovery. Yet, international human rights organisations note that the military regime has aggressively suppressed dissent in these areas, arresting activists who dare to question the quality or cost of the new infrastructure.

Regional Ambitions and International Implications

For observers in Nairobi and across the African continent, the Libyan scenario presents a stark warning about the privatisation of disaster recovery. When state institutions fracture, military factions invariably leverage humanitarian crises to legitimize their authority. The Haftar family’s strategy closely mirrors tactics employed by other authoritarian regimes across the Sahel and the Horn of Africa, where infrastructure development is utilized to purchase public loyalty and silence democratic opposition.

Furthermore, the United States and European nations find themselves in a diplomatic bind. In April 2026, the US military conducted its “Flintlock” military exercises in Libya, engaging with both eastern and western factions in an attempt to counter expanding Russian influence. However, by engaging with the Haftar-backed forces, Western powers inadvertently validate the parallel government that is currently draining the nation’s sovereign wealth.

As Belgacem Haftar continues to cut ribbons on gleaming new universities and sports stadiums, the illusion of a functioning state grows stronger. Whether this infrastructure boom will pave the way for a unified democratic Libya, or merely cement a military dictatorship funded by an unchecked treasury, remains the central geopolitical question of the decade.