Russia tells Malta it wants seized Libyan cash back

Russia seeking the release of $1.1 billion in Libyan currency, UK tells Malta to destory cargo, US wants Malta to retain evidence

The United States yesterday issued a belated statement of praise for Malta’s seizure of $1.1 billion in counterfeit Libyan currency, to counter Russian efforts at releasing the cargo.

The counterfeit cash was seized by Maltese Customs in November 2019 but the cargo has remained under lock and key since then.

The money was printed by a Russian state-owned company, Goznak JSC, in a bid to bankroll the rival Libyan government in the east of the country in Bayda, led by Field Marshal Khalifa Haftar. The cash was found in two 2,000-cubic-foot containers when the shipment stopped in Malta.

Russia has been supporting Haftar’s incursions against the United Nations recognised Government of National Accord (GNA) in Tripoli, with weapons and mercenaries.

“Russia is making its pressure felt through its diplomatic channels, both directly and indirectly,” a political source told MaltaToday.

This newspaper understands Russia is seeking the release of the currency, but the United Kingdom has told Malta it should destroy the cargo.

The United States, on the other hand, has told Malta to hold on to the cargo as evidence of Russia’s backing of Haftar and the Libyan National Army (LNA).

The Department of Justice on Saturday made its presence felt with a statement commending Malta’s seizure of the currency, which it said had been ordered by an illegitimate parallel entity.

“The Central Bank of Libya headquartered in Tripoli is Libya’s only legitimate central bank.  The influx of counterfeit, Russian-printed Libyan currency in recent years has exacerbated Libya’s economic challenges.

“The United States remains committed to working with the United Nations and international partners to deter illicit activities that undermine Libya’s sovereignty and stability, and are inconsistent with internationally-recognized sanctions regimes.  This incident once again highlights the need for Russia to cease its malign and destabilizing actions in Libya,” the DOJ said.

MaltaToday’s source said the statement was a reminder from United States of its interest in stifling Russian influence in the Libyan conflict.

Russia’s foreign ministry on Saturday said Libya has two central banks, one in the capital Tripoli and another in the eastern Libyan city of Benghazi, as the country is de-facto governed by two centres of power. “So, that’s not the dinars which are counterfeit, but America’s statements,” the ministry said.

It added that Goznak had sent the Libyan banknotes to the central bank’s address in Tobruk under the terms of a contract signed in 2015.

In a separate statement, the Russian company said the cargo was seized by customs officials in Malta when it was on its way to Libya in September 2019 in “breach of all norms of the international law”.

The Russian foreign ministry said US statements were false. “Within the framework of the fulfillment of its contractual obligations, the Russian factory sent a cargo with printed Libyan banknotes to the Central Bank in Tobruk. At the same time, we proceed from the fact that these funds are necessary to maintain the stable functioning of the entire Libyan economy... The head of the second Central Bank was appointed by the Libyan parliament, and accordingly, has the necessary international legitimacy. Thus, it is not Libyan dinars that are false, it is the American statements that are fake.”

Washington insisted that the only legitimate Central Bank that operates in Libya is located in Tripoli.

Russia’s presence in the war-torn country has long taken root: with mercenaries flying to bolster Haftar’s LNA and also attempting to broker a ceasefire between the two sides in Moscow, Russia has been more effective than America’s “leadership from behind” approach in Libya.

Russia began to print banknotes for Libya in 2016. The dinars made in Russia are slightly different from those printed by the British De La Rue company for the government of Sarraj.

War-torn Libya has two governments: the internationally-recognised GNA in Tripoli to the west, and the Interim Government, sited in Bayda to the east, which is dominated by Haftar and the LNA.

In April 2019, Haftar – backed by Egypt, the UAE, Russian mercenaries and also France – launched a bloody offensive on the capital.

But the tide has turned against Haftar since January, when Turkey started supplying armaments to the GNA, with whom it shares some ideological affinity through the presence of the Muslim Brotherhood in the government.

Turkey’s air attacks allowed the GNA to reclaim strongholds held by Haftar’s forces.

Malta too has lent a hand to the GNA’s efforts by withdrawing from the EU naval operation Irini, a mission intended to enforce the Libyan arms embargo but which targets Turkish shipments of weapons to the GNA.

The GNA extended its exclusive economic zone to Turkey’s, a move that has angered Greece for extending Turkey’s influence in the Eastern Mediterranean.

On the other hand, critics say Irini does nothing to stop Haftar’s supply of weapons from across the Egyptian board.

Since 2016, the eastern government has printed billions of Libyan dinars in Russia, a large part of which has been used to bankroll the LNA and its war efforts.

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