The Islamic State has been expanding its grip on large swaths of Libya. The more difficulties the organization encounters in its native base of Syria and Iraq, the more it expands its links with affiliated militias in Libya.
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ISIS hopes that by exploiting the Libyan oil fields, it can gain control of alternate income sources to replace those it has lost in Syria and Iraq. Such developments are particularly worrying for European nations — and especially Italy — both because of apprehensions over increased migration from North Africa to Europe, and fears that northern Libya could serve as a base for terror attacks on southern Italy.
Egypt, and to a lesser extent Israel, are also worried about ISIS operations in Libya. Egypt fears the extremist terrorist organization will base itself on its western border, while Israel worries about the expanding channel for arms smuggling from Libya to the Islamic State affiliate in the Sinai Peninsula.
One of the main successes of the U.S.-led international coalition fighting ISIS in Iraq and Syria has been the damage to the group’s economic assets. Under military pressure, ISIS has been forced to retreat from areas formerly under its authority in Syria and particularly in Iraq. At the same time, the organization is suffering from a drop in income from oil sales (only partly due to the drop in world oil prices), and damage to its oil production facilities and to the tanker trucks that transport the oil itself — along with focused aerial attacks targeting the banks it controls.
The worsening of its financial condition in recent months has caused major cutbacks in the funds ISIS has been providing to local factions which have sworn fealty to the organization all over the Middle East, from Syria to Sinai. In the latter, the Ansar Beit al-Maqdes group has formally declared itself the “Wilayat Sinai” (Sinai Province) after transferring its loyalty from Al-Qaida to ISIS. The main reason most of these groups pledged their loyalty to ISIS was due to its financial support, and the present economic crisis has cast a shadow over these relations.
The Islamic State's increased interest in Libya was motivated by the loss of revenues in Iraq and Syria.
Recently, dozens of ISIS operatives, all veterans of the wars in Syria and Iraq, have been sent to Libya to help improve the combat capabilities of the local militias associated with the Islamic State. These groups are based around the city of Sirte, which sits in the middle of the coastal strip between Tripoli and Benghazi. The city itself was under their control, and it didn't take long for them to take over areas south of the region — including large oil reserves. U.S. intelligence estimates that local militias identified with ISIS have some 6,000 fighters, concentrated mostly around Sirte, who are taking advantage of the anarchy in Libya caused by the power struggle between various tribal coalitions and militias.
In addition to the control of the oil facilities and the danger to the oil supply from North Africa to Europe, the presence of ISIS in Libya is raising fears in Europe over its possible influence on the arrival of more refugees, and due to ISIS threats to attack European targets. Because of these advances by ISIS, the coalition has stepped up aerial attacks against the organization’s targets. A number of reports on special forces — including British soldiers — aiding ISIS’ enemies have appeared in the press.
The worsening situation in Libya and its consequences were discussed on Monday in a meeting between Defense Minister Moshe Ya’alon and his Italian counterpart Roberta Pinotti, who is visiting Israel. Large weapons caches belonging to the military of former ruler Muammar Gadhafi, who was overthrown and killed in 2011, still exist in Libya. This concerns Israel too, because Libya is now the main source of weapons for terrorist groups operating in Sinai, headed by the local ISIS affiliate.
Over the past two years, in light of Egypt's increased activity against smuggling and the growing distance between Sudan and Iran, the main smuggling channel in the region — from Iran via Sudan and Egypt to Sinai and then Gaza — has been almost completely blocked. But recent efforts by ISIS, alongside those of independent arms dealers, to move weapons from Libya to Sinai have increased. The weapons include anti-aircraft missiles, anti-tank missiles, rockets and mortar shells, among others.
The Israeli defense establishment has viewed Egyptian efforts to put an end to this smuggling channel positively; Cairo is even more worried about its existence. But for now, the trafficking of weapons from Libya to Sinai via Egypt continues.