By 2016, a second phase took shape, characterized by European intervention aimed at curbing the flow of migrants across the Mediterranean. European policymakers pressured Niger to criminalize migrant movement and worked with Libyan armed groups affiliated with the state to suppress people-smuggling. These efforts temporarily reduced migration numbers but had unintended consequences. Smuggling operations adapted, shifting routes and increasing reliance on more dangerous and exploitative practices. The criminalization of migration did not halt movement; instead, it raised the risks and costs for migrants, leading to greater human rights abuses. Moreover, armed groups that had previously engaged in smuggling now diversified their activities, finding ways to profit from both restricting and facilitating migration. This shift marked the entrenchment of smuggling and trafficking within Libya’s governance crisis, as local power brokers exploited European priorities for their own strategic benefit.
The third and current phase has seen migration numbers rebound, though they remain below their 2016 peak. A new equilibrium has emerged in which Libyan armed groups strategically balance the political and financial rents they receive from European actors to curb migration against the profits from facilitating it. This transactional relationship has effectively led to de facto regulation of people-smuggling, in which migration control serves as a bargaining tool in Libya’s broader power struggles. While European policymakers and agencies view their interventions through a rule-of-law framework, the direct engagement of European officialdom with Libyan powerbrokers has, in effect, legitimized the role of armed groups in migration governance. As a result, the dynamics of smuggling and trafficking have shifted from being merely a symptom of conflict to a mechanism through which conflict is prolonged and reinforced.
Libya now finds itself locked in a self-perpetuating cycle in which the migrant-smuggling economy sustains local livelihoods in the absence of government-backed development initiatives. Armed groups, rather than being dismantled, have institutionalized their role in managing migration, leveraging their control over transit routes as a source of political and economic capital. These networks have become highly decentralized and adaptable, making external attempts to disrupt them – such as through sanctions or law enforcement – largely ineffective. The persistence of conflict also ensures that Libya’s formal economy remains weak, maintaining the necessity for illicit economies as substitutes.
Libya now finds itself locked in a self-perpetuating cycle in which the migrant-smuggling economy sustains local livelihoods in the absence of government-backed development initiatives.
Policy implications
The three case studies reveal how conflict – along with securitized responses and sanctions – has driven the evolution of decentralized and non-hierarchical geo-economic systems. In an era of multi-alignment, these transactional networks transcend traditional geopolitical divisions, allowing both adversaries and allies of the West to find mutual incentives for profit within conflict economies. Although sanctioned entities and actors have been excluded from the formal global financial system, they have adapted by turning to alternative channels. Enforcement has inadvertently strengthened the adaptability of illicit markets, making it nearly impossible to disrupt the flows of gold, fuel and migrants.
Sanctions struggle to account for all economic incentives behind the conflict ecosystem. Profit-driven intermediaries operate outside conventional country borders, exploiting gaps created by conflict and external pressures. As a result, instead of weakening illicit economies, sanctions often foster the emergence of alternative supply chains that empower an array of actors, prolong instability and erode Western leverage. This economic interdependence between allies and adversaries of Western governments underscores the paradox of multi-alignment: conflict becomes a shared marketplace rather than a battleground of opposing interests.
Addressing these dynamics requires a fundamental shift in conflict analysis and policy responses. A transnational and systemic approach (see Chapter 4) is needed that broadens stakeholder assessments to recognize the role of conflict entrepreneurs, and that identifies accountability mechanisms able to curb the most destabilizing aspects of illicit economies. Policymakers must first understand the essential functions that conflict economies and their underlying networks serve, and identify who benefits from these, before imposing restrictions.
Ultimately, in a fragmented, multi-aligned landscape, the West’s presumed allies will not always align with Western policy – particularly when economic self-interest outweighs geopolitical loyalty. A more pragmatic strategy, one that incorporates economic realities and viable alternatives, is essential to counter the unintended consequences of current conflict responses. This new strategy can focus on deeper engagement with multi-aligned actors regardless (for the most part) of their political loyalties or international alliances, leveraging economic tools to create alternative pathways for local livelihoods and strengthening accountability mechanisms to regulate trade. However, while such pragmatism is necessary, it must not come at the expense of human rights; ultimately, the goal should remain meaningful conflict resolution underpinned by sustainable, inclusive forms of accountability.
Borderlands and transit points as central hubs
in transnational conflict
Borderlands, ports and airports – often overlooked as peripheral or merely transit spaces – are, in fact, vital hubs within globalized conflict economies. Although the locations and facilities themselves may not change often physically, their role is far from static: their relationship to the economy and communities around them is continuously reshaped by the circulation of people, goods and capital that sustain and propel transnational conflicts. Borderlands function as zones of economic exchange, contestation and de facto governance where state authority is often negotiated. They host hybrid political orders and transnational networks that enable illicit economies, cross-border alliances and alternative forms of authority.
Borderlands function as zones of economic exchange, contestation and de facto governance where state authority is often negotiated.
Analysis of such locations is critical to understanding how modern conflicts are sustained and transformed. Cowen and Khalili emphasize how infrastructure facilities like ports function as nodes in global conflict systems, with the securitization of logistics networks shaping the political economy of war. Ports not only facilitate the movement of goods and capital in a conflict economy, but also become part of the conflict in their own right.
Sudan’s borderlands
The borderlands of Sudan – where multi-aligned actors converge to control the gold trade – provide a good example of this concept of contested spaces. Along Sudan’s borders with the Central African Republic, Chad, Egypt, Eritrea, Ethiopia and South Sudan – and, to a limited extent, Libya – are gold-producing areas connected to strategic arteries that sustain the war economy. Control of these spaces allows armed groups to smuggle gold, acquire weapons and reinforce their fighting capabilities. As such, the conflict is not simply about territory but about securing economic lifelines that sustain military operations and political influence.
The RSF has strategically positioned itself along key trade routes connecting Sudan to Chad, Libya and South Sudan, ensuring that its gold supply chain remains independent of the central government. In addition to being transported overland, gold mined in the conflict zones is often flown directly from airstrips in Darfur to foreign markets, bypassing Sudanese regulatory oversight. North Darfur, an RSF stronghold, serves as a primary transit hub for the smuggling of gold into Chad for subsequent export to the UAE.
The battle for control over the Sudan–Chad border has intensified as the SAF-allied Joint Darfuri Forces have attempted to restrict RSF access to this vital trade corridor. In Chad’s northeastern town of Amdjarass, where the UAE established a field hospital for Sudanese refugees in 2023, reports suggest that arms shipments to the RSF may be facilitated alongside the gold trade.
South Sudan’s Raja County, bordering South Darfur, serves as another critical hub for the RSF’s gold smuggling operations. The region is rich in minerals (including copper deposits at Hufrat El-Nahas). Gold extraction and trade here operate with minimal oversight from the South Sudanese government. Gold is reportedly smuggled from Raja County by road or plane to Juba and then on to Entebbe, Uganda, before reaching the UAE.
Libya’s eastern regions, controlled by the LAAF, have also become a staging post for RSF operations. Due to mutual allies and mutual economic interests, the LAAF has permitted Sudanese militias and foreign mercenaries to use eastern Libya as a logistical hub. Simultaneously, the LAAF and its affiliates, including Subul al-Salam, run an industrial-scale fuel smuggling network into Sudan – one that primarily supplies SAF-aligned areas rather than RSF-held territory. This multi-alignment further demonstrates how border regions, rather than being isolated peripheries, function as highly integrated (and critically important) spaces that facilitate the regional movement of resources, people and weapons.
Regional ports: their role in the trade of Iranian fuel
Similarly, by enabling the movement of Iranian fuel, ports in key locations across the Middle East reinforce the influence of members of the ‘axis of resistance’ in Iran’s wider conflicts. As mentioned, fuel shipments of Iranian origin often rely on ship-to-ship transfers in offshore international waters; the consignments are often disguised through fraudulent paperwork, and rebranded before reaching markets in China or parts of Southeast Asia. Much of this trade operates through well-developed networks that link ports in southern Iran and offshore transfer points off the coasts of Iraq and Gulf countries to international markets.
Such trade also involves various Iraqi ports. Limited oversight by the central government in Baghdad allows ports such as Khor Al-Zubair, in the far south of the country, to operate largely unimpeded. Khor Al-Zubair attracts a diverse array of international actors. ‘Axis’-linked groups operate here with impunity, vying for influence alongside members of Iraqi political elites. Iranian, Iraqi, Chinese and Gulf state actors operate alongside Western logistics firms and private contractors. Iran-linked businesses, such as those tied to the IRGC, export fuel discreetly from Khor Al-Zubair, often using methods outlined earlier in this chapter.
Foreign companies are ever more visible. China National Offshore Oil Corporation (CNOOC) has expanded its presence in Iraq’s energy sector, investing in infrastructure projects that facilitate crude oil exports. The UAE-based SKA Energy FZE operates multiple jetties at Khor Al-Zubair, handling large-scale fuel shipments. Western firms such as the Martrade Group manage key terminals, supporting logistics and energy exports. Iraq’s General Company for Ports of Iraq (GCPI) oversees the port’s administration, working with international partners such as Japan’s Mitsubishi Corporation to modernize infrastructure. This convergence of players highlights Khor Al-Zubair’s role in a globalized trade in which cooperation and competition intersect at a so-called assemblage point.
Another key nexus in the Iran–Israel conflict economy is Yemen’s Port of Aden. The UAE-backed DP World has sought control over Aden’s shipping operations, leveraging influence through allied local factions. Iran-allied networks, supporting the Houthis, have used the port’s proximity to trading routes to make arms and fuel transfers. China’s COSCO Shipping has expanded its footprint in the region, facilitating commercial trade as part of Beijing’s broader Belt and Road Initiative. Western firms such as Maersk and MSC continue to operate container services, ensuring global supply-chain connectivity despite ongoing instability. Yemen’s Gulf of Aden Ports Corporation officially oversees operations, but it must navigate competing political interests, which include Saudi-backed authorities seeking to counter Houthi influence.
Such ports are not just transit points but fundamental enablers of the fuel trading system. They connect Iranian sellers and their regional allies with multi-aligned buyers, and provide the logistical infrastructure necessary for mid-sea transfers, identity changes of vessels, and financial transactions that circumvent regulatory scrutiny. The system is deeply embedded in the regional and global economy, making it difficult to dismantle without broader political and economic cooperation. The strategic use of these maritime transit hubs ensures the fuel trade remains resilient to enforcement efforts, consolidating economic dependencies that sustain geopolitical tensions and prolong conflicts in the region.
Libya’s coastal and inland trading and migration routes
Libya’s strategic location on the Mediterranean coastline, combined with its desert connections to Saharan and sub-Saharan states, has special significance for the dynamics of transnational conflict. The country is close to the European continent and serves as a gateway to Africa. Libya’s centuries-old trading and migration routes, dotted with desert cities, have been transformed by conflict into corridors for illicit economic activity.
In Libya’s southern borderlands, local economies have become increasingly reliant on the informal trade of goods (such as fuel) and on the commoditization of the movement of people. In the case of two urban centres, Kufra and Sebha, in southeast and southwest Libya respectively, XCEPT research illustrates that migrant smuggling and TIP have provided significant sources of income. As funding from the central state has become limited, revenues from illicit activities appear to have supported municipal spending in Kufra. Artisanal agriculture has partly offset the decline in state-supported agriculture, but our research indicates that this is also in part a result of the distributive impact of profits from the illicit sector. Competition between rival factions over market control is ongoing, prolonging instability. At the same time, the conflict economy is providing income to communities in areas of the country where other economic development is limited.
Satellite imagery of the Suq al-Khamis checkpoint (west of Sebha), the Ilfat checkpoint (north of Sebha), and the Wigh checkpoint (south of Sebha) reveals notable enhancements to their fortifications, underscoring a heightened securitization of movement and a strategic emphasis on controlling vital transit corridors (see Figure 10).
