TRIPOLI (Reuters) - Libya’s conflict cannot be resolved unless the black economy and “predation of public money” are ended, the U.N. envoy to the country said, calling on international actors to target “big traffickers” with sanctions.

U.N. Envoy to Libya, Ghassan Salame speaks during an interview with Reuters in Tripoli, Libya March 28, 2018. Picutre taken March 28, 2018. REUTERS/Hani Amar

U.N. Special Representative Ghassan Salame is leading the latest push to reunify and stabilize Libya, seven years after the NATO-backed uprising in which Muammar Gaddafi was toppled and killed.

During years of turmoil punctuated by armed conflict, a lucrative shadow economy has emerged in the oil-rich nation, based on foreign currency exchange scams, smuggling and extortion.

“I think this is the most important issue today in Libya,” Salame said in an interview. “It is, at least in my modest view, the heart of the matter in Libya.”

Salame, a Lebanese former government minister and professor who took up his post in August last year, said tackling the shadow economy required a “determined effort” by the United Nations, international financial institutions and foreign powers.

He said he had been working to convince the international community that any political deal to unify rival factions based in Tripoli and eastern Libya would only be “cosmetic” if the shadow economy was not tackled.

“I tried my best to persuade them that if they want a political process they have to put an end to all kinds of traffic in this country. Not only traffic of human beings, but also traffic of fuel, traffic of subsidized (goods), traffic of drugs.”

“They need to address the black market. They also need to address the predation of public money,” Salame said.

“It’s a big challenge – I think we need to start blaming and shaming people. I think we need to look into money transfers.”

Action was also needed “through specific sanctions against big traffickers taken by the most important economic partners of Libya”, he said.

ARMED GROUPS

Control of Libya’s informal economy is often enforced through armed groups and military factions, some with official status, which have held real power on the ground since 2011.

Salame has launched a dialogue with armed groups, and has said that he hopes to unveil a strategy for dealing with them by May.

“I think this is necessarily going to be a multi-year problem, because there are a lot of them, and also because the government is not necessarily optimally equipped to integrate them into an army or into police.”

The dialogue is part of a U.N.-led “national conference” process that also includes town hall meetings, support for local peace deals and the empowerment of mayors, and reconciliation with exiled supporters of the Gaddafi regime.

“One day, probably in a few weeks or months, we will bring leaders who appeared in all these sub-processes together to meet, but that would be more like the cherry on the cake than the cake itself,” Salame said.

Salame has called for new elections by the end of the year, though he said he was “very, very aware” that polls could add to problems rather than solve them. Parliamentary elections in 2014 were disputed and led to rival governments being set up in Tripoli and the east.

Salame said presidential elections were “very, very hard to think of” without a constitution being adopted first, and that he would seek a commitment by major stakeholders to accept results.

“I hope I have a written statement, at least to have a public one.”