Islamic State cells in Libya are involved in the business of smuggling people to Europe, the Libyan ambassador to Italy said Tuesday, while rejecting the idea that terrorists are hiding among the migrants.

"Oh yes they are, they are big in that business, it is an important business [for them] because it generates money, as I said, Daesh is in the business of making money in any way possible," Ahmed Elmabrouk Safar said, using an Arabic acronym for the extremist group.

As for terrorists infiltrating migrant boats, the ambassador said: "Would you do that? Would you risk your own life in doing that? I think Daesh would rather come with a visa, in disguise ... I don't think they would use that route."

Speaking at the Foreign Press Association in Rome, Safar suggested that the Islamist extremists were not directly running trafficking operations, as he said that they have "found the right partners to do that for them locally."

Safar said that Libyan authorities were not currently able to go after smugglers, because of insufficient army, police, coastguard and intelligence capabilities, and that European Union aid to upgrade them "would be most welcome."

The coastguard is only operating tugboats at the moment, as its speed boats were decommissioned and taken to Tunisia for maintenance, the envoy said. There are plans to return them into service "soon" with Italy's help, he added.

However, Prime Minister Fayez Serraj is not yet in a position to invite EU navy vessels patrolling the Mediterranean to enter Libyan waters to catch smugglers, Safar said, as this risks antagonizing still active militias and would "not help Libya's stability." 

Safar represents a UN-backed national unity government that is struggling to extend its authority across Libya, facing resistance also from Khalifa Haftar, a powerful army chief from the east of the country.

The ambassador said Libya could help the EU screen migrants to identify those who could be eligible for asylum in Europe, and support "incentive-based projects" to convince others not to travel on, but was not ready to build "holding camps."

About 90 per cent of the nearly 47,000 migrants who arrived by sea to Italy this year sailed across from Libya, according to UN Refugee Agency UNHCR. The Italian government wants the EU to offer Libya and other African nations money to sharply reduce these flows.

Amid reports that US, French, British and Italian troops were already conducting covert operations in Libya, Safar said Libya welcomed outside "technical assistance" in the fight against the Islamic State, but no large-scale foreign military intervention.

He downplayed estimates of Islamic State's strength in its Sirte stronghold, saying it had "less than 1,000" foreign fighters. On Sunday, UN envoy to Libya Martin Kobler told French daily Journal de Dimanche that there were 2,000-3,000 combatants in the region.

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