Libya’s central bank said Monday it was resuming operations, defying a decision to replace its governor and board in a move that could further imperil an already-fragile cease-fire deal between the OPEC nation’s rival governments.
The bank, in a statement, said that Governor Sadik Al-Kabir had met with senior managers as part of the regulator’s decision to resume operations after the kidnapping of a senior employee led it to announce it was halting work. The statement, posted on its Facebook page, made no mention of a decision by the internationally-recognized Presidential Council in Tripoli to replace the bank’s chief and its board, but noted that it was back to work after the employee was freed.
The bank’s decision to suspend work had the potential to worsen the already dire political situation in the North African nation after the east-based legislature last week said it was pulling out of a 2020 cease-fire deal between Libya’s rival governments. Adding to the tension was the closure of the country’s largest oil field.
It’s decision to resume operations, similarly, represents a challenge to the decree by the Presidential Council.
“After two years of paralysis, this is a rapid succession of events. Where it’s all heading, it’s too early to say,” said Claudia Gazzini, senior analyst for Libya at the International Crisis Group, noting that what transpires next depends on what the parliament does and whether there’s some sort of back door agreement about who can be a unified central bank governor.
While the discord had the potential to further inflame tensions, Gazzini said she doesn’t expect fresh violence after the latest developments. “I think everyone is going to use this opportunity to pursue their interests.”
“It’s a dangerous game,” she said.
Read: Why Libya Lurches from One Crisis to The Next: QuickTake
Tensions are already high after the parliament in the east last week dubbed the internationally-recognized Tripoli government as illegitimate.
The legislature, which is backed by military leader Khalifa Haftar, also said it was ending the term of the Presidential Council, stripping it of its role as high commander of the Libyan armed forces.
In addition, the shutdown of the Sharara oil field in the east puts a major dent in Libya’s finances and the Tripoli government described its closure as a “political blackmail” attempt.
The rising tensions have sparked worry both domestically and abroad, especially as efforts built to oust Kabir from his post amid claims of unfair allocation of Libya’s oil wealth. The governor has yet to comment on the move to replace him.
But earlier, the US’s special envoy to Libya, Richard Norland, said that attempts to oust Al-Kabir were “unacceptable” and that replacing him “by force can result in Libya losing access to international financial markets.”
At the heart of the dispute is a struggle for power, and the currency of that fight has often been the nation’s oil fields.
In that context, the decision by Al-Kabir to suspend the bank’s operations became part of a broader attempt to use the economy to realize a political advantage.
“Disputes over distribution of Libya’s wealth must be settled through transparent, inclusive negotiations toward a unified, consensus-based budget,” Norland said on August 12.
The UN, too, has voiced concerns about the direction Libya is taking. The 2020 cease-fire deal was aimed at ending the violence and paving the way for elections. Little progress, however, has been made on either front, leaving rival governments in Tripoli and the east embroiled in a feud that’s left little room for an emergence of the chaos which Libya has endured since the 2011 uprising that ousted and killed longtime leader Moammar Al Qaddafi.
The United Nations Support Mission in Libya said on Aug. 14 it was following “with concern” moves that “increase tension, undermine trust and further entrench institutional divisions and discord amongst Libyans.”
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