Libya: a central bank in danger

Summertime has always been full of surprises in Libya, a country where the peace process has been on the dead track for too long and elections are continuously postponed. While neighbouring Algeria and Tunisia both gear up for presidential polls, Tripoli resurfaced once again as the epicentre of serious political instability and insecurity. Despite the efforts of the Government of National Unity’s (GNU) Ministry of Interior (and former paramilitary leader), Emad Trabelsi, the rule of militias has still not been challenged in the capital, as shown by the killing in broad daylight of Abdul Rahman al-Milad, also known as al-Bija, commander of the Libyan coastguard in Zawiya and widely considered at the head of a human-smuggling ring in western Libya.

The arrest of the rival militia leader Mohammed al-Barun, commander of the First Support Force, for Bija’s killing, highlights the role of microdynamics in the internecine conflict between armed groups in Zawiya, but it is on the macro level that the picture looks particularly bleak. Notwithstanding the turf wars between militias that occasionally flare up in and around the capital, political tensions escalated in mid-August around the decision of the Presidency Council (PC) head, Mohammed al-Menfi, to dismiss the Central Bank of Libya (CBL) Governor, Saddek Elkaber, and appoint a new board. The kidnapping of Musab Msallem, head of the IT department of the bank, represented the preliminary step of the attempted bank pilfering that is raising concerns in diplomatic circles.

Pressure had already started to pile up on Elkaber after he fell out early this year with the GNU Prime Minister, Abdul Hamid Dbeibah, over the PM’s excessive spending and CBL’s attempts of financial oversight. This clash was exacerbated by the political divide in Libya, where a rival Government of National Stability (GNS) rules in the east. Sensing the threat, Elkaber has inevitably been drawn towards the Tobruk-based House of Representatives (HoR), whose speaker, Agila Saleh, had approved the CBL’s decision to impose a 27% fee on foreign exchange transactions back in March. The same HoR, which in the past decade had tried to dismiss the CBL governor (in charge since 2011) three times, had just backtracked on his removal, sealing a marriage of convenience that has triggered the Tripoli-based PC’s reaction.

The decision, which blatantly disregards the 2015 Libyan Political Agreement whose article 15 empowers the HoR and the High Council of State (HCoS) to appoint the bank governor, is just a symptom of the confusion of powers in Libya, where discredited institutions continue to benefit from the lack of a constitutional document to which all factions abide by. Its consequences also show how the balance of powers is changing in Libya, slowly shifting towards the east, where General Khalifa Haftar had already imposed an oil blockade in the region of Fezzan. After the National Oil Corporation (NOC), also the CBL risks falling prey to the politicisation of institutions whose independence is paramount for the economic recovery and reconstruction of the war-torn country.