Libya’s banking system “will likely collapse” if the country’s two parallel central bank branches do not unify and stalled political talks could unravel a ceasefire, the U.N. special envoy to the country warned on Thursday.
Oil-rich Libya descended into chaos after the NATO-backed overthrow of leader Muammar Gaddafi in 2011. It has been divided since 2014 between an internationally recognized government in the west and a rival administration in the east that has established its own institutions.
The division of the central bank, combined with the lack of a unified budget, led to both branches racking up debt to finance their respective administrations, U.N. special envoy to Libya Jan Kubis told the U.N. Security Council.
Managing this debt is only possible if the central bank unifies. In plain terms, Libya’s banking system will likely collapse, absent unification,” Kubis said.
An international audit of Libya’s parallel central bank branches last week recommended steps that could lead to their eventual reunification. Kubis told the Security Council that the main finding was unification “is no longer simply recommended but required”.
Any reunification of the central bank is expected to help improve confidence among buyers of Libyan oil at a time when prices of the country’s main export are rising.
Oil revenue has flowed through the Tripoli-based Central Bank, which has paid the salaries of many state employees across front lines. Libya’s oil exports were hit by a blockade by eastern-based forces last year, leading to lost revenues.
A U.N.-led peace process in Libya brought a ceasefire last year and then a unity government was formed. However, talks this month aimed at paving the way for elections in Libya in late December stalled.
“I’m concerned that although the ceasefire agreement continues to hold, notwithstanding minor clashes between armed groups and criminal gangs, the unity of the JMC (Joint Military Commission) and implementation of the agreement could unravel if the political process remains stalled,” Kubis said.
French Foreign Minister Jean-Yves Le Drian, who chaired the Security Council meeting on Thursday, said the elections must be held in December and foreign forces must leave Libya, a call echoed by several council members.
“It is high time to implement a progressive, balanced and orderly timeframe for the for departure of foreign elements from both from the two camps,” Le Drian told the 15-member council.
Diplomats said last month that Turkey and Russia, which back opposing sides in Libya, had reached an initial understanding on a step-by-step withdrawal of foreign fighters backed by them. read more
Libya’s new unity government Prime Minister Abdulhamid Dbeibah said the presence of foreign mercenaries “remains the most important obstacle to stability in Libya.”
Libya PM unaware of Russia, Turkey deal on foreign fighters
Michelle Nichols & Ahmed Elumami
Libya’s unity government Prime Minister Abdulhamid Dbeibah said on Friday he was unaware of any understanding between Russia and Turkey on a withdrawal of their foreign fighters, but that such a move would be welcomed.
Speaking to Reuters in New York, Dbeibah also said he was committed to holding elections on Dec. 24, but warned that some lawmakers may be reluctant to give up power. Dbeibah, a businessman appointed interim prime minister in February, said he has not yet decided whether to run for office.
Libya has had little stability since a 2011 NATO-backed uprising against Muammar Gaddafi, then head of state. A U.N.-led peace process brought a ceasefire last summer, after fighting between rival factions paused, and then a unity government.
Following a U.N.-backed conference in Berlin last month, German and U.S. officials said Turkey and Russia, which back opposing sides in Libya, reached an initial understanding on a step-by-step withdrawal of their foreign fighters.
“I have not heard of this agreement regarding the withdrawal of fighters. But we welcome any agreement … and we welcome the exit of any forces, fighters or mercenaries with any support from any party,” Dbeibah said. “We are talking with all parties regarding the withdrawal of foreign forces from Libya.”
U.N. sanctions monitors have reported that thousands of Syrians had been fighting in Libya either alongside unity government troops – who were also advised by Turkish troops – or with Russia’s Wagner group in support of eastern commander Khalifa Haftar’s Libyan National Army (LNA).
Under the ceasefire reached last October, all foreign fighters were supposed to have left Libya by January.
Russia’s deputy U.N. Ambassador Dmitry Polyanskiy told the Security Council on Thursday that Moscow supported a “step-by-step phased withdrawal of all foreign forces and contingents.”
“At the same time, we need to make sure that the current balance of forces on the ground not be disrupted, because it is thanks to this balance that the situation in Libya remains calm and no threats of armed escalation emerge,” Polyanskiy added.
Addressing the Security Council, Dbeibah said the continued presence of foreign fighters poses “a real and serious risk to the current political process and it also threatens the efforts to continue the ceasefire” and to uniting the army in Libya.
Dbeibah told Reuters it would be “very difficult” to unify Libya’s military. U.N. special envoy for Libya, Jan Kubis, said on Thursday that the LNA has not allowed Dbeibah’s unity government to take control of the area it commands.
“Of course, communicating with Haftar, he is a difficult military person, but we communicate with him. But things are not easy,” Dbeibah said during an interview at Libya’s U.N. mission.
Reporting by Michelle Nichols and Ahmed Elumami; Writing by Michelle Nichols; Editing by Will Dunham