Wolfram Lacher
According to Siddiq Kabir, he is the last pillar holding the country together. His adversaries claim he is perpetuating a national crisis.
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The cityscape of Tripoli has come to chronicle the large and small conflicts that have plagued the Libyan capital since the fall of the country’s longtime ruler Moammar Gadhafi in 2011. Ruins scattered across the city radiate a feeling of decay — reminders that no government since that year has been able to reverse Libya’s descent into crisis.
If you join the trickle of foreign visitors braving the unpredictable security situation, you won’t arrive at the city’s international airport, which burned down in the 2014 civil war and was then partially restored, only to be fought over again in 2018 and 2019. Instead, you’ll land at Mitiga, seven miles east of Tripoli’s city center, on the Mediterranean coast. There, ruined hangars tell of the rockets and drone strikes that hit the airport during the 2019-20 war, when the forces of the warlord Khalifa Haftar besieged the capital for over a year before being forced to withdraw.
Driving toward downtown Tripoli, you’ll spot damaged buildings bombed by NATO as command-and-control centers in 2011. You’ll pass the foreign ministry, a trapezoid-shaped block from the Italian colonial era, whose large windows are burnt out from a 2018 suicide attack by the local Islamic State affiliate. In the city center, Gadhafi’s former headquarters is a wasteland whose destroyed walls and watchtowers were only recently cleared away. Over the years, militia battles have left bullet holes everywhere from luxury hotels to decrepit apartment blocks. On a main thoroughfare, the scorched carcass of the Aman Bank high-rise reminds passersby of the height of the country’s cash shortage in 2017. The militia guarding the bank lost control of the angry crowd queuing for cash and opened fire, killing a young man. The next day, relatives of the victim returned and fired rocket-propelled grenades into the building, setting it ablaze. I was in Tripoli at the time; the tower continued to smolder for days.
Yet, in the heart of the city, the country’s most coveted piece of real estate stands unscathed: the Central Bank of Libya, a heavyset, red-brown Italian-era building with an arcaded entrance and two turquoise domes. Built in the 1920s as the Savings Bank of Tripolitania by a future fascist star architect, it sits right next to the Red Castle, the fortress that had been the seat of Tripoli’s rulers from the 16th century until the Italian conquest in the early 1900s.
There is little visible security. The dozen or so militiamen guarding the central bank’s perimeter let you pass unchecked when told that you have an appointment. Nothing would suggest that this building holds the ultimate prize for Libya’s warring factions: Africa’s largest foreign exchange reserves and the sputtering heart of Libya’s oil-fueled economy.
Receiving visitors in his elegant office, the governor has an unimposing presence that contrasts with the vast power attributed to him by the many Libyans who describe him as the country’s de facto ruler. Bald, bespectacled and slender, Siddiq Kabir looks more like a mid-ranking bureaucrat with a conservative Italian dressing style. If asked about policies for which his enemies are attacking him, he will invariably respond by calmly explaining how the central bank is following the law to the letter, spiking his conversation with English phrases to flaunt his American education.
Kabir, who is in his early 70s and has been in office since 2011, has survived a decade of turbulence and civil wars — against all odds. As governor, he has seen two civil wars break out and end, and outlived six prime ministers. He has withstood numerous attempts to dislodge him, whether by U.S. diplomats or the violent onslaughts unleashed by successive Libyan factions. Of the latter, Haftar’s forces came closest — but they ultimately failed to seize the bank. To this day, Kabir holds the keys to Libya’s treasury.
Acore paradox of post-Gadhafi Libya is that, while state authority has almost entirely collapsed, the bureaucracy lives on. Throughout the past decade, the state has continued to add employees to its payroll, even as civil war split the country between rival governments and militia leaders shut down oil production for prolonged periods of time.
This bloated public sector is a legacy of the Gadhafi era, during which Libya became a quintessential petrostate. Yet, since Gadhafi’s fall, the number of state employees has almost doubled, to 2.4 million, in an overall population of 7 million. The education ministry alone employs more than 650,000 people, almost 10% of the population. But public schools and universities are in crisis, and parents who can afford it increasingly send their children to private institutions. The health ministry employs another 210,000 people, though state hospitals are decaying. Doctors often refer their patients to the private clinics at which they moonlight. State employees generally spend only a few hours per day at their workplace, many showing up just once a week, or not at all. Meanwhile, manual tasks are the preserve of migrant workers from Egypt, sub-Saharan Africa and South Asia, who lack the most basic rights.
When I first met Kabir, in 2018, he belittled politicians for their hiring sprees. “The government is weak,” he said. “They keep adding people to the payroll, then come to us asking that we cover these salaries.”
It is the central bank, from its seat on the Tripoli seafront, that ultimately makes the salary payments — or withholds them, sometimes for several months. Since 2014, this decision has been Kabir’s alone.
That year, war erupted between rival militia coalitions both in Tripoli and in the main eastern city of Benghazi. The fragile post-Gadhafi transitional government collapsed, and state institutions split in two — among them the central bank. Kabir’s deputy, Ali Hebri, moved to eastern Libya along with three other board members. The newly constituted east-based Parliament, which enjoyed international recognition, then appointed Hebri as governor, and he began establishing a parallel central bank in the east. Kabir, who had stayed in Malta as the war erupted, returned to Tripoli, retaining the loyalty of two other board members and — crucially — control of the bank’s SWIFT codes, which help banks identify one another.
Western governments quickly decided they would not recognize the new appointments made by the eastern authorities to the central bank and the National Oil Corporation (NOC). Like Kabir, the NOC chairman in Tripoli, Mustafa Sanalla, had been in place since before the split. In international eyes, Kabir and Sanalla remained the legitimate heads of the two institutions. It was this international recognition that allowed Kabir to prevail over Hebri. “Kabir has been held in place by the Federal Reserve, the Treasury Department, and the IMF,” Martin Kobler, the U.N. special envoy to Libya from 2015 to 2017, told me in 2018.
Since the split, Kabir has exercised exclusive control over the central bank in Tripoli – “a one-man show,” his predecessor as governor, Farhat Bengdara, told me this June, shortly before he was appointed as Sanalla’s successor at the NOC. With some notable interruptions, oil revenues have continued to accrue to the central bank in Tripoli. The split made the regular budgeting process impossible, turning Kabir into the central player in all future negotiations over government spending.
Hebri’s eastern body, lacking access to hard currency, resorted to creating money out of thin air: Hebri had billions of dinars printed in Russia. (He told me he was forced to take that step because Kabir curbed cash transfers to the east after the split.) Hebri also credited eastern banks with fictitious deposits at his central bank in exchange for the payment of salaries to employees of the parallel eastern authorities — effectively saddling these banks with billions of dinars in public debt.
Perhaps the most perplexing feature of this situation was that the central bank in Tripoli continued paying out salaries to state employees across Libya — including to militiamen on both sides of the civil war. Virtually all the Libyan armed groups that had formed since the 2011 revolution operated officially as units of the defense or interior ministries. In the first year after the split, Kabir continued to work with the payrolls that predated the civil war, in what he says was an effort to preserve the central bank’s neutrality in the conflict. This meant he was effectively financing both sides in the war. “It used to drive [then-U.S. Secretary of State] John Kerry crazy,” Deborah Jones, the U.S. ambassador at the time, told me. “He would ask about Kabir, ‘Why doesn’t he just cut it off?’”
State funds even reached certain jihadist groups during the war. In 2015, central bank checks surfaced that the defense ministry in Tripoli had made out to a coalition of armed groups that included Ansar al-Sharia, which the U.N. and U.S. had blacklisted as an al Qaeda affiliate in 2014. Kabir confirmed the checks’ authenticity to me, blaming their clearance on negligence by one of his subordinates while he himself was traveling.
Overall, however, the salary payments have ensured that average Libyans have retained a minimal level of income despite the dire economic repercussions of the conflict. And they have benefited citizens across the country. In 2018, the Tripoli government took hundreds of thousands of employees of the eastern parallel authorities onto its payrolls, where they have remained since. Since 2021, the government has transferred large lump sum payments to Haftar, who does not recognize the Tripoli government and has tried to unseat it. While these funds are ostensibly for salaries, the Tripoli authorities have no means of verifying the final beneficiaries of the money.
Kabir and his close collaborators argue that, by continuing to pay out salaries across Libya, the central bank has been the last pillar standing to hold the country together, solely responsible for keeping its economy going. They also claim that, by requiring ministries to match employees to a national ID system introduced in 2015, they have helped reduce widespread salary fraud. (Previously, civil servants would often get on the payrolls of several ministries at the same time. While such practices have become less common, they persist.)
Yet Kabir’s depiction of a technocratic, politically neutral central bank contrasts starkly with the accusation hurled at him by his numerous enemies and echoed by many Western diplomats in recent years: that he has exacerbated Libya’s economic woes, exploiting them to buy loyalties and keep himself in office.
The 2014-15 civil war pushed Libya’s economy into a deep crisis. In the east, a militia leader named Ibrahim al-Jadhran kept oil ports under his control shut, demanding large sums of money in exchange for allowing exports to proceed. In the west, armed groups allied with Haftar closed the valves of pipelines linking southern oilfields to export terminals on the coast. By January 2016, the NOC estimated the treasury’s losses from these closures at $68 billion.
Kabir reacted to the loss of Libya’s only source of export revenue by drastically slashing government spending and the sale of hard currency from early 2015 onward. The Libyan dinar is not freely convertible; its rate to the dollar is fixed by the central bank, which authorizes the sale of foreign currency to importers through letters of credit that are issued by banks.
By 2016, Kabir had cut sales of hard currency to one third of their 2014 level. Unable to get foreign currency through letters of credit, importers resorted to the black market — depriving the banking system of their funds and sparking endemic cash shortages at banks. The result was a widening gap between the official and the black market exchange rates, which before the war had been on a par with one another. By late 2016, the black market rate of the dollar was four times the official rate; a year later, it had sextupled from the original rate.
Businesses that could obtain letters of credit were highly privileged — and the central bank made the ultimate decision on who did. Access to foreign currency at the official rate opened up huge opportunities for fraud by exploiting the price differential with the black market. Companies would open letters of credit for a given commodity, then import containers filled with water bottles or simply nothing. After bribing customs to certify that the transaction had been completed as planned, they could sell the hard currency they had bought at the official rate on the black market, reaping profits of up to 600 percent.
Spectacular fortunes were made in those years, from 2015 to 2018, even as the growing cost of imports impoverished vast swaths of Libyan society. Among the businessmen who rose from obscurity to sudden prominence was a foodstuffs importer named Mohamed Taher Issa, a resident of Misrata, which since 2011 has hosted some of western Libya’s most powerful armed groups. Dubbed the “letters of credit king” on Libyan social media, Issa is widely alleged to have benefited from privileged access to hard currency thanks to the warm relations he built with Kabir. Several people close to both men confirmed this relationship to me. A former close collaborator of Kabir, speaking on condition of anonymity, claimed that, at the height of the dollar’s black market rate, Issa would come to the central bank several times per week. Issa himself confirmed to me that he frequently went to the bank and considered Kabir a “friend.” But when I repeatedly raised the issue with Kabir, he twice responded by asking “Mohamed who?” and denied any privileged relationship.
A leaked 2018 report by Libya’s audit bureau concluded that the central bank had deliberately caused a crisis in imports by obstructing the work of a cross-government committee formed to oversee letters of credit. As price hikes in basic commodities raised the political pressure to find rapid solutions, the bank then allocated letters of credit on its own. Kabir also held meetings with several prominent businessmen, Issa among them, to draft decrees authorizing emergency imports. The same businessmen then attempted to benefit from these measures before the audit bureau suspended them, according to the report and several people with knowledge of the meetings.
Some of the businesses profiting from letters of credit were front companies for armed groups. A U.N. investigative panel documented letters of credit worth more than $20 million obtained by one Tripoli militia leader, Haitham al-Tajuri, in 2015 alone, by threatening central bank employees. “They were extremely bad times,” a senior bank executive in Tripoli told me. “Armed groups were threatening and kidnapping bank directors.” Among the victims of abductions were several central bank officials or their relatives, including the brother of Kabir’s head of office. Kabir claims he himself never submitted to threats. “In spring 2017, Haitham [al-Tajuri] and Ghnewa [al-Kikli, another Tripoli militia leader] came to my house,” he told me in 2018. “But we always rejected attempts to intimidate us.”
During the same period, a handful of armed groups — including those of Haitham al-Tajuri and Ghnewa al-Kikli — gradually carved up Tripoli among themselves, dislodging smaller factions in a series of clashes. The victorious militias protected the Government of National Accord, the internationally recognized government formed through U.N. mediation, which took office in Tripoli in March 2016. Protection came at a price: The militias gained sway over state institutions, including by appointing allies to crucial positions. By controlling bank branches, they also exerted growing influence over the allocation of letters of credit.
Factions that felt disadvantaged by the distribution of spoils in Tripoli blamed Kabir and looked for ways to alter the balance of power. Fathi Bashagha, a key Misratan protagonist who would go on to become interior minister, angrily complained to me in April 2018: “Libya’s biggest problem today isn’t [Prime Minister Faiez] Serraj or Haftar — it’s Kabir! He’s buying militia leaders and parliamentarians with letters of credit, turning them into millionaires overnight. He needs to go!”
One evening that month, I joined a group of Misratan militia leaders chatting over dinner, sweet tea and a water pipe. My host became agitated about the Tripoli militias taking everything for themselves. “We’re going to Tripoli to get our share! If necessary, we’ll throw the government into the sea!” A member of Misrata’s municipal council countered: “Let’s be honest — this is about getting your slice of the letters-of-credit cake!” Nobody protested.
The group I had met was plotting an offensive on Tripoli with the Kaniyat, a militia from Tarhuna that later became notorious for the mass graves it left behind in the town. When the Kaniyat finally attacked Tripoli in August of the same year, it allied with a different set of Misratan militia leaders, while those I had spent the evening with mobilized to position themselves between the warring sides.
The month-long fighting became known as the letters-of-credit war. The Tripoli militias repelled the assault but, as part of the settlement that ended the conflict, the U.N. negotiated the introduction of a tax on purchases of foreign currency. That measure significantly narrowed the gap between the official and black market exchange rates, allowing the central bank to liberalize the allocation of letters of credit.
Kabir remained in place. But soon, a bigger threat to him loomed from the east.
Ever since Khalifa Haftar first assembled a coalition of militias to launch an assault on rival armed groups in Benghazi in May 2014, he has never made a secret of his ambitions. The mustachioed, septuagenarian general styled his forces as the “Libyan National Army” and vowed to eradicate all “terrorists” from Libya — a term that encompassed anyone who opposed him. Haftar’s campaign quickly gained much support in eastern Libya, where an assassination spree targeting military officers had spread fear and anger.
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Wolfram Lacher is a senior associate at the German Institute for International and Security Affairs and the author of “Libya’s Fragmentation”
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