Ferruccio Michelin
There is an East-West agreement for a roadmap to resolve the crisis around the Libyan Central Bank, and restart oil production. Is the country ready for political compromises, or is it just a matter of delaying decisions and taking time?
The announcement of an agreement between the two main rival political factions in Libya, to jointly decide on the appointment of a new leadership to head the Central Bank of Libya (CBL), represents a fundamental step towards resolving the economic and political stalemate that has paralyzed the country in recent years, which has reached a particularly tense situation with the issue of the institution. This agreement, brokered by the United Nations through the Unsmil mission, opens a short-term window for the resumption of oil activities and in the long term could mark a significant turning point in the long internal divisions.
The roadmap of the agreement
According to information first published by Bloomberg , the two legislative institutions – the Tripoli-based Council of State and the Tobruk-based House of Representatives – have agreed to appoint a new CBL governor and a governing council within 30 days. The agreement aims to unblock oil production, which has been severely reduced due to the political conflict between the two factions. Negotiations will continue until September 9, with the aim of consolidating this first step towards a broader resolution.
However, this agreement seems more like a compromise to buy time than a real solution to the crisis. The parties have essentially given themselves a month to resolve the issue, instead of resolving it “today.” Furthermore, rumors have already emerged that the process could be extended further: “In case of disagreement, the interim committee (of 30 days) will be extended for another 30 days,” the sources explain, and “this already suggests that the roadmap could be further delayed, making a resolution more difficult.”
The implications for the economy and oil
The Central Bank is at the center of the battle for control of the country’s energy resources, which are Libya’s main economic engine. The divisions between East and West are reflected not only in political issues but also in the management of oil supplies, with the production blockade reducing the national output from 1.2 million barrels to less than half. Oil, in fact, is not only an economic good, but also a strategic weapon in this long-running dispute. The eastern faction, which controls the main oil export terminals, has used this leverage to put pressure on Tripoli.
The Western government of Abdelhamid Dabaiba should agree to keep or temporarily bring back the “old guard” of the Central Bank, after a push to replace the leadership. The eastern government under the military control of Khalifa Haftar should feel sufficiently capable of making its choice prevail for the next CBL leadership, even without leveraging the oil blockade. If these conditions are not met, the risk is that the process will drag on further, making a short-term compromise even more difficult.
A peculiarity
The current oil blockade in Libya presents a problematic feature compared to similar situations already experienced in the country: for the first time there is the risk that several hundred thousand barrels of crude oil extracted from the Mesla-Sarir fields will no longer be sold by NOC (the state-controlled National Oil Corporation), but by a private company based in Benghazi, Arkenu.
The dynamics that brought the company to international attention, no later than July, are explained by Agenzia Nova . It is a very delicate scenario. The possible cessation of regular exports from NOC could be used by the Haftar family not only for their own blackmail — as has happened several times in the past — but this time also to create direct interests. Among other things, the Energy Triumph oil tanker chartered by the Chinese Unipec is now close to the Harriqa terminal and should load a cargo of 1 million barrels.
A political and institutional challenge
Although the agreement appears to represent a turning point, numerous obstacles remain. Libya has been politically fragmented since 2014, and the institutional system is extremely fragile. Elections, initially scheduled under the 2020 ceasefire agreement, have not yet taken place, and the situation remains unstable. Sadiq al Kabir, in office since 2011 at the CBL, is a controversial figure: on the one hand he currently enjoys Haftar’s support, on the other he is accused of mismanagement and corruption.
Accusations that have further soured relations with the prime minister of Tripoli, Dabaiba, who has tried to oust him. Another potential candidate for the leadership of the CBL, Mohamed Abdel Salam al Shukri, has refused the post, saying he will only accept with the joint support of the two factions. This underscores how difficult it is to find a consensus figure in a context of deep divisions.
“The deal represents a rare window of opportunity for Libya. If completed, it could help unlock oil production and stabilize a crucial part of the country’s economy,” one source said. However, he added, “political instability and internal divisions remain significant obstacles. Libya once again faces an existential challenge: can it overcome its internal divisions and find a balance for a sustainable economic and political recovery?”
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