The long-running feud between Libya’s competing authorities over the Central Bank has flared up again, threatening an economic crisis that could lead to unrest. The parties should press ahead with UN-backed mediation to achieve a resolution.
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In August 2024, the long-running dispute over the Central Bank blew up once more. This time, however, the allegiances were inverted: the Tripoli-based Presidential Council, which marches in lockstep with the Dabaiba government, tried to remove Elkebir, and the eastern House of Representatives rushed to his defence, declaring that he is still the legitimate governor.
A. A Bid to Replace the Governor
Tensions started to mount on 12 August, when the Presidential Council in Tripoli signed a decree that appointed Mohammed Shukri as governor to replace Elkebir.18 Neither published nor publicised, the document was circulated among the relevant institutions and then leaked within days. Observers quickly saw that it violated the stipulation in the Libyan Political Agreement of 2015 requiring the House and High State Council to agree on a new Bank governor. In naming Shukri, the Presidential Council had simply invoked an edict that the House issued (and never withdrew) in early 2018, a few weeks after Shukri’s earlier failed appointment, calling on him to take office in Tripoli. The Presidential Council’s move had no legal validity, as the Council has no mandate to unilaterally hire and fire Central Bank governors.
In a separate decree, the Council appointed a new board of directors. The new members included two deputy governors (Maraai al-Baraasi, who had been in place as deputy governor since 2022, and Abdel Fattah Ghaffar) and six others, all mentioned by name except for an unspecified deputy finance minister.
Neither document has appeared on the Presidential Council’s website, but a Libyan official confirmed that the leaked versions are authentic.
On 15 August, the House speaker’s office in Benghazi reacted by publishing an act that annulled the 2018 decree appointing Shukri, and instead reiterated that Elkebir and al-Baraasi are still the Bank’s top executives.
The full House then issued a statement on 21 August announcing that it would appoint a new board within ten days. At the time of publication, it had not done so.
[The 2018] dispute over control of the Central Bank did not conform entirely to the traditional east-west divide. Inside the capital, responses also varied.
This new dispute over control of the Central Bank did not conform entirely to the traditional east-west divide. Inside the capital, responses also varied. On 20 August, Elkebir declared the appointment of Shukri and the new board “illegal and invalid”, arguing that the Presidential Council was not authorised to make the appointment in question.
Several UN Security Council resolutions issued since 2015 appeared to support Elkebir’s contention that Shukri’s appointment did not adhere to the terms of the Libyan Political Agreement.
On the other side of the political divide in Tripoli, High State Council head Mohammed Tekkala, a Dabaiba ally, condemned the House’s reaffirmation of Elkebir’s tenure on 16 August, claiming it violated the Libyan Political Agreement’s requirement that the House consult with the High State Council about such matters to reach consensus.
All these competing claims over what constitutes a legitimate appointment hinge upon supposed compliance with UN-mediated deals signed in 2015 and again in 2021, which together have helped create Libya’s governing institutions. But these institutions have been in flux as political reality has shifted. The House of Representatives rarely acts as a genuine representative body, instead rubber-stamping what its speaker and Haftar’s entourage demand.
The High State Council is no longer the counterweight of the House, as it was when it was created in 2015; now it is split between two factions at odds over whether to negotiate with the east-based authorities. For its part, the Presidential Council, which is closely aligned with the Dabaiba government, is no longer the unifying interim authority it was meant to be when it was established in 2021. New alliances and dividing lines have emerged across the country, reshaping the pieces of Libya’s political puzzle.
B. Possible Causes of the Dispute
Why the dispute over the Central Bank governor broke out when it did remains something of a mystery, as the arrangements stemming from efforts to reunify the Bank and the National Oil Corporation deal had allowed both sides to tap into state funds. Libya had thus seen two years of relative stability.
That said, tensions had been brewing between Dabaiba and Elkebir for months before the current standoff. In February, the Central Bank governor and his allies complained about the Tripoli government’s high spending requirements and fuel subsidy bill.
Libyan politicians allege that Elkebir blocked a number of the prime minister’s requests for funds.
Conversely, as mentioned above, Dabaiba’s associates accused the Central Bank of providing “disproportionate” funding to the eastern authorities and eastern banks – a claim Elkebir dismissed as “a lie”, although he acknowledged that the Bank did transfer $950 million to the east to cover hard currency required for reconstruction projects.
In March, the two men also clashed publicly over a new tax requested by the House of Representatives: a 27 per cent surcharge on the purchase of foreign currency. The governor proceeded to levy the tax over Dabaiba’s objections. Yet, despite these disagreements, diplomats following Libyan affairs were sure that the status quo would hold.
There are three main hypotheses as to why the mutually beneficial arrangements collapsed.
1. First theory: a desperate act
The first theory suggests that the Tripoli government felt financially and politically cornered, compelled to act by circumstances. “The magnitude of the move tells me [the Tripoli authorities were feeling] massive desperation and hopelessness”, said a Libyan official. In his view, Dabaiba had no option but to sack Elkebir, because the Central Bank had been starving his government of funds for months. “They have been dealt a bad hand with Haftar, and this has left them out in the cold”, he claimed.
According to this theory, the cooperative dealings between Elkebir and the east-based authorities, which started in 2022 and resulted in the House of Representatives confirming him in August 2023 as the governor, as well as the arrangement for management of the National Oil Corporation, redounded primarily to the benefit of the Haftar family.
Supported by the Central Bank, the family’s companies have been carrying out real-estate development and infrastructure projects in parts of Benghazi, Derna and Sirte devastated by war, at least in part to buttress their popularity. Haftar associates frame this “battle for reconstruction” as a new strategy for “conquering” Libya.
Dabaiba’s own efforts to rebuild destroyed cities in western Libya pale in comparison.
A confluence of fast-paced events in early August may have added to Dabaiba’s perception that his political position was under threat. First, Egyptian Prime Minister Mostafa Madbouly invited the east-based prime minister, Osama Hamad, who is not recognised abroad, to pay an official visit to Cairo, prompting Tripoli to complain.
Dabaiba suffered a second political blow on 6 August, when his ally Mohammed Tekkala appeared to lose the High State Council presidency to Khaled Mishri. The result is still hotly contested: Mishri claims he won by one vote, while Tekkala says a ballot for him was unjustifiably discarded. In any event, at the time of publication the High State Council remained split in two factions, those supporting Mishri on one side and those backing Tekkala on the other.
The two camps are divided mainly by their attitude toward Dabaiba: the Tekkala faction wants Dabaiba to stay on as prime minister, while Mishri’s wants to replace him. Sources suggest that should Mishri prevail, he would be inclined to ally himself with Aghela Saleh, speaker of the House of Representatives, to try removing Dabaiba. Saleh and Mishri have been allies on an anti-Dabaiba ticket before, most recently in 2022.
Other challenges to Dabaiba’s position came from the east-based authorities. On 9 August, rumours began to spread about an impending offensive by Haftar-led forces on Ghadames, a desert city on Libya’s western border with Algeria that is held by Tripoli-aligned forces.
While no such operation occurred, the speculation may have spooked officials in Tripoli. Later, on 13 August, Saleh announced that the House of Representatives was about to withdraw its recognition of the Presidential Council, a step it did not take when it withdrew confidence from the Daibaba-led Government of National Unity in 2022.
In short, the argument goes, Dabaiba feared that his rivals were joining hands in a bid to oust him from power and, for this reason, he decided to make a move of his own.
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