Tim Eaton
IV – Libya’s ‘economic track’ to date
There have been sporadic efforts in recent years to develop the economic dimension of peace negotiations, with UNSMIL in particular playing a prominent role. But instability, political opposition and rivalry between Libya’s parallel governments have impeded progress.
International policymakers have long recognized the need to mitigate economic drivers of conflict in Libya, and have taken a number of concrete steps to engage Libyan stakeholders on these topics. Such steps included the announcement of an ‘economic track’ of negotiations in 2018, and subsequent efforts to make state spending more coherent and rein in the diversion of state funds by officials and their associates.
The UN also expressed its ongoing commitment to governance reforms in a recently unveiled ‘multi-track’ process. There have also been continuing efforts to facilitate dialogue between Libyan stakeholders – such as on agreeing a budget between the Government of National Unity (GNU) and House of Representatives (HoR) – in the search for consensus on economic governance.
But these ad hoc efforts have, until now, remained largely divorced from wider efforts on the political track of negotiations. Critically, too, they have taken the shape of dialogue rather than direct mediation. Thus, the meetings have aimed simply to share views rather than force agreements.
A timeline of economic negotiations
Since 2014, Libya’s economy has been shaped above all by the political and security challenges arising from the emergence of rival governments in the west and east of the country. In response to this split, the international community initially focused on damage limitation: essentially, mitigating the impact of conflict on key economic institutions, and hoping to prevent their division and protect critical sectors like oil.
These efforts had mixed results – for example, they failed to maintain nationally unified governance of the CBL and NOC – but nor were they entirely in vain.
Indeed, coherent international action arguably prevented more serious impacts. For example, universal international recognition of the CBL’s Tripoli-based leadership ensured that only the Tripoli-based entity could access international financial markets and foreign exchange.
In the case of the NOC, the parallel leadership established in the east was prevented by the international community from selling oil directly on the international market. These measures by no means solved all the problems associated with the governance divide – as noted earlier, the east developed its own financing mechanisms entirely separate from those of its counterparts in Tripoli – but they did sustain a useful degree of national economic interdependence.
Broadly, NOC-affiliated entities in the east and south of Libya continued to extract and sell oil and petroleum products, while authorities in the west of the country received the revenues and distributed them nationally.
In 2015, the Libyan Political Agreement (LPA), signed by Libyans invited to a UN-brokered dialogue process, sought to establish a unified government to bring an end to administrative division. While laying a roadmap for elections under a unified government, the LPA simultaneously sought to insulate economic and financial institutions from political instability in what was supposed to be an interim period ahead of elections.
The LPA emphasized transparency, anti-corruption policies and adherence to international standards. Under the UN banner, the LPA also aimed to avoid oil blockades and ensure the continued functioning of vital sectors. Yet the government that was formed by the LPA – which became known as the Government of National Accord – was rejected by Khalifa Haftar and the House of Representatives in the east, leading the east to retain its own government. So, the problems remained unsolved.
In November 2017, Ghassan Salamé, at the time the new UN special representative for Libya and head of UNSMIL, told the UN Security Council that ‘politics in Libya is strongly shaped by economic predation’.
Salamé and his deputy, Stephanie Williams, recognized that capture of resources had become a major driver of ongoing conflict in Libya, and that addressing this problem meant elevating issues surrounding Libya’s economy to the forefront of the UN’s political engagement with the country.
Yet this statement of intent was not matched by actions, in part because of a deterioration of the situation on the ground.
Salamé had hoped to promote a shift from brokering stopgap agreements on specific issues, such as oil blockades, to addressing the underlying causes of conflict in a broader political settlement. His plan was to table economic components of reform at a planned ‘National Conference’ in April 2019; the conference was intended to bring together Libyan constituencies to negotiate an agreement that would end political division and chart a consensus path forward.
The exact shape of what was planned on the economic side has never been disclosed, however, not least because the event was cancelled following the attack by Haftar’s Libyan Arab Armed Forces (LAAF) on Tripoli two weeks before the conference was scheduled to take place.
Despite this setback, UNSMIL remained committed to addressing economic drivers of conflict through the creation of both a new Libyan body and a corresponding new international one. On 7 January 2020, UNSMIL established the Libyan Economic Expert Commission (LEEC), which was made up of Libyan officials, experts and academics and tasked with developing essential reforms.
The LEEC’s establishment had followed UNSMIL-led engagement over several months, culminating in a meeting in Cairo where those selected to join the LEEC convened to discuss how the body should function. The LEEC was subdivided into three working groups:
i) banking and the private sector;
ii) revenue distribution and transparency; and
iii) reconstruction and development.
Meanwhile, on 9 January 2020 representatives from the international community convened at the first Berlin Conference, where Salamé sought to gather support for UN-led peace efforts. The conference was predicated on a belief that without international consensus on the way forward in Libya, agreement among rival Libyan factions would not be possible. The meeting resulted in the Berlin Declaration, which set out seven components for a peace process, including a ceasefire, security sector reform, and economic and financial reform. The declaration announced the formation of an Economic Working Group (EWG) ‘follow-up committee’ to coordinate international support for Libya’s economic stabilization and institutional unification in pursuit of the declaration’s goals.
UN Security Council Resolution 2510 (2020) endorsed the outcomes of the Berlin Conference, as well as confirming the establishment of the LEEC. Critically, however, the resolution did not clarify the relationship between the economic and political processes. It thus remained unclear what the respective roles of the LEEC and the EWG should be. Was the LEEC to be empowered to make decisions that any governing authority would be required to implement? Or was it there merely to advise the Libyan authorities and their international counterparts at the EWG?
What became clear was that the members of the LEEC expected it to be given the power to do the former – bringing them on a par with their counterparts on the political track – while the international community ended up settling on the latter.58 The LEEC thus effectively became a consultative body that worked with the EWG to put recommendations to the Libyan government. While important, this role was clearly of less significance than the political track.
The EWG was encumbered with a situation where it had four co-chairs – the US, UNSMIL, Egypt and the EU – with their own priorities and interests. Moreover, the priorities set for the EWG were extensive, ranging from pursuit of structural economic reform to supporting the provision of vital public services. To add to the challenge, the EWG had no obvious means of delivering these ambitious goals, beyond the facilitation of dialogue among Libyan officials and institutions.
Simultaneously, UNSMIL’s economic unit formulated a detailed ‘policy reform roadmap’ that would be pursued with support from the EWG and the LEEC. Combined, these developments meant that the economic track centred on agreements among existing holders of office in Libya, targeting measures that would improve economic governance. However, momentum for this agenda faltered as international attention focused on the establishment of a new government via another UN-led selection process, called the Libyan Political Dialogue Forum, in October 2020. Few of the target measures of the policy reform roadmap were achieved.
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Tim Eaton is a senior research fellow in the Middle East and North Africa Programme at Chatham House. His research focuses on the political economy of conflict in the Middle East and North Africa (MENA) region, and on the political economy of the Libyan conflict in particular.
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