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Jalel Harchaoui and Colin Powers

The Weak Social Returns of Contemporary Public Employment

Despite public employment’s sizable fiscal footprint— most years, it represents more than 50% of state expenditures—its effects on social welfare are underwhelming ndeed, the reality is that as grand as the budget line is, it fails to fund a decent quality of life for a large share of those collecting a state salary.

Three variables explain the underwhelming social return on investment of public employment in Libya. The first is the devaluation of the Libyan dinar. As a result of fractious politics and a divided government, the interventions of dueling central banks in the post-2013 period led to significant increases in the money supply—and to significant (and not fully accounted for) increases in the volume of physical banknotes in circulation. Russia’s printing of billions of unauthorized currency in 2019–2020 (and again in 2024) is responsible for the latter. The effect has been to lower confidence in the value of the Libyan dinar and to decrease the currency’s purchasing power. By extension, this has reduced the quality of life that can be sustained on a public sector salary.

The second variable is imported inflation. This was largely set in motion by the supply shocks and commodity price jumps triggered by the outbreak of the coronavirus pandemic and Russia’s war on Ukraine. (The official devaluation of the currency in 2021 did not help matters, of course). Measured against the Minimum Expenditure Basket—which considers the prices of essential goods and services—inflation topped 10.5% in 2021 before jumping to 21.1% in 2022. Price increases were worst in the west, and for food products.

The third variable is inherited from the Qadhafi era. Though public sector workers were entitled to significant nonwage benefits such as housing, utilities, and food allowances under the former dictator, salaries were relatively depressed by a rigid and fixed wage system.

By 2012, the average wage of those working in the public administration was just LD 755 per month (USD 600 at the time), and the average of those employed by SOEs was only LD 934 (USD 741). In subsequent years, salary increases were implemented. Nevertheless, state wages remained relatively low. This is evidenced by the fact that it is not at all uncommon for public sector workers to either take on a second public sector job, operate an informal business, or borrow to cover essential expenses.

The inadequacy of the state wage for a large share of today’s public workforce is illustrated by comparing public sector wages with average household spending. When it comes to earnings, official figures reported by the Central Bank in 2023 determine an average public sector wage of LD 2,272 per month and a minimum public sector wage of LD 900.

At current exchange rates, these wages translate to USD 470 and USD 186, respectively. Median wages in the public sector cannot be calculated without access to the Central Bank’s data. An estimate in the area of LD 1,700–2,000 per month seems generous, however. With regard to household spending, the Bureau of Statistics and Population Census—a division of the Ministry of Planning—documented average household expenditures of nearly LD 3,100 in 2023.

It therefore just takes a simple calculation to establish that a public sector salary is not enough to cover a family’s bills at this point in time. As such, regardless of the enormous fiscal burden generated by public employment policies, it is clear that the state’s spending is not yielding a commensurate social return.

This is of grave importance. Even if we ignore the implications of public employment policies for economic development—the opportunity costs of allocating such significant shares of annual budgets to public sector salaries are immense—the weakness of the social return on investment alone would justify the need for reform.

Public Employment’s Uneven Geographic and Demographic Reach

Making matters worse, public employment’s efficacy as a social policy is also not demographically or geographically consistent, with younger people and those living in peripheral regions of the country having comparatively less access public. These social groups are therefore disproportionately excluded from one of the main systems by which oil rents have been, and continue to be, redistributed within the country.

One may question, of course, the wisdom of making public employment a social policy in the first place. That the state should be directly responsible for ensuring the welfare of the population by providing employment indeed seems a dubious proposition in this day and age.

Be that as it may, the proposition in question is one that is supported by a wide segment of the Libyan population, and with good reason: The Libyan state has dominated the national economy since the Qadhafi era. It is also the case that for many decades, the Libyan state proudly accepted the responsibility of acting as an employer of first and last resort. Both of these historical facts anchor popular expectations today when it comes to public employment:

According to Wave VII of the Arab Barometer—based on survey data from the spring of 2022—62% of Libyans want the government to create public sector jobs, and 69% express a preference for public sector employment. The extent to which the current government is fulfilling its responsibility as employer of first and last resort—and the extent to which different segments of the population benefit from public employment—is therefore essential to understanding the contemporary social and political dynamics in Libya.

Regarding the demographic unevenness of public employment, the data establishes that public sector opportunities are disproportionately limited for younger generations. This can be seen by examining aggregate measures such as growing youth unemployment and labor force participation rates.

We can rely on these non-discriminating statistics because, due to the weakness of private sector labor demand, the public sector employs an estimated 85% of salaried, formally employed people in Libya (and 75% of the national workforce). Consequently, unemployment rates of specific social groups and age cohorts is predominantly a function of access to public sector jobs.

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Jalel Harchaoui is a political scientist specializing in North Africa, with a particular focus on Libya. Before joining the Royal United Services Institute as an Associate Fellow in 2022, he worked with the Global Initiative Against Transnational Organized Crime and the Clingendael Institute in The Hague. His research primarily centers on Libya’s security sector and political economy.

Colin Powers is the Scientific Coordinator and Chief Editor of Noria Research’s Middle East and North Africa Program. He earned his doctorate from Johns Hopkins SAIS in 2020 and was a postdoctoral researcher at Sciences Po Paris in 2022. A political economist by training, his work focuses on issues of development, distribution, finance, and power.

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Jalel Harchaoui and Colin Powers

INTRODUCTION

Modern Libya’s trajectory has been set by the formulae determining the distribution of the country’s oil rents. Since crude oil was first discovered in 1959, it is these very formulae that underlie the forms of power, state-society relations, and social organization observed.

The same formulae are also responsible for drawing Libya’s developmental horizon. The fall of 2011 famously brought an end to the Qadhafi regime. Due to political disarray in the years that followed, however, many Qadhafi-era arrangements for managing the distribution of Libya’s oil income were kept in place. Institutionally, pillars such as the National Oil Corporation (NOC), Central Bank of Libya (CBL), CBL-owned commercial banks, and the Ministry of Finance remain preeminent.

When it comes to the tools used for distributing oil revenues across the population, public employment, public procurement and tenders, the CBL’s selective extension of letters of credit to individuals and firms, and the subsidization of essential goods remain favored. Concerning the former, public sector hiring was scaled up considerably post-2011, driven by unchecked patronage networks, the influence of armed groups, and local officials’ exploitation of weak central authority. This research report centers it concerns upon public employment in the post-2011 period. A mixed methods approach was adopted for conducting the research. To capture the lay of the land, authors first gathered and analyzed all available state-published quantitative data on public employment.

These data were, however, insufficient for deriving high-confidence conclusions for a number of reasons. First, the open source statistics that are released by institutions responsible, namely the Central Bank of Libya and Ministry of Finance, are neither consistent nor fully reliable. In addition, documentation regarding off-budget spending, including the resources allocated to cover the compensation of militias, is not publicly unavailable. Discrepancies between the expenditures announced and those actually disbursed by the Benghazi-based Government of National Stability confuse the picture further.

Dis-aggregating salary data at the firm or industry level for those employed by Libya’s 2,000 SOEs —a category of worker estimated to include 175,000 people in 20123 — is now not technically feasible. Last but not least, the books of quasi-state entities, such as the Libyan Arab Armed Forces’ Military Investment Authority (MIA), the Haftar-family controlled Military Authority for Investment and Public Works, and the Tariq bin Ziyad Agency for Services and Production4 are fully sealed.

In view of the limitations of official statistics, quantitative analysis was combined with qualitative forms of inquiry. The latter included a comprehensive literature review covering government reports, media articles, and specialized publications related to Libya’s political and economic situation. It also consisted of semi-structured interviews with a diverse sample of Libyan citizens. Mindful of the uneven geography of Libyan public sector employment, interlocutors were selected based on them living in more peripheral areas of the country: namely, Fezzan, the west coast, and the environs of Ajdabiya. The report is organized as follows. It begins with a macro overview of public employment policy.

Beyond establishing baseline empirics, this opening section considers public employment’s most salient fiscal and social consequences. Situated in this way, the report then narrows the focus to examine post-2011 changes in the public employment practices. Here, analysis centers on the rise of tribalized wasta in hiring, the privatization of public asset management, and the enduring effects of the Libyan state’s partition between east and west. The report then concludes by laying out a number of policy recommendations.

The Big Picture

Establishing the facts regarding Libyan public employment is no simple undertaking. In view of the limitations in the data—the causes of which go beyond those discussed in the introduction—any investigation into public employment must proceed in the knowledge that official figures cannot be fully trusted. Approaching the data with a necessary degree of skepticism does not mean we should discard the official figures altogether, however: They can still help us create a useful sketch of the current situation.

In terms of the guiding metrics, the Libyan Ministry of Finance asserted in November 2023 that the government workforce amounted to 2.1 million people. A ministerial review of the public sector salary structure conducted at a slightly earlier date put the number of people employed by the state bureaucracy at 2.2 million. Set in temporal context, these (slightly divergent) numbers indicate that the government workforce has more than doubled since 2012. Set in a population context, they indicate that approximately one-third of all Libyan nationals residing in their country of citizenship are notionally employed as civil servants.

It is important to note that this does not account for those on the payroll of Libya’s SOEs, its Social Security Fund, or its Solidarity Fund. Estimates from a credible interlocutor place the current number of salaried employees working for Libya’s SOEs alone at 500,000. This is roughly three times more than the figure reported in 2012, a jump driven to no small degree by the rise in “ghost” employment. At the General Electricity Company of Libya (GECOL), for instance, payroll has leapt from 18,000 to 60,000 on the back of the firm doling out jobs to individuals never expected to come to work.

For a country with a total population of 7 million, where about 3.6 million are of working age and 500,000 retired, official data suggests that more than 2.6 million are employed by the state. Paying the salaries of these millions of employees naturally translates to a sizable public sector wage bill. For the first four months of 2024, the Libyan state spent LD 20.4 billion (USD 4.2 billion) on wages. The rate of spending is broadly in line with expenditures from the previous year: Official reporting from the Central Bank presents a public sector wage bill of LD 63.9 billion for 2023, including National Oil Corporation salaries.

This was equivalent to approximately 25% of Libya’s GDP. As with reporting on employment, it is important to be mindful that the sum in question does not factor in the salaries of those employed by all SOEs, the Social Security Fund, or the Solidarity Fund.

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Jalel Harchaoui is a political scientist specializing in North Africa, with a particular focus on Libya. Before joining the Royal United Services Institute as an Associate Fellow in 2022, he worked with the Global Initiative Against Transnational Organized Crime and the Clingendael Institute in The Hague. His research primarily centers on Libya’s security sector and political economy.

Colin Powers is the Scientific Coordinator and Chief Editor of Noria Research’s Middle East and North Africa Program. He earned his doctorate from Johns Hopkins SAIS in 2020 and was a postdoctoral researcher at Sciences Po Paris in 2022. A political economist by training, his work focuses on issues of development, distribution, finance, and power.

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Hafed Al-Ghwell

Over the past decade, Libya has spiraled into a curious form of governance, aptly termed “dysfunctionism” — a state in which political gridlock, kleptocracy, and perpetual crisis have become not the symptoms of collapse, but the very framework of governance. This peculiar status quo has not only impeded progress, but has also entrenched a ruling elite that thrives on systemic inefficiency.
The roots of Libya’s “dysfunctionism” lie in the political fractures that emerged post-2011, following the fall of Muammar Qaddafi.

Competing for control, various factions have entrenched themselves within the central institutions of the country, with the Central Bank of Libya emerging as the latest battleground, much like the frictions at the National Oil Company, or the growing interest in wresting control of the Libyan Investment Authority. The bank’s dual role as both monetary policy setter and fiscal distributor has made it a coveted asset in the political tug-of-war, illustrating how critical state functions have been repurposed to sustain the power of ruling factions rather than serving the Libyan people.

In essence, Libya’s political elite has managed the bizarre — i.e., the effective institutionalization of gridlock to the point where it has become a deliberate governance strategy. By maintaining control over the central bank and other pivotal resources, for instance, warring factions are now well placed to weaponize instability, holding Libya’s economy hostage as the standoff between the Tripoli-based government and eastern authorities continues to metastasize in a deliberate perpetuation of crisis. Each side’s refusals to concede are no longer mere administrative rows but calculated strategies to fuel a paralyzing status quo from which both derive significant benefits.

Chaos and inefficiency have become the currency of power in Libya. The dysfunctional situation enables key actors to manipulate resources, secure loyalties, preserve patronage networks, and keep potential reformers at bay. For instance, the partial shutdown of oil production by eastern authorities, retaliating against the appointment of a new central bank governor by Tripoli, illustrates how economic sabotage is used to maintain leverage. The ensuing turmoil deters foreign investment, disrupts daily life, and keeps Libya tethered to external negotiations — a perfect breeding ground for corruption and rent-seeking.

Libya’s predicament is a testament to how entrenched dysfunction can become a deliberate mode of governance. Provided the ruling elite benefit from this chronic instability, its members have little incentive to support genuine efforts for a stable, pluralistic society. The international community’s sporadic interventions, though well meaning, often get entangled in Libya’s internal contradictions, ultimately bolstering the dysfunction they aim to dismantle.

Hence, “dysfunctionism” continues to define Libyan governance — an alarming example of how systemic crises can become the bedrock of political survival. Another striking example was an Aug. 5 decision to shut down Libya’s largest operational oil field by Saddam Haftar in a calculated move to “punish” Europe following his detention in Naples. This was no isolated incident but part of a larger trend where state resources have been transformed into currency for personal and political gain.

Moreover, Libya’s political economy, fragmented by foreign influences and internal rivalries, is unsuitable even for its leaders, and incapable of constraining them, perennially unable — by design — to meet the needs of its citizens. The closure of oil fields, military flare-ups, institutional paralysis, and political standoffs are symptoms of a system engineered to permanently malfunction, reinforcing the power of a kleptocratic elite. 

However, when the international community attempts to “restart” Libya’s broken system, it always ends in temporary fixes that never target nor address the underlying issues crippling it. This cyclical process of crisis and reset only perpetuates dysfunction. Clearly, Libya’s political deadlock is not just a consequence of endless internal power struggles; it is fueled by the international community’s short-sighted strategies and reluctance to engage deeply.

By repeatedly endorsing quick fixes and temporary measures, global actors have played into the hands of Libya’s ruling elite, who exploit these interventions to maintain their grip on power. This “input-output” dysfunction ensures that while interim solutions are continuously proposed, the deeper structural reforms necessary for long-term stability remain unaddressed.

Access to Libya’s vast oil revenues remains the foremost prize in this standoff, worsened by the international community’s failure to enforce stringent economic measures or foster comprehensive political dialogue. The Central Bank of Libya, the repository of tens of billions of dollars in oil revenue, has also become a focal point in this same struggle.

Yet, international financial institutions still failed to impose firm penalties on the Libyan factions for their manipulative use of these resources, allowing the ruling elite to divert funds at will, reinforce their power bases and grease palms, all while the general population suffers from chronic instability.
However, foreign governments remain wary of their own economic and strategic interests — often avoiding taking decisive action that would disrupt their transactions with Libya, ultimately bolstering a kleptocratic cabal that is all too thrilled when potential intervening actors look the other way. A collective reluctance to impose asset freezes or more stringent financial controls out of fear of losing access to Libya’s oil and markets only deepens an existing divide.

Meanwhile, instead of driving progressive change, the UN’s involvement has — at times — magnified the dysfunction. For instance, the UN-backed preliminary deal to appoint a new central bank governor demonstrates how international mediation often becomes a pawn in the local power game. Although the agreement aimed at resolving fiscal disputes, the competing factions manipulated the process to gain a stronger foothold, thus perpetuating the status quo. This illustrates how international actors, despite their well-meaning attempts, have facilitated a system where state capture and political inertia thrive.

Libya’s version of “dysfunctionism” goes beyond mere inefficiency — it is a self-propagating governance model that systematically blocks any meaningful reform. As state institutions crumble and moribund laws are manipulated, armed militias and a disengaged international community keep public outrage at bay. This absence of accountability solidifies the ruling elite’s hold over the country which is characterized by cyclical crises without resolution.

It is imperative to recognize that until this system is uprooted, Libya will remain trapped in a cycle of collapse and pseudo-reconstruction, staving off democratic transition and entrenching corrupt rule. This country, on the brink of a democratic miracle a decade ago, has seen that vision swallowed by “dysfunctionism” — a grim testament to the intractability of entrenched power.

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Hafed Al-Ghwell is a senior fellow and executive director of the North Africa Initiative at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies in Washington, D.C.

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Khaled Mahmoud

Ordinary Libyans Pay the Price of

the Power Struggle

By 2023, the Libyan crisis had entered a phase of stagnation and failure. In May, Bashaga was replaced by Osama Hammad, a bureaucrat with no political ambitions, Hamad followed Haftar and Saleh’s directives, as reflected in his public statements. Dbeibah and Hammad symbolised the dual power structure that has plagued Libya’s institutions, with two rival authorities constantly disputing legitimacy, to no avail.

Storm Daniel, which struck the eastern cities and caused the worst disaster in Libya’s history, was not enough to push the political players to negotiate and resolve their differences. On September 9, the people of Derna woke up to a disaster. The torrent coming from the Derna Valley swept away neighbourhoods along its banks and caused great destruction in the city centre.

Eyewitnesses spoke of an indescribable event, saying they heard an explosion late at night, followed by a second one about fifteen minutes later. Minutes after that, floodwaters rushed through the centre of the city, destroying everything in their path. Martin Griffiths, the UN Emergency Relief Coordinator, stated that “climate and capacity have collided to cause this terrible, terrible tragedy.” Meanwhile, the Secretary-General of the World Meteorological Organization, Professor Petteri Taalas, shed light on the situation in Libya by saying: “The tragedy in Libya highlights the devastating and cascading consequences of extreme weather on fragile states.”

The struggle for power between the rival GNU and GNS, along with the lack of central authority, shaped the entire disaster. Ordinary Libyans paid the price for the failure of their political leaders. The storm caused catastrophicflooding, with 4,333 people confirmed dead and about 8,540 missing, including 930 migrant workers. Many of these workers lived in the hardest-hit areas of Derna, suggesting that the real death toll is likely higher than reported.

Unlike the divided political leaderships competing for power, Libyans responded in unity and answered the call for relief in the affected areas. In this way, the floods seemed to dissolve the divisions between them. However, this disaster was not an isolated incident. After nearly a decade of chaos and conflict, the political fragmentation in the country had already severely weakened the infrastructure and worn down state institutions.

Political Fragmentation

The existence of about 140 government institutions, split between the east and west, aggravated the situation. While Libya had never faced a disaster of such magnitude before, the political divisions further complicated both the response and relief efforts, hampering a unified and effective recovery. Wolfram Lacher, a Libya specialist at the German Institute for International and Security Affairs (SWP), noted that the government in the east, the GNS, was weak and lacked the mechanisms to respond to the disaster. Meanwhile, the UN-supported government in Tripoli had no authority in the east due to political divisions.

The disaster failed to unite the rival powers, even when it came to reconstruction efforts. The GNS called for an international conference to oversee the rebuilding of Derna and other areas devastated by Storm Daniel. Meanwhile, the GNU, confident that local resources were enough, officially sought assistance from the World Bank to manage the reconstruction funds for the affected regions.

The situation became worse when the High Council of State (a consultative body based in Tripoli) refused to approve a budget for storm recovery, citing national security concerns. The head of the UN mission at the time, Abdoulaye Bathily, saw his appeals for an end to the chaos go unanswered. He expressed concern about conflicting initiatives from various Libyan factions for the reconstruction of Derna and other affected areas.

However, no one heeded his repeated warnings that these unilateral efforts would backfire, further deepening the divisions within the country, obstructing reconstruction, and going against public opinion. Amid the complexities surrounding reconstruction and compensation, the authorities have ignored both local and international calls for an independent investigation into the failures in managing the disaster, with no effective international mechanism in place to pursue such inquiries.

Amnesty International highlighted that the two rival authorities mishandled the response, failing to investigate the responsibilities of those in power to protect the people’s rights to life, health, and other human rights, as part of criminal investigations into the disaster. Bathily realised his efforts to engage the main parties in a new political dialogue had failed, and he resigned abruptly, leaving the UN mission in disarray once again.

Ongoing Instability

Since 2011, the Libyan conflict has had an astronomical cost, affecting every part of the economy. Growth has not only slowed but has become highly volatile. Mouin Kikhia, chairman of the Libyan Democratic Institute, believes this is the moment to stop foreign interference, suggesting that now is the time for outsiders to step back from imposing their directives.

Hopes for Egyptian-Turkish mediation, following nearly a decade of diplomatic crisis, had once offered a glimmer of optimism for resolving disputes in Libya. However, this hope has since faded. The core issue preventing elections in Libya is that those who currently hold wealth and power through their theoretically temporary positions have no incentive to negotiate their exits or subject their positions to the risks of an electoral process. The disparity between the West and the East of the country exacerbates internal instability and raises the risk of regional conflict in the Mediterranean.

Central Bank Crisis

Libya’s political deadlock deepened when Central Bank Governor Siddek Elkaber clashed with the GNU over government spending. This conflict escalated when Mohamed al-Menfi, head of the Presidential Council, who had seldom involved himself directly in Libya’s internal crisis, unexpectedly dismissed Elkaber in August 2024. Both the Tobruk-based parliament and Haftar’s forces in the east opposed the move. The dispute led to a halt in oil production, affecting global oil prices and threatening to escalate into the worst crisis in years.

International diplomatic efforts have centred on preserving the independence and integrity of the National Oil Corporation (NOC) and the Central Bank. However, this has become increasingly uncertain after the dismissal of the NOC chairman in 2022 and the crisis over control of the Central Bank. After mediation by the UN mission, both governments in the west and in the east reached an agreement to appoint Naji Muhammad Issa Belqassim as new governor to the bank. Despite the fact that oil production was restarted ever since, many challenges remain over the handling of oil reserves in the divided country.

Despite Libya’s substantial oil reserves, the economy remains in dire straits. Internal conflicts have led to frequent closures of oil fields and ports, reducing production and government revenue, which has further weakened the economy.

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Jalel Harchaoui and Colin Powers

The Critical Need to Shift from Patronage to Performance

• Salaries of public sector are no longer sufficient to cover average household expenses, and job creation is too weak to integrate younger generations and communities in peripheral areas.
• Tribal bias in public sector hiring practices has worsened in recent times.
• Along with the pervasiveness of ghost employment, tribal biases have undermined the quality of public services and of the commercial performance of state owned enterprises
• Outsourcing the management of key state assets, including in the oil sector, is a deeply troubling trend.
• Policymakers’ deliberations are not subject to public scrutiny, inviting corruption and favor trading.

EXECUTIVE SUMMARY

The social, political, and economic trajectory of modern Libya has been determined by the manner with which the country’s oil rents have been distributed. Public employment has long been key to the country’s distributive schemes. This research report considers the state of public employment in the post-2011 period.

Based on field and desk research conducted during the winter and spring of 2024, the analysis advances four main claims.

The first is that public employment is becoming increasingly inadequate as a welfare measure. Despite interim Prime Minister Dabaiba introducing salary hikes between 2021 and 2023, steep rises in the cost of living mean that the wages of most of those on the government’s books are insufficient for meeting the needs of a family.

The second claim is that the transitional rulers’ tethering of public employment to political and/or distributive concerns, a practice inherited from their predecessors, is driving a decline in the quality of public services and in the performance of state-owned enterprises (SOEs). Across sectors, from education and healthcare to infrastructure maintenance and electricity provision, the Libyan state is providing its citizenry with substandard services. Weighed down by corruption and ghost hires, SOEs show declining commercial performance.

The third claim is that the paramilitarization of politics and state—and the attendant emergence of securitized dynamics within policy deliberations—is intensifying the socially and geographically uneven distributive effects of public employment. Since the outbreak of civil war, many public sector jobs have been doled out with the aim of buying or retaining the loyalty of particular tribes or armed groups. The effect has been to exclude the groups and places that lack the political influence necessary to extract work opportunities from the state.

The fourth claim is that reversing public employment-related policy failures requires a wider resolution of the prevailing political situation and the restoration of democratic governance. As long as existing power structures remain in place, it will be difficult to conceive of how public employment might be reoriented toward social and developmental objectives.

MAIN FINDINGS

(i) Political dysfunction in the post-2011 period worsened the performance of the Libyan public sector, which has declined across social, developmental, and commercial metrics. The public sector today is characterized by irregular hiring practices, ghost employment, and delayed salary payments. It also provides services of increasingly poor quality.

(ii) Attempts at rationalizing the public sector were launched in the summer of 2021. These efforts proved short lived, however, quickly faltering as rulers in the west and east once again succumbed to factionalism and institutional division.

(iii) Despite consuming an outsized portion of the state budget, public sector employment has diminished in its effectiveness as a redistributive mechanism. Although state-funded jobs continue to be created, the Libyan people are deriving fewer social gains than in the past.

(iv) In relative terms, younger cohorts and those from peripheral regions have access to fewer public sector opportunities. This not only deprives these populations of a potential source of income, but excludes them from the social and health security that public sector employment provides.

(v) Public sector hiring decisions are increasingly mediated by considerations of power and wasta. Today, jobs are doled out as spoils by the country’s political and military elite. Tribal affiliation and place of residency are often the primary hiring criteria.

(vi) A new generation of private companies, controlled by Libya’s political and military elite and linked with foreign firms, has emerged and inserted itself into both public procurement processes and the management of public assets such as the country’s oil reserves. The firms’ business operations are opaque, create relatively few jobs, and may contribute to increasing inequality by allowing large transfers of public wealth.

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Jalel Harchaoui is a political scientist specializing in North Africa, with a particular focus on Libya. Before joining the Royal United Services Institute as an Associate Fellow in 2022, he worked with the Global Initiative Against Transnational Organized Crime and the Clingendael Institute in The Hague. His research primarily centers on Libya’s security sector and political economy.

Colin Powers is the Scientific Coordinator and Chief Editor of Noria Research’s Middle East and North Africa Program. He earned his doctorate from Johns Hopkins SAIS in 2020 and was a postdoctoral researcher at Sciences Po Paris in 2022. A political economist by training, his work focuses on issues of development, distribution, finance, and power.

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Khaled Mahmoud

Local and external factors have pushed Libya into a phase of political and institutional failure to rebuild the state that collapsed in 2011. As of 2024, the situation of disorder and insecurity shows no signs of abating. Ordinary Libyans bore the brunt of the chaos, highlighted by two major events that struck the country.

Introduction

Amid rising political and military divisions, the ousting of the governor of the Central Bank of Libya (CBL) Siddek Elkaber in August 2024 led to a temporary halt in oil production, a lifeline of the economy. Despite the appointment of a new governor a month later, uncertainties remain over disagreements on how to handle Libya’s oil revenues through the CBL.

This chaos and sustained insecurity are part of the political disorder and the absence of a unified state. Late 2023, a natural disaster struck the country, the aftermath of which reflected this disunity. Meanwhile, the situation on the ground suggests that fighting could erupt at any moment in Tripoli between rival armed militias and Field Marshal Khalifa Haftar’s forces, who seeks control of the country and make an end to the chaos.

Emerging from the Shadows

In 2022, Libya remained trapped in the same confusion and turmoil it had experienced since the fall of Gaddafi’s regime during the 2011 NATO-backed popular uprising. Abdul Hamid al-Dbeibeh, head of the Government of National Unity (GNU), strengthened his hold over Tripoli and the western region, despite efforts by the House of Representatives (HoR), based in Tobruk, to remove him from power.

Meanwhile, the HoR placed its hopes on Fathi Bashagha, known as “the tyre-man” among Libyans, and appointed him as prime minister of the rival Government of National Stability (GNS) in February 2022. Bashagha was a former member of the Misrata Military Council, which rose to prominence during the conflict against Gaddafi.

Bashagha presented himself as a veteran politician, having previously served as minister of Interior in the Government of National Accord (GNA) led by Fayez al-Sarraj. He resisted Sarraj’s attempts to remove him and aimed to convince the public of his seriousness in dismantling the militias controlling Tripoli. Bashaga’s promises were never realised.

Bashagha, whose family is of Turkish origin and, like Dbeibah, hails from Misrata, shifted from fighting Haftar’s forces in their failed 2019 attempt to control Tripoli to allying with him. Bashagha believed that Haftar’s backing would enable him to seize power, not as a minister but as the head of government.

After being appointed by the HoR, which had stripped Dbeibah’s government of its powers due to delays in holding the 2021 presidential and parliamentary elections, Bashagha planned his entry into Tripoli. He aimed to prove to the international community that whoever controls the capital is the most powerful. Bashagha infiltrated the city, relying on the loyalty of the Nawasi Brigade. He claimed to have entered the Brigade-guarded gates of Tripoli, in civilian cars without any incidents and without guards.

Prime minister Bashaga, now a rival to Dbeibah based in Tripoli, attempted to win over the militias that Dbeibah depended on to maintain his government. He reached an agreement that he thought could pave the way for his entry into Tripoli. The Nawasi Brigade (the Eighth Force) announced the entry of Bashagha’s government into Tripoli, but violent clashes soon followed with forces loyal to Dbeibah’s GNU.

Despite Nawasi Brigade’s defection to the rival prime minister, Dbeibah retained the loyalty of other armed factions, allowing him to thwart the infiltration of Tripoli. After around seventeen hours in the city, Bashagha was forced to leave, sneaking out with his aides and a small force of militants, claiming that he wanted to “prevent bloodshed.”

Dbeibah quickly reaffirmed his authority by visiting the sites of clashes, describing Bashaga’s infiltration as an “outlaw armed group sneaking in under cover of darkness to spread fear and chaos.” He praised the security forces for “handling the situation with professionalism.”

Victim of Haftar’s Ambition

After the military confrontation ended, Bashagha lost favour with Haftar and the HoR, who realised he was not the right man for the job. They realised that depending on him to control Tripoli was just as unrealistic as Haftar’s failed 2019 war.

The Tobruk-based parliament abandoned Bashagha following his failure and called for his investigation, effectively ending his political career as quickly as it had started. Bashagha “the tyre-man,” who once proudly spoke of his expertise in the car tire trade, became another victim of Haftar’s relentless ambition to control Tripoli.

Haftar, who remains in good shape despite his age, understands that staying in his base in al-Rajma near Benghazi is not enough to fulfill his dream of making history by becoming Libya’s president. In his political and military moves, Haftar misjudged both Dbeibah, head of the GNU, and Mohamed al-Menfi, head of the Presidential Council. Both were brought to power in October 2020 by a UN-backed agreement following the ceasefire in Tripoli.

Emerging from the Shadows

The end of the war in 2020 had marked the start of a new phase, where the UN mission briefly regained control, overseeing the political and military situation through a troika composed of Dbeibah’s government and al-Menfi’s Presidential Council. This new leadership seemed to be made up of men who had suddenly been thrust into power like footballers charging forward to score.

Neither al-Menfi nor Dbeibah were widely known before being selected in Geneva by a 75 member UN-appointed committee during the political dialogue. Despite concerns of bribery and financial corruption surrounding the Geneva process, Haftar and his ally Aguila Saleh, the speaker of the HoR, in the presence of al-Menfi and Dbeibah reluctantly accepted the fait accompli imposed by the Geneva dialogue.

As a result, Haftar, a veteran military leader, found himself saluting the civilian Mohammed al-Menfi, who had never served in the military, but now served as the new supreme commander of the Libyan army. Egypt advised Haftar and Saleh not to oppose the new authority.

Haftar met al-Menfi once, but it was not a positive experience, and they never met again. Dbeibah also distanced himself from Haftar and refused to meet him, even though he took the oath before the HoR as head of the new government in March 2021, until that brief cooperation soon ended.

By the end of 2022, Dbeibah still controlled Tripoli as the head of the internationally recognised government (GNU), while Bashagha’s weak parallel government, the GNS, only operated in areas controlled by Haftar’s forces in the east and south. Throughout 2022, many oil fields and ports were shut down due to local conflicts and pressure by armed groups, severely affecting oil exports, the backbone of Libya’s economy.

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Marieke Wierda

Transitional justice and reconciliation are hotly debated topics in Libya. In this piece, Marieke Wierda draws on her experiences in Libya and beyond to propose four key policy questions that may require further discussion in Libya.

Transitional justice has been under discussion in Libya for at least 12 years, starting with the original draft law published by the NTC in 2011. The vision document that was published by the Presidential Council in 2022 is very inspiring and progressive and shows a political commitment that is absent in many countries.

Libya’s eminent experts have built a lot of knowledge on these issues over the years, and the latest draft reconciliation law has many areas of improvement over earlier versions. Still, four important policy questions may require more discussion in the Libyan context.

First, the vision of reconciliation in the draft law in Libya is rather legal. In its vision document the Presidential Council refers to using the law as the pathway to deal with conflict, in order to have long-term impact. This raises the problem of scale. 

The mechanisms suggested in the law, and in particular the Truth Commission, are too focused on resolving individual cases. In the case of Libya, both perpetrators and victims of 42 years of dictatorship followed by over 10 years of conflict could be in the hundreds of thousands. It is half a century worth of violations.

In general, Transitional Justice should focus on addressing root causes. It cannot address all individual cases. It should focus just on the who and the how, but on the why. The focus should be on structural causes and patterns of violence, or on “incidents” that are important to the collective memory (the Abu Salim massacre being a prominent example). It can also look at groups of victims who were particularly victimized, or regions (groups are referred to in the draft law).

This is a different approach than looking at each individual case. It will also require a different way of working and requires significant investigative capacity. It cannot just be left to individuals to come forward.

The vision document of the Presidential Council that “national reconciliation is dependent on members of society’s awareness of the need for it.” This is extremely important. Transitional Justice needs to be primarily a social rather than legal process. The public (including women and youth) must put their trust in the process and the mechanism.

Participation is voluntary and should therefore be based on trust. The current vision on appointing a Board of Directors, and the criteria for appointment, are not sufficient to guarantee trust in their independence. In many countries, the appointment process to a TRC makes the difference to it being trusted (a prominent example is the Truth and Reconciliation Commission in South Africa, which was chaired by Bishop Tutu) and not trusted (there are different negative examples of this such as Liberia, DRC).

The social stature of persons who are appointed in this role is very important and the appointment process has to be elaborate and transparent, in order to guarantee this trust. A communications strategy for Transitional Justice mechanisms is also very important, including social media.

Secondly, the problem of scale raises particular challenges on reparations. The current law may go too far in raising the expectations of victims. It also leaves too much of the burden of pursuing justice on them. The law implies that victims will be compensated proportionally to their loss, but this will be a huge drain on the Libyan state budget.

Again, this raises huge problems of scale. Which victims and how many? For instance, what about all the Law Number 4 victims? Lessons can be drawn from the mechanism that was set up to compensate victims of September 11 in the US. The Sept. 11 Fund had USD 9.4 billion in it (circa), and victims were paid a range of compensation from $500 – $8.6 million each.

This is more than victims are likely to receive in Libya. Yet the issue was hugely divisive among victims. How do you value the life of an investment banker against the life of the cook in the restaurant in the World Trade Center who also died? Is earning potential the most important criteria?

In this respect, while reparations should be seen to support reconciliation, it is important to be aware of their divisive potential and think of ways in which it can be approached to promote cohesion, including symbolic ways of acknowledging victims in ways that contribute to reparation (memorials, museums, etc.).

The current draft law refers to collective reparations which may be a step forward. Libya has its own experience with the divisiveness of compensation, through the Mistrata-Tawergha reconciliation committee. In the end, it did not succeed because the state did not want to fund the compensation that was agreed by the committee.

Thirdly, on criminal justice for (alleged) perpetrators, the problem of scale also applies. It is impossible to try all the perpetrators, since there may be too many. If there is no selection (and no statute of limitations), the courts will become entirely congested with these cases. Many acts qualify as war crimes, and crimes against humanity (which are not a part of Libyan law at the moment) by definition have many perpetrators.

In a Transitional Justice process, countries seek to balance accountability and reconciliation, but they can never try everyone who may be guilty of crimes. Even a single trial can be very complicated and last months or years. This is why in different countries there was a choice to focus on those with the most responsibility, and to decline prosecuting other cases (Colombia, Sierra Leone).

Amnesty can be a useful tool for reconciliation, particularly for financial crimes. In Libya, some prominent former regime figures were already tried – would they be tried again under this law? That may violate non bis in idem/ prohibition on double jeopardy. These are issues that remain to be resolved.

Fourth, it is important to consider from the outset the issue of capacity. Some countries, including Colombia but also South Sudan, concluded peace agreements that provided for extremely elaborate and complicated Transitional Justice mechanisms.

These can be very difficult to implement in practice. In many countries, professionals are not trained on applying transitional justice since these are not part of the ordinary justice system. Conducting investigations for a truth commission, in order to compile a historical record, is a very complicated exercise that requires advanced skills.

The same can be said for vetting, deciding on reparations, or conducting prosecutions. While Libya may have many able lawyers, they may not have this specific experience and the process needs much more than lawyers. If the mechanisms cannot be properly staffed, the process will not be professional and fair. It is important to think about starting to build capacity before the process is implemented.

As Libya embarks on the journey of national reconciliation, it will hopefully draw on its own context, in terms of its history, culture and society, to innovate and to adopt unique methods that will make it an example to other countries.

***

Marieke Wierda is Deputy Ambassador at The Netherlands Embassy to Yemen.

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Amy Addison-Dunne and Marwa Koçak

Italy’s policies on migration reveals the ugly truth of the country’s pushback tactics. Italy’s strict migration policies, supported by the EU, have led to serious human rights abuses for migrants, as they face violence and pushbacks to Libya. Recently, UK Prime Minister Keir Starmer praised Italian Prime Minister Giorgia Meloni for her country’s efforts in combating “irregular migration.” He stated, “You have made remarkable progress, working with other countries along migration routes as equals.” He also noted that “irregular arrivals to Italy by sea are down by 60% since 2023.”

To achieve this, Italy and the European Union (EU) have invested millions in the Libyan coastguard. This funding aids in patrolling the Mediterranean Sea and provides essential training and equipment. According to Doctors Without Borders (MSF), over 341,000 people attempted to cross the Mediterranean in 2023, with more than a third being intercepted and sent back to Libya. Fulvia Comte, who leads an MSF search and rescue team, shared distressing accounts from migrants about being pushed back multiple times over two years and facing violence and torture upon their return to Libya. “They are taken back to the same circle of violence and torture — of killing, of rape, and kidnapping,” Fulvia stated.

She further explained that while the Libyan coastguard threatens civil rescue fleets with dangerous manoeuvres, boarding their ships and trying to prevent rescues, the situation is far worse for migrants when search and rescue (SAR) vessels are absent.

Personal migrant accounts

Personal stories collected by The New Arab reveal the challenges migrants have faced due to Italy’s implementation of pushback tactics. Syrian refugee Amjad says he has never interacted with the Italian authorities, yet he has experienced the country’s border tactics, which reveal that the plan is working: migrants are being stopped before they can reach Italian waters. He recalled, “The Libyan coastguard intercepted us 100 km from Greece and tricked us into thinking they were British, so we would feel safe and approach them.” Amjad added, “Then, we were transferred to their ship.”

Displaced in northern Syria in 2018 due to threats from the Assad regime, Amjad paid $3,500 for a dangerous journey on a rubber boat with 30 others to try to reach Europe. After being picked up at sea by a group calling themselves the “Frogmen,” Amjad shared his experiences, explaining that he and others were forced to “sing songs” praising the coastguard to receive water. He also revealed that their money and belongings were taken, and some were tortured for steering the boat.

“There were 43 of us in a space no larger than 7 square metres,” he further explained. “We suffered from a lack of ventilation, water, and food, as well as from inadequate medical care, all while dealing with numerous skin infections.” When they finally reached the port, Amjad reported being detained. After three days, a convoy of police cars arrived from the Illegal Immigration Control Department.

Amjad recounted, “The police car took us far from the city centre. And there, a broker sent by the smugglers came and took us. The whole thing had been arranged with them beforehand.” Each person paid $300 to be released. Despite assurances that the Libyan coastguard is tackling traffickers, Amjad’s experience shows how they gain profit and feed people like him back into the meat grinder.

After this ‘nightmare’ experience, Amjad familiarised himself with maps, learned their route, and obtained waterproof bags for his devices, noting that the satellite phone given to him had enough credit for one call. Facing rough seas with three-metre-high waves, Amjad managed to contact a Syrian named Ghaith, who operates an emergency service to assist boats in distress. “He contacted the Greek coastguard and advised us to move 20 kilometres closer, as the Libyan coastguard would take over seven hours to reach us. We had no choice but to accept the risk and continue,” Amjad revealed. Eventually, after reaching out to a commercial ship, the boat was finally rescued.

The Piantedosi Decree

Currently, Italy is increasing its efforts to block rescue missions. In 2019, former Sea-Watch captain Carola Rackete was charged with helping illegal immigration after her crew and passengers waited two weeks in a heatwave for permission to dock in Lampedusa. The judge sided with Carola and dismissed the case, marking an embarrassing defeat for the Italian government. As of last year, Italy introduced the Piantedosi Decree, named after Interior Minister Matteo Piantedosi.

This rule says that search and rescue (SAR) missions can only respond to one call for help before they must return to port. With this new decree, NGOs often get fined, and their ships are detained for trying to help more than once. Fulvia commented on the decree and told The New Arab about the current reality: ships are redirected to distant Italian ports, which wastes time and adds days to their return for continued operations. With so few rescue vessels available, this time away puts lives at risk. Fulvia elaborated, “The problem is the (SAR zone) is less covered by ships that can perform rescues…”

She added, “We spend more than one-third of the time navigating from the area of operation to the port, and so far since we started, we have spent (the equivalent) of going more than twice around the planet.” A Sea-Watch spokesperson also weighed in on the matter, stating that this hinders the mission and leaves no option to go to a nearer port. “You have to go to the port assigned, and if you don’t, this is a breach of Italian law and leads to your ship being blocked.”

Outsourcing migrants

As Italy tightens its grip on rescue missions with measures like the Piantedosi Decree, the country has also started outsourcing its migrant crisis to other countries. In northwest Albania, the village of Gjadër, once home to a Soviet military base, has been transformed into Italy’s migrant processing camp — a project that has caught the attention of Starmer.

Migrants first arrive at a reception centre in Shëngjin, where their claims are processed before being moved to Gjadër to await their fate. According to journalist Kristina Millona, the building isn’t finished yet, and the details are quite shady. The reception centre in Shëngjin is surrounded by a five-metre perimeter fence and monitored by 40 security cameras. To add to the concerns, the project is managed by Medihospes Cooperativa Sociale, a company that has previously been investigated for mismanagement of public funds, migrant centres, and mafia infiltration.

Locals seem unaware of the harsh realities of the processing centre. Coming from a country where the government is corrupt and rife with trafficking gangs, there is hope that migrants will be treated well in these centres due to the perception of the EU as a bastion of human rights and democracy.

Kristina isDespite assurances that the Libyan coastguard is tackling traffickers, Amjad’s experience shows how they gain profit and feed people like him back into the meat grinder. After this ‘nightmare’ experience, Amjad familiarised himself with maps, learned their route, and obtained waterproof bags for his devices, noting that the satellite phone given to him had enough credit for one call. Facing rough seas with three-metre-high waves, Amjad managed to contact a Syrian named Ghaith, who operates an emergency service to assist boats in distress.

“He contacted the Greek coastguard and advised us to move 20 kilometres closer, as the Libyan coastguard would take over seven hours to reach us. We had no choice but to accept the risk and continue,” Amjad revealed. Eventually, after reaching out to a commercial ship, the boat was finally rescued.

No regrets

In reflection of Italy’s pushback tactics, Fulvia tells The New Arab that she envisions a world where the services of smugglers and human traffickers are no longer needed. “Our struggle is not to exist; our struggle is actually being able to disappear as civil search and rescue vessels,” she shared. Reflecting on his journey, Amjad has no regrets, stating that he would still have migrated. “Syria not only lacks security but also the elements of a decent life,” Amjad says of his home country. “It lacks an authority that respects the citizen and the elements to build my future as I aspire.” Ultimately, it is the most vulnerable who pay the price — a truth that Starmer must grapple with.

***

Amy Addison-Dunne is a freelance digital journalist with an interest in the Middle East and British politics. She has written for the Daily Mirror, Morning Star.

Marwa Koçak is a journalist and translator with an interest in politics and human rights in the Middle East. She speaks Arabic, English and Turkish. She has written for Middle East Eye, Al-Jazeera.

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Ezzedine Enaya

The expatriate intellectual grows like a wild seedling searching for a presence in a soil other than his own, and in a climate where he is not accustomed to growth.

Therefore, the different reality often forces the immigrant intellectual to live on the outskirts, on the margins of the new reality, far from the center and the controls of the institution. He is content to maintain his physical existence, postponing his dreams and ambitions to an unknown date. The journey of searching for integration may be long or short, and may never come, as many of those who are tempted to immigrate do not know the consequences of what the days hold.

It is not only the illegal immigrant who gives up on dreams, but the intellectual and the student share it. It is striking that the temptation of immigration blurs awareness and underestimates the consequences. I have noticed this in many university and non-university colleagues, who work in the field of culture, who are motivated to immigrate as if the process is a passing outing.

In the diaspora, there are many wandering intellectuals, forced by the new living conditions to change course and give up what was on their minds before departure. Because the battle to settle residence permits, arrange legal status, and find decent work is a fierce and renewed battle that may drain the immigrant and take the last of his remaining energy and determination.

It is easy for the floating intellectual to become an additional asset in the world of the marginalized in the West, so his main concern becomes the morsel with which he satisfies his hunger and the shelter he seeks in the social shelters that the marginalized resort to when their paths are stranded. Many imagine that immigration is the ultimate achievement, while the immigrant is faced with difficulties every time he goes a long way.

Dreamers often collide with an unimaginable reality that robs them of their remaining ties to the world of culture and intellectuals, and “Covid” has made matters worse with the coldness in relations, stagnation in communications, and stagnation in the work of administrations. It is noticeable that most intellectuals who dream of immigration come to the West carrying purist visions of the world of research, creativity, writers and studies, devoid of realism and sometimes filled with naivety.

On the basis that this environment is free from the disadvantages of exploitation, opportunism, discrimination and frenzied competition, and that talents and abilities are appreciated and capabilities are welcomed, due to the prevalence of many myths about the welcoming West and the repellent East.

It is enough for a person to be a university graduate, poet or writer to be welcomed and revered. Therefore, the dreaming intellectual hopes for a quick integration into the circles of Western intellectuals working in the fields of journalism, teaching, cultural circles, artistic fields and the like.

In fact, those who control these sectors, as soon as one of them becomes aware of the fragility, need and poverty of the newcomer, turn him into a prize in his eyes. It is brought closer to the extent that it adds to the improvement of their writing, research and academic projects, and at this point another journey begins for the immigrant intellectual with blackmail, which is sometimes coercive and imposed.

Few escape from this miserable situation, because cultural exploitation is worse for the intellectual than material exploitation, in which he suffers the worst types of forced labor.

Among the Western contractors in the field of culture, especially those who invest in the culture of the East, are those who produce translations, studies and research for them, and they may raise you to the position of editor-in-chief or include you in the advisory boards in research centers and periodicals. So that the ignorant person may think that his cultural contribution is based on respect and appreciation for him, as a partner in the achievement.

With the accumulation of experiences and the multiplicity of facts, he becomes aware of the horror of exploitation and the baseness of morals in a field that he thought was innocent of faults. In fact, the fragile Eastern intellectual is nothing but a bridge to pass over, and a facade for display only. Even if those in charge of these institutions tell you at length about their universal leftist convictions, and that all free people, in the East or the West, are one front against savage capitalism and against the commodification of knowledge.

Many cultural contractors in the West occupy the orientalism and Arabism departments, and many fields of archaeological and anthropological research and the like, and their names are on everyone’s lips and their fame is widespread at home and abroad, but dealing with them closely reveals to one that they are men of contracting and profitable deals, not owners of scientific research projects or civilizational dialogue, as they repeat whenever they have the opportunity to ascend high platforms.

You see them hunting for generous awards in the East, and some of them submit one request after another, without shame, begging for such and such an award on the grounds that they are the most deserving of it. There are those who invent fake cultural projects (magazines, research institutions, translation works, holding seminars) to create a false pretense to blackmail the good people of the East under the pretext of serving Arab, Chinese, Persian or other cultures.

This suspicious situation prompts the immigrant intellectual to pause and reflect, in an attempt to take stock of what is revealed to his eyes of the entrepreneurial work in the cultural sector, in which interest prevails and creativity diminishes. There are Western names in the field of Orientalism, and in the field of Arabic literature studies and translation from Arabic, who in the last stage of their academic journey turn into godfathers rather than flags and references, arranging deals between the interior and the exterior and nothing else.

Based on the accumulated credit of fame in the past years, their undertaking of any cultural achievement becomes based on a material evaluation, and is often transferred to collaborators, assistants and students. I once attended a verbal altercation between an Arabized Arab godmother and a hired Arab translator. Because the godmother was not paying attention, her name was dropped from the completed work and did not appear on the main cover, which led to a major catastrophe.

The question arises: what role does the expatriate intellectual have?

In fact, this intellectual should not be burdened with what he cannot bear, nor should he be burdened with commitment, or asked to become a bridge for ideas and news to cross, but a sincere testimony from him about a reality whose secrets we have always lacked from within is sufficient.

***

Ezzedine Enaya – Professor at the University of Rome – Italy

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Patrick Wintour and Mihir Melwani

Mohamed al-Menfi defends dismissal of previous governor and says deal will bring back international accountability.

A deal backed by leaders on both sides of Libya’s political divide to appoint a new central bank governor has the potential “to resolve all the political issues” in the country, Libya’s head of state has said.

Mohamed al-Menfi, the president of Libya’s Presidential Council who is largely aligned with the UN-recognised government in Tripoli, was accused of acting unilaterally and propelling the country into fresh turmoil when in August he dismissed the previous long-serving bank governor, Sadiq al-Kabir, who then fled into exile.

Kabir’s dismissal led to a shutdown of oil production and exports by forces in eastern Libya – rivals to the Tripoli government – who were furious at Menfi’s decision.

Libya’s deep political divisions have given the central bank the key role of distributing state revenues between the east and west.

In a rare interview with western reporters given at the UN in New York, Menfi justified his decree by claiming Kabir had been managing the bank’s funds, largely made up of oil income, “without any form of accountability” and “had exploited the state of division” in the country.

“It was an abnormal and unsustainable situation,” he said.

He said he had also issued his decree “to spare the capital, Tripoli, from a certain war that would directly target the Central Bank after the failure of months of negotiations between the dismissed governor and the parliament”.

He claimed Kabir had lost the support of the armed forces in Tripoli. “I tried to convince Kabir to share financial decisions in the country with others through the supreme financial committee. People were complaining they were not getting paid,” he said.

Kabir has said he and other senior bank staff were forced to leave the country to “protect our lives” from potential attacks by armed militia and described the attempts to remove him as illegal.

The deal to appoint a new governor and a deputy brokered by the UN mission in Libya has to be ratified by the country’s two key representative bodies, the High Council of State in the west and House of Representatives in the east.

Under the deal, Naji Issa is to be appointed interim governor, while Marai al-Barassi continues as deputy. A new board of governors, intended to be experts but reflecting the geographical interests in the country, will be nominated within two weeks to a month.

Menfi said the three main purposes of the deal were to ensure good governance; for there to be accountability and transparency; and to enable a financial committee to distribute money equally inside the country.

“The agreement that has now been reached regarding a governor and a deputy has happened because of the pressure we exerted to create a transparent administration and an integrated board of directors,” he said. “We have to put the money away from politicians and for it to be run by a financial committee.”

It is not clear how long the interim deal will stick, but first indications are that it will be enough for eastern forces who played a role in agreeing the new board and may now be minded to end the shutdown on oil production and exports. Oil production, concentrated in the east, had fallen from 1.2m barrels a day to about 350,000.

Menfi’s critics say the dismissal was not purely about accountability, but the west’s loss of trust in how Kabir was distributing revenues. He denied the interim bank leadership he had installed had been unable to operate due to loss of access to the international banking system. But prices did rise as the value of the dinar fell.

He said as a result of the deal “international accountability should return by reinstatement of the international auditor that was unilaterally suspended by the previous and without the approval of any other institutions”.

Kabir has accused the government of not implementing reforms and spending money irresponsibly. He said the state had spent more than 420bn dinars since 2021, most of which was on consumer spending and not on development investments.

Menfi said the agreement might open the path to tackling corruption in the country, including the smuggling of heavily subsidised fuel. That, he said, was turning into “a real obstacle “to any economic development”, adding: “There are ideas to replace it gradually with direct cash support that will stimulate investments and create a private sector in the field of oil housing and transportation.”

He also backed simultaneous national parliamentary and presidential elections – long promised by all Libyan politicians – to end the existence of two competing legislative councils. He said the difficulty with presidential elections was that people were fearful of being excluded if someone else was elected. “We tried to go for parliamentary elections on its own and it did not work,” he said.

He said the long-term economic prospects for Libya were bright, and the country could diversify away from its dependency on oil.

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Dorian Jones

The recent rapprochement between Egypt and Turkey, long-standing supporters of rival factions in Libya, offers a potential pathway to easing tensions in the North African country.

Libya resumed oil exports this month after a pause caused by a dispute over control of the country’s central bank, which oversees oil exports.

“This was a serious crisis,” said Jalel Harchaoui from the Royal United Services Institute. “And while it’s partly fixed, there are still issues that need attention.”

The row between Libya’s two rival administrations which led to the temporary halt, was only resolved by intense negotiations, but Harchaoui claims the conflict’s repercussions continue.

“A lot of players, including armed groups in Tripoli, are trying to take advantage of whatever has happened over the last several weeks. So I’m not describing a scenario of war, but I’m describing a more volatile environment,” he said.

Turkish-Egyptian relations

However, a recent rapprochement between Egypt and Turkey could offer hope of easing Libyan tensions.

“We agreed to consult between our institutions to achieve security and political stability,” pledged Egyptian President Abdel Fattah al-Sisi at a press conference last month in Ankara with his Turkish counterpart Recep Tayyip Erdogan. 

Libya once was a point of Turkish-Egyptian rivalry, with Cairo backing the eastern Libyan administration in Benghazi of Khalifa Haftar and Ankara supporting the western Tripoli-based Government of National Unity. Now, Egyptian-Turkish collaboration is key to resolving the latest Libyan crisis.

“Both countries can push the Tripoli-based government at least to accept something or come to the least terms that they can agree,” said Murat Aslan of the SETA Foundation for Political, Economic and Social Research, a pro-Turkish government think tank. “So it’s a win-win situation for both Egypt and Turkey.”

Economic crises

With both the Turkish and Egyptian economies in crisis, the economic benefits of cooperating in Libya are seen as a powerful force behind the country’s rapprochement and Libyan collaboration.

“These two countries are very important to one another,” said Aya Burweila, a Libyan security analyst

“They’ve figured out a way to divide spheres and work together. Even in the east now, Turkish companies have cut lucrative deals, infrastructure deals, just as Egypt has.

“So economy and money drive a lot of these political friendships and reapportionment.”

Ankara is looking to Cairo to use its influence over Hafta to support an agreement it made with the Tripoli-based Government of National Unity to explore widely believed energy reserves in Libyan waters.

At the same time, Cairo is pressing to remove Ankara-supported Prime Minister Abdul Hamid Dbeibeh of Libya’s Government of National Unity. Despite differences, Harchaoui says Cairo and Ankara are committed to cooperation.

“What has already been decided is that they are going to speak and they are going to speak on a daily basis,” said Harchaoui.

“And then at every crucial moment, they are going to make sure and Turkey, specifically, is going to make sure that Egypt is on board.

“But we need more tangible results from the dialogue that has already been in place,” he added.

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Neil Quilliam

The shifting global order and Western reluctance to intervene have allowed conflicts to persist unchecked in the Middle East

Israel’s mission to eradicate Hamas in Gaza following the group’s killing of over 1,200 Israelis on 7 October 2023 has expanded into a much wider military campaign. Prime Minister Benjamin Netanyahu is seizing this moment to restore his country’s deterrence, downgrade the capabilities of Hamas, Hezbollah and other armed non-state actors, and reassert Israel’s military and technological dominance in the region.

But what has enabled this moment? How can Netanyahu prosecute a war that has killed, to date, over 42,000 Palestinians and at least 2,000 Lebanese civilians without the entire international community imposing or demanding a ceasefire?

The cause of Israel’s actions this time around can be attributed to Hamas’s military incursion and Hezbollah’s repeated missile attacks against its territory—no country should have to endure that. But to comprehend how a single conflict actor can seemingly act with impunity, one needs to look at the changes in the international political environment following the US-led war on Iraq.

Security in a multipolar world

While the conflicts we are witnessing now have a long and painful history, their nature stems from the aftermath of Iraq, which tempered the appetite of Western governments to intervene in conflicts. The chaos left in the wake of the NATO-led operation in Libya in 2012—which was supposed to exorcise the ghost of Iraq—only compounded leaders’ reluctance to engage in future conflicts.

This shift became abundantly clear when Russia annexed Crimea in 2014 and deployed its forces into Syria in 2015. The Western response—to impose sanctions and arm opposition groups—was limited. Even after Russia invaded Ukraine in February 2022—which was on another scale, on par with Iraq’s invasion of Kuwait in 1990—Western states employed similar measures. By doing so, they signalled to middle powers that they were free to act at will and could do so without fear of major sanction.

Gone are the days when superpowers could compel allies to exercise constraint. The US no longer desires to mobilise coalitions and liberate countries or apply overbearing pressure on all conflict parties to reach a ceasefire. The unipolar order has given way to a messy multipolarity, and Western states have narrowed their definitions of “national interest.”

It is not just about avoiding military intervention but, more importantly, a reluctance to exercise muscular diplomacy—to persuade partners to stop killing civilians and make a genuine push for ceasefires. The US and European powers might call for ceasefires but are unwilling to put weight behind them. The Biden administration criticises Israel’s actions against Palestinian and Lebanese civilians and chastises Netanyahu but does little else. In fact, it continues to arm Israel.

In this multipolar world, major powers seem willing to live with active conflicts as long as they pose no threat to their national interests. In the Middle East, conflicts continue in Libya, Syria, Yemen, Gaza and now Lebanon—with no end in sight.

The 2015 nuclear deal (JCPOA) marked the US’s political “swing” away from the region. The US withdrawal from the deal during Donald Trump’s presidency did little to alter Washington’s course. President Biden has tried to steer in the same direction. Meanwhile, Europe also swung away, becoming more inward-looking as it dealt with Brexit and COVID-19. Neither Russia nor China has the capacity or will to swing into the West’s place.

This has left a political and security vacuum for regional states and armed non-state actors to fill—which they have, attacking their enemies with impunity and without recourse from the major powers. Examples include Iran targeting Saudi Arabia’s energy assets in Abqaiq and Khurais in 2019; the Iranian Revolutionary Guards Corps launching missiles against a suspected Israeli target in Erbil in 2022; Yemen’s Houthis targeting shipping in the Red Sea after October 2023; and Israel killing of Hamas leader Ismail Haniyeh in Tehran in July this year.

The new face of conflict

It is in this environment that Israel now operates. Netanyahu has chosen this moment—in the aftermath of 7 October, after a decade preparing to dismantle Hezbollah, and during the dying days of a lame-duck US presidency—to press home Israel’s military advantage and project its dominance back into the region. He has come to realise that he can act without restraint, at least until the next US president takes office, and is therefore determined to vanquish Israel’s enemies with little thought for civilian lives.

Aside from the US deploying aircraft carriers to signal its readiness to aid Israel in the event of an all-out war, the states and armed non-state actors of the region will be left to fight it out. Meanwhile, the US continues to supply Israel with advanced arms and matériel, giving Tel Aviv an unassailable advantage overall.

As the Israeli army pushes further into Lebanon, continues its bombardment of Gaza and contemplates a reprisal against Iran—the world’s major powers will call for an end to violence, wring their hands, and live with the conflicts.

In the short term, it seems only the next US president will have the authority to rein in Israel and bring an end to these battles, but that is not a given. Over the longer term, Israel will have to face living in a regional environment in which it has squandered goodwill and the hope for normalisation and stoked generational resentment.

_______________

Miral Sabry AlAshry

The crisis in Libya began in August 2024, with ongoing efforts by various factions to gain control of the Central Bank of Libya (CBL) posing a clear and present danger to the country. The crisis over the control of the CBL has resulted in the closure of 60% of Libya’s oil production. This closure has halted some 700,000 barrels a day of production, with further shutdowns imminent, leading to an immediate spike of 7% in global oil prices.

In response, Eastern factions declared a complete halt to oil production. Crude oil prices rose after the Eastern Libyan government announced the closure of all oil fields in August. This decision followed the crisis involving the Central Bank Governor and the subsequent suspension of production and exports. Oil prices increased by 3%, influenced by reports of “almost complete” oil production in Libya. These reports heightened concerns that the escalation of the Middle East situation could disrupt the region’s oil supplies.

Millions of Libyans rely on the CBL to ensure the payment of their salaries and the letters of credit essential to providing them billions of dollars a year. The United Nations Support Mission in Libya (UNSMIL) is warning that the situation is critical. The Libyan government, led by Osama Hamad, also announced the suspension of oil production and exports from all fields in the country until further notice. However, the National Oil Corporation, which oversees oil resources and sector activities, did not confirm this.

In a video statement posted on social media, Hamad explained that the decision was made “in response to attacks on leaders and employees of the Central Bank of Libya by outlaw groups, incited and assisted by the Presidential Council.” The Government of National Unity in Tripoli, headed by Abdul Hamid Dbeibeh, has not commented, nor has the National Oil Corporation, based in the capital, issued any statements.

The resumption of Libyan crude oil production had previously led to a surplus of crude supplies in Europe, forcing competing sellers to cut their prices. This crisis caused the OPEC member’s exports to fall to a four-year low. The National Oil Corporation (NOC) provides some 97% of Libya’s export earnings, pumping roughly 1.2 million barrels a day of oil to generate $20 billion-25 billion.

The resumption of Libyan crude oil production came after a political crisis over the central bank led to a surplus of crude supplies in Europe, forcing competing sellers to cut their prices, and the crisis caused the OPEC member’s exports to fall to a four-year low.

Libya’s National Oil Corporation announced the resumption of production on October 3, 2024, after a new central bank governor was appointed. By October 13, production was at about 1.3 million barrels per day, close to pre-crisis levels.

Data from a shipping agent showed that Libyan crude oil exports reached about 550,000 barrels per day in the first week of August, a three-fold increase from the previous week before the crisis, and this comes as Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), remains amid a political crisis that has hampered oil production.

The National Oil Corporation, which manages Libya’s fossil fuel resources, has not declared force on all port loadings and has so far opted to use the measure on specific shipments.

The corporation reported crude production at the El Feel oilfield on September 2 and exports from the Sharara field on August 7, before the crisis over the central bank’s leadership erupted. The corporation confirmed on August 28 that oil production had fallen by more than half from normal levels to around 590,000 barrels per day, but did not provide any new production figures.

The timing of Libya’s increased oil production coincides with maintenance at European refineries and the full or partial closure of several refineries in the Mediterranean and northwestern Europe. This is weakening the prices of competing crudes.

According to data from the London Stock Exchange (LSEG), the premium of Azerbaijan Light crude to benchmark Brent crude fell to $1.55 a barrel, its lowest since April. The spreads between other major Mediterranean crudes — Caspian Pipeline Consortium (CPC) Blend, Saharan Blend, and Libya’s Es Sider Blend — also narrowed in the first 11 days of October.

These Mediterranean grades will face further downward pressure from the second-largest field supplying the CPC Blend, Kashagan, which returns from a full maintenance shutdown after November 10, 2024.

Global oil prices surged to their highest levels abruptly due to the suspension of more than half of the country’s oil production, equivalent to 700,000 barrels per day. This occurred after a dispute erupted between the eastern and western governments of the country over the central bank, the sole authority authorized to manage oil revenues.

Libya incurred a loss of $120 million in just three days as oil exports remained suspended from major ports and production levels stayed low across the country, despite some increased supplies for local power generation.

The Libyan National Oil Corporation announced the resumption of production on October 3 following the appointment of a new governor for the central bank. By October 13, production had reached approximately 1.3 million barrels per day, approaching pre-crisis levels.

During a meeting with the Chairman of the Management Committee of the Libyan National Oil Corporation, Farhat Bengdara, the Prime Minister instructed support for the private oil sector to boost production and enhance the efficiency of Libyan workers. The state-owned National Oil Corporation aims to increase production to 2 million barrels per day, with the current daily output standing at 1,250,775 barrels.

Oil and gas exports serve as Libya’s primary source of income, but the sector has faced challenges in recent years due to internal conflicts and political instability.

Libya’s production has seen an increase due to maintenance work at European refineries, with several facilities in the Mediterranean and northwestern Europe either fully or partially closed. The crisis at the Libyan Central Bank commenced in late August, resulting in the shutdown of numerous oil fields and ports. Libyan crude oil exports dropped to approximately 550,000 barrels per day, marking their lowest level in four years and half the July average. However, October exports have since rebounded to over 600,000 barrels per day.

Refineries have already made alternate arrangements to procure other crudes, anticipating a continued disruption in Libyan supplies. While European refineries will continue to receive Libyan shipments, they are in a position to negotiate significant discounts. Italy stands as the largest buyer of Libyan crude, accounting for a third of total Libyan exports in 2023.

***

Prof. Miral Sabry AlAshry is Co-lead for the Middle East and North Africa (MENA) at the Centre for Freedom of the Media, the Department of Journalism Studies at the University of Sheffield.

____________________

Ali Noureddine

The geopolitical dynamics involving regional powers add layers of complexity to the Central Bank of Libya’s operations. Without a cohesive political framework, Libya’s economic stability and the efficacy of its Central Bank may remain precarious.

Libya’s oil production has returned to normal as of October 9, 2024, according to the National Oil Corporation, following the reopening of all fields and export ports. The “force majeure” that had halted operations for over a month and a half was lifted, after a political dispute over the leadership of the Libyan Central Bank between the eastern and western governments was resolved through U.N. mediation, resulting in the appointment of a new governor.

Despite the significance of this agreement, it did not address the broader challenges facing the Central Bank, particularly those stemming from Libya’s ongoing political division and disputes over governmental authority. By October 13, 2024, more than 2.5 million public sector employees were still awaiting their salaries for the previous month due to administrative and bureaucratic delays.

The Complexities of Libya’s Central

Bank Disputes

Under typical circumstances, central banks manage monetary policy and oversee the financial system, coordinating with government fiscal policies and public spending directives. However, Libya’s political landscape has placed the Central Bank of Libya in an exceptional situation, as it is the sole legal recipient of the country’s oil revenues – vital in a nation where revenue from oil accounts for 96.7 per cent of public spending. This dynamic leaves the bank caught between two rival governments vying for legitimacy.

In effect, the battle over the Central Bank has become a proxy for the larger struggle over control of oil revenues. While various armed factions compete for control of oil fields and operations, the management of the Central Bank remains the key to accessing public funds and executing government spending orders from both the eastern and western governments.

This struggle was highlighted on August 26, 2024, when the eastern-based government in Benghazi, led by Osama Hamad, announced the closure of all oil fields under its control. This move was in response to the dismissal of the former Central Bank governor, Al-Siddiq Al-Kabir, by the Tripoli-based Presidential Council. The situation escalated quickly, with Al-Kabir forced to flee the country, alongside other senior bank officials, fearing attacks from armed groups in western Libya.

The Hamad government in the east of the country justified the suspension of oil production as a measure to protect Libya’s financial reserves and oil revenues. It made clear in a statement that it would not resume production without a settlement that ensured its influence over the management of oil wealth, citing the need to “protect the livelihood, wealth and reserves of the Libyan people held by the Central Bank of Libya. The country’s oil output subsequently plunged from 1.2 million barrels per day to just 450,000 barrels, given that most oil fields are located in eastern Libya.

These developments reflect the deteriorating relationship between Al-Siddiq Al-Kabir and the western-based interim national government, led by Abdul Hamid Dbeibah. At the core of the dispute were disagreements over access to Central Bank funds and spending directives, which were key to maintaining the loyalty of armed groups in Tripoli. Al-Kabir had publicly criticized Dbeibah for ramping up government expenditure on consumption at the expense of development projects, further straining ties.

In response to these tensions, the Presidential Council – aligned with Dbeibah – dismissed Al-Kabir, triggering further conflict with the eastern government and its allied armed groups. The subsequent closure of oil fields prompted the United Nations to intervene, ultimately brokering a settlement that allowed all parties to have a say in the appointment of the new Central Bank leadership.

Major Ongoing Challenges

The recent settlement resulted in the appointment of Naji Muhammad Issa Belqasim as governor of the Central Bank of Libya, following an agreement between the authorities in the east and west. Belqasim, an experienced technocrat, previously served as an adviser to the ousted governor and held key roles within the bank, including director of the Department of Monetary and Banking Control and the Department of Studies and Research. His familiarity with the complex political dynamics, including the influence of armed groups controlling oil fields, positions him as a figure capable of navigating the challenges facing the Central Bank.

Despite his reputation as a “moderate” figure, Belqasim will face numerous challenges that extend beyond the traditional scope of a central bank governor. One of the foremost issues will be ensuring the equitable distribution of oil revenues across the various regions, a task complicated by the division of executive authorities that claim these funds. This challenge places the Central Bank in the role of regulating public spending, a responsibility typically assigned to the Ministry of Finance, which oversees budget allocations approved by the House of Representatives.

A further critical challenge will be the stabilization of financial flows from Libya’s oil exports. While oil production has recovered since Belqasim’s appointment, ensuring sustained production amid potential political disputes or security threats will be essential. Armed groups have historically used oil field closures as leverage to impose their demands on Libya’s divided political authorities, creating ongoing instability in oil revenue streams.

In the short term, Belqasim must also address the administrative issues resulting from the abrupt departure of the previous leadership. Without a formal handover, the bank has struggled with internal reorganization, leading to delays in disbursing public sector wages. These administrative disruptions, coupled with the earlier halt in oil production, have exacerbated a liquidity crisis due to the shortage of hard currency, adding further pressure on the Libyan dinar in the parallel market.

Looking ahead, one of Belqasim’s most critical tasks will be maintaining the Central Bank’s institutional unity and preventing a return to the division that previously split the bank into eastern and western entities. The unification of the Central Bank is relatively recent, achieved in August 2023 after nearly a decade of division since 2014. The recent leadership dispute has raised concerns about the potential for a renewed “monetary division,” which could severely impact the stability of Libya’s banking system and erode confidence in the local currency.

The Role of External Interventions

A key factor shaping the challenges facing Libya’s Central Bank is the influence of external interventions. Algeria has maintained firm support for the western-based government, providing intelligence coordination and military training. This stance is largely driven by Algeria’s strategic interest in keeping General Khalifa Haftar’s forces, which back the eastern government led by Osama Hamad, away from its eastern borders.

On the other hand, Egypt has taken a more pragmatic approach, supporting the Hamad government in exchange for lucrative reconstruction contracts in areas damaged by Hurricane Daniel. Meanwhile, Russia continues to foster a close relationship with Haftar’s forces, seeking investment contracts in eastern Libya’s oil fields. In response, the United States has focused its involvement on curbing Russian influence in Libya, even if that means exerting pressure on the Central Bank, which remains tied to transactions in U.S. dollars.

These external interventions contribute to the protracted nature of Libya’s political crisis, which in turn impacts the operations of the Central Bank. The bank will need to navigate this geopolitical complexity, aligning its strategies with the country’s ongoing political division to mitigate the impact on Libya’s monetary and financial stability.

American pressures, particularly in contrast to Russia’s growing ties with Haftar, present a long-term challenge for the Central Bank. Until Libya’s political institutions are unified under a leadership capable of establishing a balanced and independent foreign policy, external pressures will continue to complicate the bank’s efforts to maintain stability.

Meanwhile, the Libyan dinar’s value in the parallel market has plummeted to 8 dinars to the dollar, compared to the official rate of 4.7 dinars. These issues highlight the pressing economic challenges that the new Central Bank leadership will need to confront.

_____________________

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.

***

VI. What Should Happen Now?

Libyan politicians’ immediate priority should be to implement the preliminary deal signed on 26 September. The House of Representatives and High State Council, as well as the Presidential Council, should all do everything in their power to allow the new appointee Naji Issa to take over as Central Bank head and allow for establishing a board of directors. The board should be an active one, charged with enhancing the institution’s transparency and accountability. Oil production across the country should also resume.

Reaching a preliminary deal was by no means an easy feat. Talks to resolve the crisis began on 2 September, hosted by the acting head of the UN Support Mission in Libya, Stephanie Koury, at the UN headquarters in Tripoli. She envisioned them as trilateral consultations among representatives of the Presidential Council, House of Representatives and High State Council aiming “to reach a consensus based on political agreements, applicable laws and the principle of the Central Bank’s independence”.

But the two assemblies’ representatives refused to negotiate directly with the Presidential Council’s emissaries, and the latter were relegated to a separate room. As late as 23 September, two rounds of talks had produced no agreement. But informal conversations among key figures reportedly continued. On 25 September, quite suddenly, according to UN sources, the delegations informed the UN that they had reached an agreement on new management, asking Koury to host a signing ceremony the following day.

This initial agreement between the two rival assemblies is not a done deal, and as noted above, much could still go wrong. A first priority should be to ensure that the Presidential Council also backs the new appointments and is ready to revoke its controversial August decree.

The two assemblies’ refusal to sit with Presidential Council representatives during the UN consultations is hardly surprising. The House of Representatives stopped recognising the Dabaiba government in 2022 and recently threatened to do the same with the Presidential Council.

Their strategy in the talks could well have been to buy time to let the economic crisis hit in the hope that public opinion will turn against the Dabaiba government, which they blame for triggering the dispute. As for the High State Council, its new acting (but still contested) president, Khaled Mishri, likely wished to keep the Presidential Council out of the picture so as to deal directly with the House speaker, Aghela Saleh, which is what the two assemblies have done in the past. 

The fact that the two assemblies signed this preliminary agreement does not mean that they have given up on undermining the Dabaiba-led government.

The fact that the two assemblies signed this preliminary agreement does not mean that they have given up on undermining the Dabaiba-led government. Yet, with a deal now on the table, the leaders of the two assemblies would be ill-advised to proceed without ensuring that the Presidential Council and Prime Minister Dabaiba are on board.

Although the UN-backed procedure for selecting the Central Bank head has since 2015 required only the two rival assemblies’ consent, in the current fractured political set-up the Presidential Council’s buy-in is crucial for reaching a stable agreement and preventing an economic meltdown. Broad consultations that include all major institutions are essential for reaching consensus on how to resolve the dispute. Keeping the Presidential Council out risks encouraging it to become a spoiler. 

Furthermore, as foreign officials have clearly stated, the Presidential Council’s buy-in is a prerequisite for international financial institutions to consider the dispute over the Central Bank’s leadership closed and to unlock suspended transactions with Libya. For that to happen, all parties would need to recognise the same person as interim governor, and the Presidential Council would need to explicitly revoke its August appointments. 

A second priority is to ensure that the House of Representatives officially ratifies the appointment in accordance with Libyan law and the Libyan Political Agreement. On several occasions in the past, members of the House have reached preliminary political deals with their rivals, only to see Saleh or the House as a whole renege at the last minute.

This time, members of the House should collaborate in good faith to finalise as quickly as possible their endorsement of the new governor and a board. Once the House ratifies these arrangements, a peaceful, legally valid handover of the Central Bank will need to take place to avoid any further disputes regarding the new management. 

For the UN, meanwhile, this crisis represents an opportunity to reset its negotiating approach to Libya by adding economic and financial discussions to existing political talks. Between 2018 and 2021, the UN was actively engaged in mediating budgetary disputes and other economic and financial disagreements. In 2020, it even integrated a separate economic track into the diplomatic framework, alongside the political and military ones.

These talks included some of the feuding financial institutions’ representatives, as well as bankers, economists and other competent experts. But since 2022, successive UN envoys have neglected economic issues in favour of political discussions. The Central Bank crisis is a powerful reminder that the fight over finances is an integral part of the overall conflict and has huge repercussions for people’s well-being. Yet UN-led talks have stalled for over a year, and since UN Special Representative Abdoulaye Bathily resigned in April there has been no permanent envoy for Libya.

The UN Secretary-General should appoint a new Libya special representative, whose active mediation efforts Libya sorely needs. Should naming a new envoy prove impossible, due to divisions within the UN Security Council, the Secretary-General should appoint the interim head, Koury, as acting special representative, a step up from her current role as “officer in charge”. He should make this move before the next UN mission mandate renewal vote, which is due before the end of October. 

VII. Conclusion

Time is of the essence in resolving Libya’s Central Bank dispute. If the preliminary deal signed on 26 September falls through and the feud between rival authorities continues, outside partners will continue to keep Libya disconnected from international financial markets, aggravating the risks of an economic collapse.

Although a limited number of foreign financial transactions are still taking place, a prolonged cutoff could take a devastating toll in Libya, a country which is almost entirely dependent on oil revenue to cover government expenses and which imports virtually all its essential needs, including foodstuffs and construction materials. 

Reaching a preliminary accord to settle this dispute is a major achievement, but the wrangling over the Central Bank is far from over. That said, rival factions have a shared interest in avoiding a sharp deterioration in living conditions, which could trigger popular protest or violent unrest.

They should now work in good faith and, with the UN’s help, aim to implement the deal by allowing the new governor to take over the Central Bank and appoint board members. Reconnecting Libya to global financial circuits is crucial, but it should happen only through arrangements that include all the country’s main political forces and respect agreements that have already been struck.

_____________________

Simon Watkins

• Libya’s oil production, which was cut in half due to a blockade in August, has recovered to around 1.2 million barrels per day.
• International oil companies, including Italy’s ENI and France’s TotalEnergies, are actively investing in Libya, with plans for both oil production and renewable energy projects.
• Libya’s fractured political landscape, especially the unresolved issue of equitable oil revenue distribution, continues to threaten the stability of its oil sector. ***

Libya’s oil production was cut roughly in half when a blockade of major fields and ports began at the end of August. With the shutdown having ended on 3 October, output has bounced back to around 1.2 million barrels per day (bpd) again. According to subsequent statements from its National Oil Corporation (NOC), the move is now on to significantly boost its crude production.

Theoretically, Libya could achieve this. Prior to the removal of its long-time leader, Muammar Gaddafi, in 2011, it had easily been able to produce around 1.65 million bpd of predominantly high-quality light, sweet crude oil. Production had been on a rising production trend at that point, up from about 1.4 million bpd in 2000, and the country still had around 48 billion barrels of proved crude oil reserves – the largest in Africa. Although this output level was well below the peak levels of more than 3 million bpd achieved in the late 1960s, the NOC had plans in place at that point in 2011 to roll out enhanced oil recovery (EOR) techniques to increase crude oil production at maturing oil fields.

These projects were put on hold due to an increase in sectarian hostilities across the country, but they were resuscitated even before the most recent comments from the NOC alongside its creation of a new ‘Strategic Programs Office’ (SPO). The aim of this is precisely to orchestrate a rise in Libya’s production capacity to 2 million bpd in the next three to five years.

During Gaddafi’s 42 years as leader, numerous international oil companies (IOCs) operated in Libya or desired to do so. Several of these retained an active presence in the country since his removal and the onset of a rolling civil war between various factions centred on controlling the country’s only major source of income – its oil and gas sector. Italy’s ENI is one such firm, signing an agreement towards the end of 2023 with the NOC that envisioned investment of around US$8 billion to produce about 850 million cubic feet per day (Mmcf/d) from two offshore gas fields in the Mediterranean Sea.

ENI still produces gas in Libya from its Wafa and Bahr Essalam fields operated by Mellitah Oil & Gas, a joint venture between the Italian company and the NOC. Gas from the fields is transported to Italy through the 520 kilometre 8 billion cubic metres per year (Bcm/y) Green Stream pipeline that crosses the Mediterranean Sea and lands in Gela in Sicily. Negotiations are also ongoing between ENI and the NOC for the launch of several major renewable energy projects too.

Like France’s TotalEnergies and the UK’s BP and Shell, ENI has been at the forefront of developing alternative energy flows for Europe to compensate for those lost from Russia since it invaded Ukraine on 24 February 2022. Moreover, the Italian government has additionally unilaterally pledged to eliminate all Russian gas from its supply network by 2025.

ENI and BP both feature in the exploration and production sharing agreement (EPSA) that the two firms signed in October 2018 to resume exploration activities in the country. The EPSA – originally awarded in 2007 but suspended from 2014 to 2018 — includes three contract areas, two in the onshore Ghadames basin and one in the offshore Sirt basin, covering a total area of around 54,000 square kilometres.

Plans were also afoot at the NOC before the latest oil production shutdown in August/September for a series of offshore and onshore drilling programmes to begin within the coming months, under the leadership of France’s TotalEnergies. April 2021 had seen an agreement between its chief executive officer Patrick Pouyanne and the then-NOC chairman, Mustafa Sanalla, for the firm to continue with its efforts to increase oil production from the giant Waha, Sharara, Mabruk and Al Jurf oil fields by at least 175,000 bpd. It had also agreed to make the development of the Waha-concession North Gialo and NC-98 oil fields a priority, according to the NOC. 

The Waha concessions – in which the then-Total took a minority stake in 2019 – have the capacity to produce at least 350,000 bpd together, according to the NOC. The NOC added that the French firm would also “contribute to the maintenance of decaying equipment and crude oil transport lines that need replacing.”

Having said all this, the outlook for a meaningful sustained rise in oil Libya’s oil production remains extremely clouded by its fractious political situation. At the core of this remains the failure since 18 September 2020 to create a properly functioning systems whereby revenues from its oil and gas sector can be equitably processed in a manner acceptable to the key warring factions in the east and west of the country.

The date is significant because it was at that point that a deal was struck between Khalifa Haftar, the commander of the rebel Libyan National Army (LNA), and elements of the United Nations (U.N.)-recognised Government of National Accord (GNA) to end the oil blockade that had been running for nine months by that point.

In the deal, Haftar made it clear that the resultant lifting of the shutdown would not last unless a precise framework was agreed about exactly how oil revenues would be divided up between the various groups from then on. From that moment until September 2020, Libya experienced several further blockades of its oil sector of various magnitudes until a draft framework was agreed between Haftar and Ahmed Maiteeq, the then-Deputy Prime Minister of the GNA.

Key to this agreement was the proposed formation of a joint technical committee — between the LNA and GNA principally — to deal with overseeing oil revenues and then ensuring the fair distribution of resources. In order to address the fact that the GNA effectively held sway over the NOC and, by extension, the Central Bank of Libya (in which the revenues are physically held), the committee would also “prepare a unified budget that meets the needs of each party… and the reconciliation of any dispute over budget allocations… and will require the Central Bank [in Tripoli] to cover the monthly or quarterly payments approved in the budget without any delay, and as soon as the joint technical committee requests the transfer.”

Due to the influence of several domestic and international disruptive elements since that idea was mooted – notably Russia – it has never been properly implemented and has been replaced instead by at time ludicrous events on both sides. However, hopes were high from several quarters – including the U.S. and U.N. – that such a deal could work well, and indeed that it might still be able to solve the ongoing impasse over the country’s oil and gas revenues. In the meantime, it looks highly likely that Libya will remain subject to further similar shutdowns for variously ludicrous reasons based on the whims of various of its warring factions.

In the run-up to the August/September shutdown (resulting from efforts to remove the then-Governor of the Central Bank of Libya), for example, a smaller one began in the first half of August caused by the arrest of Saddam Haftar, the son of General Haftar. The younger Haftar had been briefly detained at Naples airport after his name appeared on a European Union database over an arrest warrant issued in Spain for alleged weapons smuggling.

This followed comments from former U.N. special envoy to Libya, Abdoulaye Bathily, that the country was becoming a mafia state dominated by gangs involved in smuggling operations, especially for arms. This in turn followed General Haftar’s visit last September to Moscow for talks with Russian President Vladimir Putin, whose Wagner mercenary soldiers provide support for LNA forces in Libya. Early July also saw Italian authorities seize two Chinese-made military drones that were destined for Libya and disguised as wind turbine equipment.

***

Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for Credit Lyonnais, and later Director of Forex at Bank of Montreal.

_______________

Mostafa Barghouthi

In this text, Mostafa Barghouthi draws up the macabre balance sheet of the last year and clearly announces what awaits the Palestinians if nothing is done: the annexation of the rest of the occupied territories, the continuation of apartheid and the completion of ethnic cleansing. While affirming the continuation of resistance, ‘whatever the cost’.

***

Israel’s war on Gaza, which began on October 7th 2023, is unprecedented in modern history. Since that date, Israel conducted three war crimes in parallel: genocide, collective punishment of a civilian population, and ethnic cleansing.

During the first year of this devastating war, which has now expanded as we expected to Lebanon, the Israeli army bombed the 2.2 million inhabitants of Gaza living in less than 140 square mile, no less than 83,000 tons of explosives.

This means 32kg of explosive for each man, woman, or child. To put this number into perspective, 83,000 tons is four times more than the explosive power of each of the nuclear bombs thrown on Hiroshima and Nagasaki during the Second World War. Nearly 80% of all homes have been partially or completely destroyed.

In Germany only 10% of homes were destroyed by the end of the Second World War. The Israeli war machine intentionally destroyed all universities, more than 70% of schools, 34 out of 36 hospitals, 165 health institutions, 80 health centers, 137 ambulances, 178 shelters, 611 mosques and all 3 churches in Gaza.

“Dad, will my hands grow again

when I grow up?”

Israeli bombardment killed more than 41,595 Palestinians, in addition to more than 10,000 who are still missing under the rubble. Among those killed, 70% were children, women, and elderly. Nearly 17,000 Palestinian children have been killed, including 115 children who were born and killed during the war.

Some, like the children of Mohamed Abu Alkumsan, lived for less than three days. It was heartbreaking to hear him explain how happy he was that his wife managed to give birth during the war to two healthy twins, how he rushed to get birth certificates for them, and how shocked he was when he returned to his apartment to find both his children and his wife killed by Israeli bombardment.

Besides, 96,251 Palestinians, mostly civilians, were injured. This figure includes 4 000 who had amputations, among them 1 300 children. On one of the days of this seemingly endless and brutal war, I was heartbroken when I turned on the television and saw a five-year-old Palestinian child who had lost both his hands asking his father: “Dad, will my hands grow again when I grow up?” The father could not say a word, his eyes full of tears.

By the end of September 2024, the Israeli army had killed or injured 6.5% of the population of Gaza. Had this happened in the USA it would mean proportionally that more than 20 million Americans are killed or injured in less than a year.

The Israeli military attack on Gaza was accompanied by a ruthless campaign to dehumanize Palestinians. It was led by Israeli Prime Minister Netanyahu and the Israeli Army Minister Galant who called Palestinians “human animals”.

The fascists Bezalel Smotrich and Itamar Ben Gavir, both of whom were previously accused by the Israeli Judiciary of belonging to terrorist Israeli groups, ran campaigns to eliminate Palestinians who, according to them, were all terrorists even children.

No longer living, no longer caring

During Israel’s bombardment of Gaza, the Israel military did not only target civilians indiscriminately, but also specifically targeted medical personnel. By the eleventh month of the war, they had killed more than 880 medical doctors, nurses, ambulance drivers and other health professionals.

They also arrested and tortured, sometimes to death, no less than 200 health workers. This includes Dr. Adnan Al-Bursh and Dr. Iyad Rantisi, previously head of Orthopedic surgery at Shifa hospital, and Obstetrics and Gynecology-respectively at the Kamal Edwan hospital who were tortured to death at the Sde Timan and Ofer prisons.

The Israeli attacks on Palestinian medical and health facilities clearly intended on destroying medical resources for the treatment of the sick and injured. Out of the 95,000 injured, at least 25% could die due to absence of medical facilities and proper treatment and are unable to receive proper medical treatment because of Israel’s refusal to allow them to leave Gaza.

Israel did not only conduct a genocide through bombardment, but they also allowed an explosion of epidemics and diseases by depriving people from food, proper nutrition, clean water and all forms of energy such as electricity and fuel.

According to Palestinians Medical Relief, which runs medical operations in Gaza, providing medical treatment to about 200,000 patients monthly, on September 2024 there were 1,737,524 infected with infectious diseases as a result of displacement., including 112,000 suffering from an outbreak of infectious hepatitis, 3,500 children with severe malnutrition, hundreds of thousands suffering from skin diseases including scabies and impetigo, several children with Meningitis and 6 cases of suspected poliomyelitis in addition to one confirmed case.

The WHO was obliged to run a new polio vaccination campaign under Israeli bombardment, since Netanyahu refused to allow a humanitarian ceasefire even for a few days.

According to PMRS every person in Gaza gets sick an average of 3 times a month, sometimes with respiratory infections, gastroenteritis, or skin diseases.

Today 10,000 cases of cancer don’t get proper treatment, 12,000 people are in urgent need for medical evacuation, and 350,000 suffer from chronic diseases that require continuous medical care and supply of medications.

Beyond Gaza

Journalists and media personnel were also major targets of the Israeli attacks. The aim was and continues to be to prevent the truth about the Israeli war crimes from reaching the world. Foreign journalists were forbidden from entering Gaza (except for one CNN correspondent for 3 hours only), and 174 Palestinian journalists were killed, many with their families, including Al-Jazeera correspondents, which is one of the main media outlets covering Israel’s war on Gaza, and which was punished by closing its offices in Palestine by the Israeli government.

This was the first war in modern history that international journalists were forbidden from covering, and yet no serious protests against this Israeli behavior of the suppression of the free media was made from the mainstream western media. If it wasn’t for the courageous Palestinians journalists from Gaza and news outlets such as Al-Jazeera, and Al-Mayadeen, or for the young social media activists, the world would not have known about the Israeli atrocities in Gaza.

Israel is now expanding its genocide to the West Bank. 720 Palestinians, mostly civilians, among them 150 children have been killed by Israeli settlers and military in the West Bank during this last year.

More than 11,000 prisoners have also been arrested. Israeli bulldozers have caused massive damage in many cities and refugee camps like Jenin and Tulkarem, destroying infrastructure. Moreover, the Israeli government has dismantled most of the areas that are meant to be under the control of the Palestinian authorities, invaded several cities, and stripped the PA from any civil authority in Area B (Oslo Accords).

……

____________________

Owen Kirby

At the Red Castle in downtown Tripoli, one day this past Spring, I observed Libyan school students gaze up at a tall, iron clad replica of what is said to be (and contain the remains of) the mast of the USS Philadelphia, scuttled in the nearby harbor in 1804 by the U.S. naval hero Stephen Decatur.

Wherein American telling, Decatur led a dramatic rescue of the Philadelphia’s captured crew before setting it ablaze, in the Libyan version of events the details likely take on a different hue. The incident over two hundred years ago was the beginning but not the end of American involvement in what was then the Barbary Coast.

Long-serving International Republican Institute (IRI) chairman Senator John McCain, who visited Libya a half dozen times before the U.S. Embassy was relocated in 2014 to neighboring Tunisia due to civil conflict, toured the Red Castle in December 2013 (his second visit to Libya that year). Two years after the killing of U.S. Ambassador Christopher Stevens in Benghazi, standing before the mast of the Philadelphia, McCain remained positive about the country, stating “[a]lthough these are difficult times, we are very optimistic about the future.” 

In 2016, with Libya split, both territorially and administratively, between Tripoli in the west and Benghazi in the east, McCain declared U.S. policy towards the country “an abject total disgraceful failure on the part of this administration.” Passing away in 2018, McCain was arguably the last American political figure of any standing on either side of the aisle to champion the country and U.S. interest in its stabilization.

For McCain, an energetic supporter of democratic activists and freedom fighters across the globe, he saw the potential of Libya; not just a people unshackled from decades of an authoritarianism with a bizarre twist, but also a large country close to Europe with a rich history, a relatively small population, and the largest hydrocarbon deposits on the continent. In the eyes of most Libya watchers, the country’s future should have been bright, akin to that of the oil and gas producing states of the Persian Gulf, if only given the chance.

In the aftermath of Amb. Stevens’ killing, the overall U.S. approach, diplomatically and militarily, in Libya, however, has been what AFRICOM Commander Waldhauser described in a frank nomination back-and-forth with McCain in 2016 as an “economy of force mission.” When asked what the Obama administration strategy was to confront the deteriorating situation in the country, including the presence of ISIS, Waldhauser answered, “I am not aware of any overall grand strategy at this point.”

Eight years and two U.S. administrations later, little has changed, at least in terms of American attention to a situation that should be uppermost in the ranks of U.S. strategic priorities in the region. On the ground, though, much has changed and not just in Libya. What had been a limited Russian footprint, in the guise of the Wagner Group, ostensibly to assist with de-mining in 2017 in the east, has since morphed into a Russian forward operations base, a few hundred miles from key NATO allies in southern Europe.

Initially backed by the UAE, in 2019 Russia firmly entered the Libyan political fray with Wagner forces joining an eastern push against Tripoli. A late intervention in 2020 by Turkish forces blunted the advance, saving the internationally-recognized government.

Since a 2020 ceasefire brokered by both Russia and Turkey, things have settled into an uneasy stalemate between Tripoli and Benghazi. This has allowed Russia to refocus Wagner, now under the command of Russia’s military intelligence (GRU), towards opportunities for self-aggrandizement further to the south. Restyled the Africa Corps, ex-Wagner forces, which include thousands of foreign mercenaries, are being bolstered by a recruitment drive for deployment throughout the continent. The trail of havoc that has ensued, fueled by war profiteering (mining, oil, human trafficking et al) should be keeping the White House up at night.

From Mediterranean ports on the Syrian coast to safe harbors and airstrips in eastern Libya, Russia has developed a sophisticated pipeline, moving men and military material in one direction and pilfered African natural resources in the other. The implications for stability and U.S. national security interests across the continent are not insignificant. Since 2020, there have been at least five military coups in sub-Saharan Africa and civil war is Sudan is resulting in the worst humanitarian crisis of the 21st century. Lurking somewhere in the background has been the Africa Corps or whatever name it chooses to go by. Perhaps not a key instigator in all, Russia is present nonetheless, ready to avail itself of unfolding opportunities and riches, at the expense of retreating European and American interests.

While this has been occurring, the West seems stuck in some post-Arab Spring malaise or, where the U.S., specifically, is concerned, the lingering aftershock of Benghazi. Southern European nations, when looking south, seem solely focused these day on preventing illegal migration across the Mediterranean, so its diplomatic and assistance efforts are thus narrowly focused; but this overlooks Libya’s continued deterioration as a nation state. For its part, the U.S economy of force approach has ceded much of the necessary diplomatic lift to the Europeans, who have demonstrated little interest beyond the parochial, and to the UN, which, not surprisingly, lacks the necessary clout and leverage to effect positive change.

The U.S. Global Fragility Act, enacted in 2019, is intended to bring the full weight of U.S. military, diplomatic, and assistance efforts to bear on cases such as Libya, where the regional implications of instability are wide-ranging. But, apart from the recent appropriation of some funding for Libya under the Act, and the welcomed announcement of a 10-year plan to stabilize the country’s economy and government, the full attention and weight of U.S. policy tools have yet to be deployed. A serious signal of American interest and commitment to Libyan stability will be the reopening of the U.S. Embassy in Tripoli, if and when that happens.

Until then, the U.S. is relegated to observing from over the horizon as opportunists [read: Russia] continue feeding off the country’s resources, while abusing Libya as a doormat for sowing broader regional instability and plunder. The losers are many, but most of all Libyans for whom McCain’s vision of “a peaceful and inclusive transition to democracy that will benefit all Libyans” is slowly receding over the horizon.

***

Owen Kirby – Regional Director, North Africa and Middle East

__________________

Charlie Mitchell & Luke Stuart

Highlights

Libya producing 1.22 mil b/d post-shutdown: NOC

Maintenance carried out at fields, new wells drilled

Rising exports set to weaken Med-bound crude diffs

***

Libya’s latest political crisis wiped out 570,000 b/d of its crude oil production in September, but with the standoff now resolved, output could come roaring back to surpass even pre-crisis levels, according to industry sources.

In late August, the North African country’s eastern faction closed oil fields, ports and installations amid a row over the leadership of Libya’s central bank, following efforts by the western government in Tripoli to replace central bank governor Siddiq al-Kabir.

The worst shutdown in two years eventually ended on Oct. 3, when Naji Essa, a former adviser to Kabir, was formally appointed as the institution’s new governor.

According to the Platts OPEC Survey from S&P Global Commodity Insights, production fell to 580,000 b/d in September, down from 1.15 million b/d in July. Exports hovered around 465,000 b/d in September, according to data from S&P Global Commodities at Sea.

With the crisis resolved, Libya could now see output exceed the levels recorded before it, according to statements from the NOC, sources and loading programs seen by Commodity Insights.

“With the tireless efforts of workers across various oil production sites, oil and gas production rates have seen a notable increase just days after the lifting of force majeure on oil fields and ports and the resumption of operations,” the state oil firm said on its social media accounts on Oct. 10.

“Oil and condensate production rates have surged by nearly 85,000 barrels over the past two days. On Thursday, daily production reached 1,217,148 barrels, compared to 1,158,862 barrels on Wednesday, and 1,133,133 barrels the day before.” Condensate production is estimated at around 50,000 b/d.

Output boost ahead

Sources said production had rebounded at the Sarir and Mesla fields to a combined 200,000 b/d on Oct. 10, while Es Sider production was up to 222,000 b/d, a gain of 76,000 b/d since Oct. 6.

One driver for an output boost could be field works, with sources saying companies had likely taken the opportunity to carry out maintenance during the shutdown.

Production at the El-Feel field – operated by Italy’s Eni and the NOC in a joint venture – was at the top of its capacity, just under 90,000 b/d, on Oct. 7, sources familiar with the matter said on condition of anonymity. Maintenance was carried out at the field during the shutdown, although output was high before it, sources said. Eni did not respond to a request for comment.

Maintenance was also ongoing at the Sharara field, Libya’s largest at up to 300,000 b/d. The field was producing around 250,000 b/d prior to the central bank crisis. Spokespeople from Repsol, a stakeholder in Sharara, directed questions to NOC, which could not be reached for comment.

Force majeure was lifted on both the El-Feel and Sharara fields, which lie in western Libya, after Essa’s appointment.

The NOC also said its subsidiaries and IOC partners had successfully drilled five new wells during the first 10 days of October, adding up to 12,000 b/d of crude production. Drilled in the Abu Attifel, Sharara, Nafoura and Sarir fields, the spuds are part of efforts by the state-firm to boost output to compensate for the shutdown and a recent dip in oil prices.

Dated Brent was last assessed at $79.35/b by Platts, a unit of Commodity Insights, on Oct. 10, propped up by escalating tensions in the Middle East. However, the key benchmark almost dipped below $70/b in early September on sluggish Chinese demand, high interest rates around the world, 2025 oversupply fears and high non-OPEC+ production. The price decline led OPEC – of which Libya is a member – to postpone plans to unwind some 2.2 million b/d of output cuts.

Libya is exempt from OPEC quotas due to its ongoing political crisis, but the shutdown helped drag production by OPEC and its Russia-led allies down by 500,000 b/d in September, according to the Platts Survey.

Export uptick

Commodities at Sea data suggests Libyan exports are yet to rebound fully, with October exports currently just 100,000 b/d above September levels at 560,000 b/d. However, an Oct. 10 loading program shared with Commodity Insights shows planned liftings at all of Libya’s key ports in the month.

Vessels have already sailed in October from Mellitah, Es Sider, Marsa El Brega, Ras Lanuf, Zueitina and Marsa Hariga, according to the loading program. A combined nine cargoes are expected to ship from the two key western ports of Mellitah and Zawia in October, the program shows.

A rise in Libyan production and exports would impact other Europe-bound crude grades, as Libyan light sweet oil is popular among refers in the Mediterranean and Northwest Europe, including Azeri Light, Algeria’s Saharan blend and even gasoline-rich crudes from West Africa, such as Nigeria’s Bonny Light.

Differentials for Med-bound crudes strengthened after the Libya outage, but have weakened in recent days. Azeri Light hit a $4.90/b premium to Dated Brent on Sept. 9, according to a Platts assessment, but fell to a $2.20 premium on Oct. 10.

“[The] market is flooded with prompt Libyan. I don’t really know where all this oil can be placed to be honest,” one trader said.

“People are inundated with Libyan cargoes,” said another trader. “They are displacing WTI Midland and Azeri Light.”

While a production rebound is gathering pace, experts say the NOC’s plans to reach 2 million b/d of crude within five years are still optimistic, given the impact that ties between key political actors, including eastern warlord Khalifa Haftar, Prime Minister Abdul Hamid al-Dbeiba and NOC chief Farhat Bengdara can have on oil production.

In the summer of 2022, Haftar’s self-styled Libyan National Army blockaded key oilfields, reducing production and exports to a trickle.

Oil accounts for some 93% of government revenues making the sector and key related institutions such as the oil ministry, NOC and central bank, which distributes oil revenues key political footballs.

The country has seen scant stability since Moammar Qadhafi was toppled in 2011. Since 2014, it has been run by rival governments in Tripoli in the west and Benghazi in the east.

_____________________

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.

***

In the meantime, opposition to the change in command at the Central Bank also spread. On 3 September, the Court of Appeals in Benghazi, which operates in eastern Libya where the parliament and the Haftar-led forces are based, ruled in Elkebir’s favour, declaring that the Presidential Council had acted illegally in appointing a new governor.

Soon after, the mood in western Libya also began to sour. Leading traders in the capital voiced concerns that stores of food would run out within three weeks if imports did not resume; and in Prime Minister Dabaiba’s hometown of Misrata, armed groups announced that they would mobilise against the government for its decision to replace the governor should the economy go into freefall.

But the Tripoli-based government continued trying to reassure people. On 22 September, Economy Minister Mohammed al-Hweij stated that the country had a stockpile of essential foodstuffs that would last three months; he also promised that banks would resume issuing letters of credits for imports within a week.

For the first time since the feud’s outbreak, some good news emerged on 26 September. Under the aegis of the UN, representatives of the House of Representatives and of the rival Tripoli-based High State Council, meeting at the UN headquarters in Tripoli, signed a preliminary agreement to resolve the crisis. The deal stated that the two assemblies had agreed to appoint Naji Issa, a veteran Central Bank manager, as the new governor, and Maraai al-Baraasi as his deputy. 

Besides these appointments, the two sides also established a number of conditions for the deal to move ahead. They stipulated first, that the House must ratify the appointments within a week; secondly, that after consultations with the House, the governor must appoint a board of directors within two weeks; and thirdly, that any decision about Central Bank administration that was not taken in compliance with the Libyan Political Agreement should be declared null and void.

Whether the Presidential Council, the institution that triggered the feud in the first place, has signed on to this agreement is unclear. A member of the Council was present at the signing ceremony as a witness, but he was not a signatory, and nor has he explicitly stated that the Council will revoke its August appointment. Neither the Council’s president, Mohamed Mnefi, nor Prime Minister Dabaiba has issued a statement.

How the situation will unfold is uncertain. Libyans informed of the deal suggest that there is a strong possibility that the Presidential Council will bless it and eventually retract its appointment of a new governor in August. If it does, ties to the circuits of international finance could be reinstated rapidly. 

But much might still go wrong. Libyan politicians have a well-established record of signing preliminary agreements only to backtrack at the last minute. The looming question is now whether the House will ratify the deal. If it does not, or if any other impediment gets in the way of the deal, economic conditions could deteriorate fast.

Libya is a country that depends heavily on its foreign currency revenues to cover government expenditures such as subsidies, funds for oil-sector development, scholarships and payments for medical treatment abroad, as well as commercial imports (see Appendix A). Should citizens see that shops are becoming empty due to a lack of fresh supplies (which is not yet the case), public discontent would likely surge. 

The possibility of this outcome has receded in recent days, as the two sides look to a compromise solution. Even without a deal in place, in the short run, the Central Bank can still disburse the Libyan dinars it has or eventually print more in order to pay public-sector salaries.

As long as the new Central Bank managers can tap foreign funds via subsidiaries of the Libyan Foreign Bank or other foreign banks, bankers and economists say, the immediate effects of the crisis can be contained. Still, if the new deal stutters and the dispute over the Central Bank persists for many more weeks, oil exports will remain low, and the Central Bank will be unable to draw on reserves on deposit in U.S. and most European banks, or issue letters of credit for imports. In such a scenario, the risks become far greater. One Libyan banker said:

Since the economy depends entirely on oil sales, the bank must sell $2 billion every month to create the liquidity to pay [among other things] for monthly salaries. If there are no salaries, there is no liquidity in the market and the foreign exchange will go through the roof.

If there are no imports, prices will go through the roof. If people are not paid their salaries, they will protest. Violence could ensue, especially on the part of the militias that are not being paid. Commenting on what could happen if there were no resolution of the Central Bank crisis, a U.S. official said:

There will be a breaking point when people decide to revolt, when you start to see real shortages and people push back on the ground. It could be a week; it could be a month; it could be three months. We just don’t know.

If this moment were to come, the likely target of popular ire would be the Tripoli government, which people would hold responsible for the meltdown. “One cannot rule out the toppling of the Dabaiba-led government and a war”, the Libyan banker speculated.

V. Foreign Reactions

The Presidential Council’s move elicited criticism from outside Libya, with key figures reproaching its unilateral nature and highlighting its potentially destabilising impact on the Libyan economy. On 26 August, the UN Support Mission to Libya (UNSMIL) stated: 

The Mission believes that continuing with unilateral actions will come at a high cost for the Libyan people … and risks precipitating the country’s financial and economic collapse.

On 28 August, UN Security Council members echoed concern about the mounting crisis around the Central Bank, calling on “all Libyan political, economic and security leaders and institutions to de-escalate tensions, refrain from use of force or threat of use of force or any economic measures designed to exert pressure”.

The critical stance taken by the U.S., given its importance to global financial markets, has been particularly significant. Washington’s reaction is all the more important to Libya because the country’s oil revenues are in U.S. dollars and most of its reserves are held in U.S. banks. On 27 August, the U.S. embassy in Tripoli warned of the consequences of “undermining confidence in Libya’s economic and financial stability in the eyes of Libyan citizens and the international community”. On 31 August, the State Department weighed in, too: 

The uncertainty created by recent unilateral actions has led U.S. and international banks to reassess their relationships with the [Central Bank of Libya] and, in some cases, pause financial transactions until there is more clarity on [its] legitimate governance. We are concerned that further disruptions with international correspondent banks could damage the Libyan economy and well-being of Libyan households.

While the U.S. did not rule out the possibility of recognising the Bank’s new management, officials said they would not condone the new setup without consensus in Libya itself.

The U.S. Treasury, which historically has had close ties with the Central Bank of Libya and is the go-to institution for Western banks seeking guidance on when to resume operations with Libya, has not taken a position in favour of one governor or the other. Nor has it signalled intent to freeze the Central Bank’s assets. But it has made clear that it wants to see rival factions settle the dispute as a first step toward unlocking international transactions with the Bank. 

Settling the dispute would mean getting all the parties to approve an interim governor with the experience to manage a Central Bank, pending a permanent resolution, said a U.S. government representative who follows the matter closely.

As to whether this deal should stick to the letter of the Libyan Political Agreement that envisages consultations between Libya’s rival assemblies, he underscored that besides the requirements for such an agreement, the Presidential Council should also sign off. The important thing is “ending the dispute between all parties”.

France and the UK have joined the U.S. in calling on everyone concerned to reach a compromise. On 26 September, the UN greeted news of the preliminary agreement signed by representatives of the House of Representatives and the High State Council as “positive and promising”.

__________________

Crisis Group

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.

***

2. Second theory: a soured pact

The second hypothesis suggests the Dabaiba and Haftar families were about to forge a pact that went sour at the eleventh hour. According to three people informed of relevant conversations, Ibrahim Dabaiba, the prime minister’s nephew and adviser, as well as others who wanted Elkebir removed, had been discussing the governor’s possible replacement for months with Saddam Haftar.

The two men, who were the architects of the National Oil Corporation deal, are known to regularly consult each other over projects and budgetary issues. These sources believe that Saddam Haftar had greenlighted the appointment of Shukri and a new board of directors, promising to deliver the House’s endorsement, only to backtrack at the last minute due to alleged disagreements over nominations for other key posts.

3. Third theory: external interference

A third possible explanation relates to supposed external interference. A number of Western officials speculate that an unspecified European government sponsored the Presidential Council’s move “to push back on the Libyan National Army and put pressure on Russia”.

Several Western countries are worried about Russia’s footprint in Libya. Moscow has developed good relations with both the Tripoli- and east-based governments, while materially supporting the Libyan National Army. Between 2018 and 2023, the Wagner Group, a Russian private military company, had units covertly stationed in at least three military bases in the country.

Since early 2024, Russian troops have docked in eastern ports while several hundred men believed to be operating under the defence ministry have been engaged in the east. Western officials suspect that east-based authorities are using some of the money transferred to them by the Bank to pay for Moscow’s military assistance.

At least one European diplomat rejected the notion of outside meddling as fanciful, saying, “This sounds like a romantic interpretation that would help the Presidential Council save face”. He added: 

The story is simpler: the Government of National Unity and the Presidential Council understood that, if the alliance among Aghela Saleh, Siddiq Elkebir and Khaled Mishri materialised, it would have destroyed them, so they took the initiative. The truth, for now, remains obscure.

IV. The Battle for the Bank and the

Risks Ahead

While Libya’s competing factions wrangled over who was legitimately entitled to remove or appoint the governor, the Central Bank’s personnel came under threat, as did peace in the capital.

On 18 August, an armed group aligned with Dabaiba and opposed to Elkebir briefly kidnapped the Bank’s IT manager, sparking fears of clashes among Tripoli’s rival militias, some of which support Dabaiba’s move and others of which do not. Simultaneously, armed groups from Misrata, Dabaiba’s hometown in western Libya, marched on Tripoli, although it is not clear what they were looking to do; eventually, they withdrew to the city’s outskirts. 

At first, Elkebir refused to hand over the Central Bank’s headquarters in Tripoli to the officials in charge of ensuring that the newly – if improperly – appointed leadership could take over. Within days, however, these officials gained control of the building and installed new management, prompting Elkebir to leave the country.

Elkebir claimed that some of the Bank’s employees were coerced “gangster style” into cooperation with the new managers, alleging that gunmen threatened the relatives of staff members – an accusation that the new managers deny. Violence in Tripoli was averted mainly because the Deterrence Force (al-Rada), a pro-Elkebir Tripoli-based group that secures the Bank’s premises, stepped aside when the new managers turned up at the building.

The struggle over the country’s main financial institution intensified in the days that followed. On 23 August, Shukri declined his appointment as governor, saying he would accept the job only with the blessing of both assemblies.

In response, on 26 August, the Presidential Council chose one of the two deputies, Abdel Fattah Ghaffar, as interim governor. Alongside a few other board members, he installed himself in the Central Bank headquarters in Tripoli.

The dispute then spread to the oil sector.

On 26 August, the east-based authorities ordered the oil fields under Haftar-led forces’ control to shut down in retaliation for the Presidential Council’s decision to replace the Central Bank governor. Data show that production dropped from 1.4 million to 590,000 barrels per day after three days of closure.

Even though the new board managed to take over the Central Bank’s headquarters and social media accounts, the institution’s operating systems remained out of commission.

Even though the new board managed to take over the Central Bank’s headquarters and social media accounts, the institution’s operating systems remained out of commission. It was unclear if the new leadership would be able to get those systems up and running, as shortly after the dispute erupted Elkebir had instructed the staff not to comply with the new authorities’ orders and to halt all work until further notice.

Libyan bankers say he also directed the foreign correspondent banks – the British Arab Commercial Bank in the UK and ABC Bank in Bahrain – to stop transacting with Libyan commercial banks.

These are the main institutions that Libyan commercial banks use to clear foreign currency transactions. Elkebir confirmed to Crisis Group that these financial institutions and at least two dozen more had suspended dealings with Libya.

He said the U.S. Federal Reserve and the Banca d’Italia, which clear U.S. dollar and euro transactions for the Central Bank, had done the same. Other Libyan sources nevertheless indicate that while dollar transactions have stopped, euro transactions have continued to take place.

The new management, meanwhile, sought to reassure the public that operating systems would be restored and that payment of salaries would resume by 1 September. On 31 August, an official involved in the takeover said work at the Central Bank had returned to normal, with all systems functioning properly.

The Tripoli government also sought to soothe Libyan businesses and the public, saying that replacing Elkebir would yield better governance and transparency in the Central Bank’s management. The reassurances seemed to work, at least at first. Contrary to expectations, the dinar’s exchange rate did not collapse in the first week of the crisis, and cash was still available.

There was no outcry in western Libya about the sacking of Elkebir, whom various political factions had demonised for years as responsible for the country’s economic woes. The new authorities also denied claims that the Bank had been disconnected from international financial markets.

Those claims, however, were soon proven accurate. Local bankers reported that, as of the end of September, none of the foreign currency purchase requests submitted by traders to commercial banks over the previous month have been processed.

They said the requests have been inserted in the Foreign Currency Management System (which banks use to request hard currency from the Central Bank), but the Central Bank has not approved any of them.

Furthermore, for a few days after the crisis broke out the new managers could not get access to any Central Bank foreign account except for those of the Libyan Foreign Bank, an overseas institution owned by the Central Bank through which oil revenues pass before settling in its coffers. According to a Libyan banker, they ordered the Libyan Foreign Bank to keep oil revenues in its accounts.

But even access to these accounts did not last long. A U.S. government official noted that all foreign financial institutions had suspended transactions with Libya’s Central Bank by 5 September, and by then most had also stopped doing business with the Libyan Foreign Bank because it is solely owned by the Central Bank, and as such was affected by the same restrictions stemming from the unresolved leadership dispute.

The official highlighted that some commercial banks in Türkiye and the United Arab Emirates might still be doing business with the Libyan Foreign Bank and its subsidiaries, but risked being cut off by other financial institutions should they be discovered.

Libyan sources, however, suggest that at least two Europe-based commercial banks owned by the Libyan Foreign Bank also continued to process euro transactions during the crisis. Leading traders in the capital voiced concerns that stores of food would run out within three weeks if imports did not resume.

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