Libya straddles the verge of a revolution, with the Central Bank having just collapsed and the growing tensions between the Government of National Accord (GNA) headed by Abdul Hamid Dbeibah in Tripoli, a government in Benghazi supported by the warlord Khalifa Haftar, and the rising power of armed militias in the capital.
Mohamed Khaled Elghuel, Chairman of the Peace and Prosperity Party in Libya, explained to The Media Line that the country currently faces two main scenarios: either a revolution that may be worse than the one of 2011 if no actions are taken to end this endless circle of dysfunction or a total reset towards a federal system.
Libya went through the collapse of the Central Bank in the past few days, and this poses a serious threat to the country’s stability since armed militias could easily take over.
The bank dominates the Libyan economy, owning the two main commercial banks and holding $27bn in reserves, most of it from oil revenues. Sadiq al-Kabir, the sacked governor, has recently started attacking Dbeibah’s overspending and is now seen to favor the forces in the country’s east.
Abdel Fattah Ghaffar, the new interim deputy governor appointed by the Tripoli-based government, held a press conference in the capital and insisted he could ease the current liquidity crisis, pay unpaid salaries within two days, and be accountable to a board of governors.
Kabir has run the bank since 2011, the year that Col Muammar Gaddafi was toppled with Western backing, leading to the paralyzing split between the west and east of the country.
The rival eastern administration has opposed Kabir’s sacking and said on Tuesday it would continue “suspending all oil production and exports until Kabir is reappointed,” citing “force majeure.” The affected oilfields constitute about 90% of the country’s oilfields and terminals.
Kabir said on Tuesday, for a second day running, the bank had been unable to operate due to threats from militia and the kidnapping of four staff, leading him to warn that August salaries may not be payable.
“The current events are caused by different historical reasons. Libya’s independence was historically a foreign decision more than a national process. In fact, Libyans do not have a national charter that sets peace within the country as its principle. This is why we are still facing inner disputes,” Elghuel stated.
“On top of that, since the 1960s, there was not a clear plan adopted by the country to invest the money coming from oil revenues, which turned Libya into a rentier state with an endless circle of corruption that led to social uprisings like the one in 2011. The current situation may lead to a far worse scenario,” he added.
Libya's economy
According to a recent report by the Central Bank of Libya, the country’s oil revenue totaled 51 billion dinars from the first of January until July 31, 2024. Last year, oil income reached 99.1 billion dinars, a decrease from 105.4 billion dinars in 2022. This fluctuation highlights the volatile nature of Libya’s oil-based economy, which is influenced by global oil prices and domestic production challenges. Moreover, according to a report from the National Institution for Human Rights in Libya, from the end of December 2023, the poverty rate in the country has risen to 40%.
“Our economy is shrinking; our expenditure is increasing, but the corrupted parties are only benefitting from this. This system created the dichotomy of a lot of billionaires with 40% of the people under the poverty level,” Elghuel stated.
Aside from economic issues, Libya also faces a lack of security since no Western nation has shown interest in stabilizing Tripoli’s political system and has reduced everything to its personal goals. The Europeans are primarily concerned with irregular migration and thus find it convenient to deal with a semi-anarchic situation. The United States is concerned with terrorism and the spread of Islamist organizations such as ISIS throughout the region. It pays no concern over who governs Libya as long as extremist groups are contained.
This vacuum allowed external entities, mostly Russia and Turkey, to take over militarily.
“Currently, we have imperialist powers trying to compete with one another. Russia recently deployed 1800 fighters to eastern Libya to have a strategic asset close to the Sahel region, where Wagner is also present,” Omar Misbah, political analyst and Local Coordinator at the Institute for Integrated Transitions (IFIT), said to The Media Line.
“The US and European countries, like France and Italy, maintain their small military influence in the country to monitor terrorism and irregular migration. While Turkey aims to expand its influence by gaining the trust of both the Eastern and the Western governments, trying not to be an obstacle to Egypt’s plans, too. Libyans need these foreign powers out to gain back control of the country,” he added.
“The possibility of Libya becoming a field for proxy wars is plausible in the future since we see conflicting actors being present in the country and destabilizing it as well. You have the US vs Russia, and Italy, France, Turkey, Qatar, the Emirates, and Egypt competing over influence”, stated Ibrahim M.S. Grada, Former Libyan Ambassador to Sweden and Former UN Senior Advisor.
This overall chaos may increase the threat of ISIS and even Iran’s influence in the country.
“With a chaotic scenario like the one we are seeing, ISIS may be able to recruit more people who are struggling to survive economically and are poorly educated. At the same time, Iran could use Libya as a tool to compete against Saudi Arabia, The Emirates, and Qatar while harming Europe by creating a new axis of terrorism connected to the Mediterranean’s migration flow”, commented Misbah.
Both Elghuel and Misbah stressed that a federal system might be the solution to stabilize the country again and reset everything. This would avoid the current centralized power and create the basis of a new modern state.
For Grada, the international actors’ influence may be decisive in understanding whether a solution to the current situation is reachable or whether a war will break out instead.
“International powers are currently busy with the situation going on in Gaza, in Ukraine, in Sudan, so the Libya issue is currently not on the table. So far, both armed militias and local politicians seemed not to want a war, but if the current situation will go further and no international actor will intervene, a war may occur,” Grada concluded.
Giorgia Valente is a recent graduate of Ca’ Foscari University of Venice and an intern in The Media Line’s Press and Policy Student Program.