The turmoil surrounding the Central Bank of Libya raises questions about the legitimacy of the country’s institutions and, more importantly, the sovereignty of the state itself
Crises in Libya have been the norm for the last 13 years. They are unpredictable and can erupt at any time, over anything, no matter however ridiculous it is. Once a crisis appears, it has the potential to make the lives of ordinary people hell. Armed clashes could easily break out because of a squabble between two neighborhood militias in Tripoli. Such clashes quickly spiral into serious fighting, with Kalashnikovs being the weapon of choice.
Central Bank crisis
The latest predicament to hit the divided country involves the Central Bank of Libya (CBL), triggered by the decision to replace its governor, Sadiq al-Kabir, who has held the position since October 2011. On August 12, the country’s three-member Presidential Council issued a decree replacing Al-Kabir as the CBL’s head.
Libya has been split between two competing regions, western and eastern. The interim Government of National Unity (which the Presidential Council is part of), which was installed in 2021 as part of a UN-backed process to prepare for elections, is headquartered in Tripoli (western). The other, eastern administration is based in Benghazi, home to the nation’s parliament, the House of Representatives (HoR). The CBL is split along the same political lines, but the one in Tripoli, headed by Al-Kabir, remains the only internationally recognized institution.
The irony here is that each side considers the other illegal or illegitimate while neither government has ever been voted in. The CBL funds both sides, even when they are fighting each other with guns and mortars rather than just words. In western Libya, the CBL is always under pressure to bankroll not only the governments but also various militias, whose existence depends on CBL money despite their criminal and disruptive role in the country.
According to all laws in force, especially the Libyan Political Agreement, signed in Morocco in 2015, which became the country’s de facto constitution in the absence of one, the Presidential Council does not have the authority to appoint a governor. The parliament, in consultation with the Higher State Council, is the only institution authorized to take such a measure.
The parliament had voted twice before to replace Al-Kabir, first in 2014 and then again in 2018. In both cases, he ignored the resolutions and stayed at his job. Why should he obey the law if the entire country is a somewhat lawless jungle where laws are hardly ever enforced, let alone respected? Even Libya’s top leaders selectively observe laws, making the case of the CBL a pretty common occurrence.
The parliament (often referred to as Benghazi-based, though its official seat is in Tobruk, while it has another meeting place in Benghazi), for instance, was elected in 2014 for a four-year term, yet a decade later, the same chamber is still around. Its counterpart, the Tripoli-based Higher Council of State, was elected in 2012 and still operates.
Why the CBL is important
Libya is a top African oil producer and the treasury gets most of its revenues from hydrocarbon exports. All wealth generated by oil and gas goes into the coffers of the CBL, which distributes it in accordance with government budgetary allocations for different sectors and services, including public sector salaries.
Moreover, the CBL is the only financial channel to the outside world, and considered the nerve center of the country’s banking relations with the world, as all import-related transactions, for example, must be approved by it. Libya, nowadays, imports almost everything and its major export commodity remains oil and gas. Therefore, any disturbance to the CBL’s inner working, leadership and management team or any politicization of its role exposes the country’s financial transactions to danger, both internally and externally. For example, the bank is responsible for dispensing the monthly salaries of 2.2 million public sector employees.
Moreover, the institution, since 2011, has been increasingly politicized and this further complicates its role, making it a political tool in the hands of the governor, who may use it in domestic political wrangling by, for example, giving more money to one side or region at the expense of others.
Who said CBL governor should go
Besides overstaying his term of four years, Sadiq Al-Kabir has been operating the CBL without a board of directors as legally required. People hold him responsible for the dreadful banking system in the country, making it difficult to defend Al-Kabir’s record as governor.
Banking in Libya is hard to rank as efficient in comparison to, for example, that of neighboring countries. Since 2011, when the country sank into its deepest-ever crisis as the NATO-backed uprising toppled and killed Muammar Gaddafi, all banks, private and public, have been suffering from liquidity problems: people and businesses cannot access their accounts and get enough cash simply because banks do not have any. The problem sometimes becomes chronic, and clients have to wait for months to be able to get the amount of cash they require.
The issue has become very serious since hardly any other form of electronic payments exists. ATM machines are scarce, even in the capital: there are only a few, located in banks themselves, not in shopping centers or gas stations where people need them. Many ATM machines do not work, and several kilometers outside Tripoli, there are none. People in rural areas, small towns and villages have yet to see one.
Cash is the preferred and trusted method of any transaction because the entire economy is built around cash payments. The economic cycle operates, mostly, on a cash basis, and paper checks, for example, are untrustworthy unless certified, which is another complicated process in itself.
Some of the blame belongs to dysfunctional politics in Libya. Lack of economic and political stability as well as security are also important factors affecting the functioning of the banking sector. However, the fact that Al-Kabir has kept his position for so long with almost no improvements in either CBL policies or in the wider banking system makes defending him a lost cause. Nevertheless, the bank governor should have been replaced in the legal way to avoid any negative repercussions for the CBL itself or the wider banking sector in the country.
Like any similar institution in any country, the CBL is supposed to be an independent organ responsible for financial and monetary policies, controlling inflation and managing the fluctuation of the local currency among others. It is not a political institution, and should not play any political role. Above all, the CBL’s governor is appointed, removed and replaced by the legislative branch of government, not by the executive branch.
These general principles are emphasized in all relevant laws and political agreements that have served as the basis of governance in the country since 2011.
The bigger crisis Libya suffers from is actually deeper and more challenging to overcome since it has to do with the legitimacy and legality of entire state “institutions” and the current politicians who lead them.
Foreign meddling
Needless to say, Libya’s troubles started back in 2011, when Western countries ganged up, using their formidable military alliance, NATO, to destroy the country under the disguised UN Security Council resolution 1973, which authorized the use of force to, as falsely claimed, protect civilians against government forces. The real goal of what was marketed as “humanitarian intervention” was to topple the government of the late leader Muammar Gaddafi, who was brutally murdered on October 20, 2011.
Libya has not only been politically divided but also socially fractured, and its own institutions have been hollowed out in a way that make them unable to function like they are supposed to. A hollowed institution, while still standing, can hardly carry out its duties, paralyzing the progress of the country. The roles of the armed forces and police have been taken over by armed militias and the security of the state itself has all but disappeared.
When Gaddafi was killed, the country descended into lawlessness and became an open field for foreign meddling; a competition between the same countries that destroyed it 13 years ago. While the UN mission in Libya is trying to bring the country together and organize elections for both president and a new parliament, the ambassadors of France, United Kingdom and the United States keep interfering in almost every detail, including the latest crisis surrounding the CBL.
For example, when the 2021 elections were agreed upon, the plan did not progress, thanks to internal disputes made worse by foreign meddling. Both the ambassadors of the UK and the US spoke publicly against the idea of Saif Al-Islam Gaddafi, Gaddafi’s son, entering the presidential race despite a Libyan court giving him the green light to run. The parliament then felt so embarrassed by the UK ambassador’s bold comments about the election it voted to declare her persona non grata.
On the day the decision to replace the CBL governor was published, Al-Kabir appeared alongside US special envoy Richard Norland on the US embassy’s X account. The post carried both an explicit warning against removing the governor and an implicit threat of what to expect if he was removed.
Sovereignty-free country
The CBL crisis exposes deeper and more troubling long-term questions regarding both the legitimacy of all institutions and, more seriously, the sovereignty of the Libyan state itself.
The point is, all the institutions and politicians dominating the country now have lost their legitimacy since they have overstayed their mandates. However, no one is really serious about organizing national elections any time soon. Such a ballot means most politicians, particularly MPs and members of the Higher Council of State, are very likely to be voted out. Both governments in Tripoli and Benghazi will also disappear, and the country will have a president for the first time since independence in 1951.
Regardless of how the CBL crisis is solved, it is only the tip of the iceberg. The renewal of legitimacy through elections is a must, and it is long overdue. Most importantly, foreign meddling must stop, leaving only the UN mission (as it tries to solve the CBL problem) to intervene, and only when it must facilitate agreements. The CBL issue provides a unique chance to take the opportunity to settle all major disagreements hampering elections as soon as possible, such as setting up a new unified interim executive to take the country to voting day. Just as critically, all parties and politicians must accept the outcome of any elections as long as they are fair and transparent.
Read more
September 16, 2024 at 11:04PM
from RT - Daily news
via IFTTT
Why Western ‘help’ is fueling constant chaos in this African nation
Reviewed by Unknown
on
September 17, 2024
Rating: 5
No comments