Libya factions agree to appoint new central bank chief to end crisis: UN

Libya’s two legislative bodies agreed Tuesday to jointly appoint a new central bank governor and end the power struggle over control of the country’s oil revenues that has cut crude output and exports, according to the UN Support Mission in Libya.

Headquartered in the capital, Tripoli, the Central Bank of Libya operates independently of the two governments and is the sole legal repository for Libyan oil revenue. It also pays state salaries across the country and provides millions of Libyans with financial incentives. 

The House of Representatives, based in the eastern city of Benghazi, and the High State Council in Tripoli in the west signed a joint statement after two days of talks hosted by UNSMIL, the mission said. The Tuesday statement from UNSMIL said that they would appoint a central bank governor and a board of directors in the next 30 days. However, the two factions agree to extend the consultations until the end of Sept. 9.

“Following consultations hosted by UNSMIL at its headquarters in Tripoli on Monday and Tuesday, the representatives of the House of Representatives and High Council of State reached important understandings on the crisis of the Central Bank of Libya, particularly on the mechanism and timelines for appointing the CBL Governor and Board of Directors,” UNSMIL said in the statement.

A 2011 NATO-backed uprising led to the overthrow and murder of long-time dictator Moammar Gadhafi, which led to a bloody civil war that ended in a cease-fire in 2020. However, the divisions between the two competing governments still exist. 

The central bank has been in a crisis since Aug. 18, after the institution’s head of IT, Musab Msallem, was kidnapped by an unidentified group from his house, the bank said in a social media post at the time. Other officials at the bank and their relatives were also abducted. Although Msallem was returned later that Sunday, US Special Envoy to Libya Richard Norland later described the kidnapping as an attempt to force Sadiq al-Kabir, the Central Bank of Libya’s veteran governor, to resign. Kabir and his board had previously been dismissed by the Presidential Council, a body based in Tripoli linked to Prime Minister Abdul Hamid Dbeibah’s internationally recognized government. Kabir said the council has no jurisdiction to dismiss him, due to the central bank’s independence from both governments.

The chaos at the central bank prompted Libya’s eastern factions to suspend oil production and exports in a bid to reverse Kabir’s dismissal.

Kabir and other senior officials at the bank had to flee Libya for the Turkish city of Istanbul on Aug. 30. Kabir said at the time that he and his colleagues were fleeing to “protect our lives” after threats of attacks by armed militias. Ever since, the central bank has not been able to carry out transactions, as Kabir fled with some of the system access codes. The inertia is impacting hundreds of thousands of Libyans on the state payroll. 

In an interview with Al-Monitor published Tuesday, Kabir vowed not to return until security guarantees are in place and there is "a return to the rule of law based on the Libyan banking law and Libyan political agreement."

"This would start by the cancellation of the Presidential Council’s decision and the adoption of a board of directors by the House of the Representatives in consultation with the High State Council," he added.

One source familiar with the discussions told Al-Monitor that if a new governor is not appointed, another option is to keep Kabir on until the next Libyan elections. 

Al-Monitor has contacted Kabir for comment.