Libya's Central Bank Crisis: Political Power Struggles, Alliances, and Future Scenarios

The conflict over the leadership of the Central Bank of Libya (CBL), which reflects long standing divisions in the Libyan political landscape, continues to drive headlines. This episode, whereby Government of National Unity (GNU) Prime Minister Abdulhamid Dabaiba ousted CBL Governor Sadiq al-Kabir via decisions by the Presidential Council (PC) has severely impacted the standing of the latter institution. Each actor is now making calculations to see who can come out on top without resorting to an all-out conflict. This article examines what happened and lays out scenarios ahead.

A muddied PC

The PC has been central in the ouster of al-Kabir, but as explained in last week’s report, its decision was primarily forced by Dabaiba and political miscalculations. In fact, PC head Mohamed al-Mnefi had counted on vague guarantees from some eastern Libyan elements that its decisions to install Mohamed al-Shukri as CBL Governor and restructuring the bank’s board of directors would not create tensions. This further motivated al-Mnefi to act confidently and move against the power of the House of Representatives (HoR) and High Council of State (HCS) – which are the only entities enabled by the 2015 Libyan Political Agreement (LPA) to appoint sovereign positions.

Yet, the way that the PC went with al-Kabir’s removal broke off any understanding with the aforementioned eastern actors, who were themselves contending with the opposition of the rest of the eastern establishment to al-Kabir’s sudden removal. In fact, the PC unilaterally published its decisions by not seeking to enforce them via aligned members of the HoR and HCS, and therefore fully violating the LPA. This has had grave repercussions for the PC which has become more isolated and weak as a result of its loss of neutrality. It is important to remember that al-Mnefi, who hails from Tobruk, has had ups and downs in his relations with eastern actors but that for more than a year, he had solidified his role as an intermediary and viable partner to them.