UN leads talks in Libya to resolve central bank crisis
Police officers stand guard outside Libya's Central Bank headquarters in Tripoli on August 27, 2024. - The United States gave its backing on August 27 to UN efforts to resolve differences between Libya's rival administrations over the mangement of the central bank without cutting off vital oil income. (Photo by AFP)
The United Nations Support Mission in Libya (UNSMIL) announced that it held discussions in Tripoli on Monday aimed at resolving a central bank crisis that has led to an oil production blockade and poses a severe threat to the country’s stability as a major energy exporter.
The crisis erupted after Western factions attempted last month to remove long-serving Central Bank Governor Sadiq Al-Kabir and install a rival board, prompting Eastern factions to halt all oil production in response.
UNSMIL stated that the talks concluded with “significant” progress, with both sides agreeing to present a draft agreement to their respective chambers for review, with the goal of finalizing and signing the agreement on Tuesday.
Oil prices saw a modest increase on Monday, recovering from last week’s losses as Libyan oil exports remained suspended and concerns about increased OPEC+ production in October subsided.
The talks, hosted by UNSMIL, involved representatives from Libya’s House of Representatives (HoR) and High Council of State on one side, and the Presidential Council on the other. Discussions continued from morning until late into the night, according to the statement.
Libya’s Central Bank (CBL) is the sole legal repository for the country’s oil revenues and is responsible for paying state salaries nationwide. If the current crisis disrupts these functions, Libyans could soon face significant hardships.
A prolonged struggle for control over the CBL could paralyse the economy, halting state salaries, banking transactions, and letters of credit essential for imports, effectively freezing Libya’s economy and international trade.
The ongoing crisis threatens to shatter four years of relative peace in the OPEC member country, which has been divided between Eastern and Western factions for over a decade, with backing from Russia and Turkey, respectively. Despite the state’s fragmentation, the CBL and NOC were previously kept off-limits, ensuring that some government functions continued uninterrupted.
