Libya has been embroiled in political debate since the head of the Presidential Council Mohamed Al-Menfi dismissed the governor of the Central Bank Al-Siddiq Omar Al-Kabir two weeks ago. Al-Menfi installed a new board of directors for the institution to oversee the management of oil revenues of the OPEC member state.

The move was denounced by the House of Representatives and the government appointed by the council under Osama Hamad in Benghazi. Members of the Supreme Council of State, which has been internally divided for the past month, also accused the Presidential Council of overstepping its legislative authorities.

Libyan reports indicate that members of the two opposed councils fear that Al-Kabir’s dismissal might trigger more stringent measures, such as a presidential decree to dissolve or freeze the two councils themselves. They have after all failed to reach a consensus on an electoral roadmap for the upcoming elections, which Western powers are eagerly anticipating as the culmination of the UN-sponsored political process.

Despite the opposition in both Tripoli and Benghazi to Al-Kabir’s removal, both Aguila Saleh, the speaker of the House of Representatives, and Khaled Al-Mishri, the chairman of the Supreme Council of State, had previously agreed in meetings held in Morocco and Egypt to replace Al-Kabir and install a new board of directors at the Central Bank, though that agreement had not materialised.

The Presidential Council has accused the House of Representatives and the Supreme Council of State of impeding the electoral process by delaying the enactment of necessary legislation for presidential and parliamentary elections. In response, the House of Representatives disputing the claims, asserted its commitment to the electoral laws formulated by a joint committee during sessions in Morocco, while the Supreme Council of State remains divided on the issue.

Key political groups are discontented with the outcomes of the UN-facilitated political process in 2021, which led to the formation of the Presidential Council and the Government of National Unity. Saleh and his newfound allies in western Libya, including prominent figures from the Muslim Brotherhood, voiced their opposition. This alignment signifies a political coalition comprising Saleh, Al-Mishri, and Muslim Brotherhood leaders aiming to challenge the executive authority that emerged from the UN-brokered process.

On the other hand, both the Presidential Council and the Government of National Unity are seeking to establish communication channels with the general command of the Libyan National Army based in Benghazi, under the leadership of Field Marshal Khalifa Haftar, who has yet to take a definitive stance on the matter.

Local media sources in Tripoli suggest that Haftar’s relative silence on the Central Bank issue may be linked to negotiations with the head of the internationally recognised Government of National Unity, Ibrahim Dbeibah. These are taking place through Haftar’s son, Ground Forces Commander Saddam Haftar, and Dbeibah’s political adviser. Those talks, the sources added, were intended to arrive at mutually acceptable figures to oversee the Central Bank and to fill key governmental positions.

The camp of Haftar and Dbeibah is anticipating a resolution that would effectively sideline the two councils, a move expected to garner backing from foreign powers. Meanwhile, the camp of Saleh and Al-Mishri is exerting pressure on the Presidential Council to reverse its decision and retain Al-Kabir as head of the Central Bank.

In response, the Presidential Council stated on 29 August that it had granted the House of Representatives and the Supreme Council of State a window to reach a consensus on appointing a new leadership for the Central Bank, but they failed to reach an agreement. In the meantime, the House of Representatives said that Al-Kabir had put forth a new list of board members for approval by the House. Despite its objection to the Presidential Council’s decision, the House has yet to make a decision on that.

Opposing parties continue to push for the reinstatement of Al-Kabir. This is unlikely, however, especially after the new management has assumed control. The UN has urged Libyan parties to resume negotiations to resolve the Central Bank crisis and appoint a new leadership, a call endorsed by the Presidential Council. However, neither council has responded to this appeal beyond insisting on pressuring the Presidential Council to revoke its decision. The US and Europe have also called on Libyan parties to heed the UN call for a resolution on the Central Bank crisis, viewing it as a step towards re-launching the political process and garnering support from different groups towards elections, which currently remain a distant prospect.

The Presidential Council’s decision to remove Al-Kabir has stirred a hornet’s nest, eliciting strong reactions from the councils opposing the Presidential Council and the Government of National Unity. Meanwhile, the general command of the National Army in Benghazi emerges as the singular beneficiary in the ongoing political dispute.

Al-Kabir has been described as a figure with substantial backing from the US and UK, portrayed as immune to being removed by Libyan leadership. A diplomatic source said his ouster by the Presidential Council was expected, particularly following his refusal to collaborate with the joint financial committee established by the Presidential Council for overseeing government expenditures.

In July 2023, the Presidential Council created the Supreme Financial Committee with the endorsement of the Economic Working Group of the International Follow-up Committee for the Berlin Process, involving members such as the US, the EU, Egypt, and the UN. Subsequent meetings of the Supreme Committee held in various Libyan cities were disrupted after the House of Representatives and the general command withdrew their representatives, leading the Presidential Council to re-form the committee in April. The committee was expected to resume operation but understandings between Saleh and Al-Kabir concerning Libya’s largest budget allocation in history – in favour of the government tasked by the House of Representatives – posed a challenge to the recognised authority in Tripoli, serving as a key factor behind Al-Kabir’s dismissal.

The Presidential Council insists it will not reverse its decision to remove Al-Kabir, urging the House of Representatives and the State Council to collaborate on appointing a new administration. It also welcomed the UN call for dialogue to resolve the bank crisis.

The UN and the West view the change in leadership at the Libyan Central Bank as a promising opportunity to revitalise the sluggish political process among Libyan factions that anticipate UN involvement in their plan to re-establish the executive authority, form a new government, and progress towards elections.   

* A version of this article appears in print in the 5 September, 2024 edition of Al-Ahram Weekly