Divided Libya faces new threat

Libya remains embroiled in a state of political fragility, which is being exacerbated by a new “war” among its litany of belligerents that now seek to undermine key institutions, particularly the central bank and the National Oil Corporation. This new warfare, characterized by insidious maneuvering as an alternative to disastrous kinetic warfare, has emerged as rival factions struggle over control of the nation’s vital oil resources and revenues, as well as influence over the institutions that control them.

This struggle signifies more than just a bureaucratic tug of war; it marks the latest phase in a decade-long endeavor by Libya’s nonstate armed factions to solidify state capture by drawing the essential pillars of the country’s economy into their competing spheres of influence. Thus, control over the central bank and oil company — the equally troubled state-owned enterprise that dominates Libya’s oil and gas sector — is now a battlefield where political elites vie for dominance, threatening an already fragile relative peace.

The central bank has long been one of the few institutions to unite Libya’s east and west. However, recent moves to oust the bank’s governor, Sadiq Al-Kabir, reflect deeper political machinations. The UN-recognized government in western Libya, led by Prime Minister Abdul Hamid Dbeibeh, and the eastern parliament under Khalifa Haftar both see the bank’s leadership as crucial to their power.

Analysts predict that ousting Al-Kabir could sever Libya’s access to international markets, further crippling its economy. Such a scenario would have dire ripple effects, paralyzing government salaries and essential services that millions of Libyans depend on. Additionally, manipulating the bank’s resources would also allow either faction to keep funneling public funds into sprawling kleptocratic networks, unchecked by a war-weary public and an exasperated international community not keen on a return to open conflict.

Control over the central bank and oil company is now a battlefield where political elites vie for dominance

Hafed Al-Ghwell

Rather, the preferred status quo is the current political climate — an unsteady peace between two equally matched foes that recognize the futility of leveraging violence to achieve their objectives. However, Libya’s quarrelsome ruling elites have yet to forgo their ambitions to usurp their rivals by any means possible.

Recently, this has manifested itself in covert strategies aimed at delegitimizing and destabilizing the institutions that manage the country’s primary export — oil. Last week’s blockade of Libya’s largest oil field by Haftar and subsequent militia deployments around the central bank’s Tripoli headquarters are eerie reminders of familiar strategies prior to the October 2020 UN-brokered ceasefire, with disruptions at key locations and threats of violence leveraged to drive bargains where discourse fails.

Although self-defeating, such escalations remain relatively effective, illustrating how crucially intertwined oil revenues and financial control are when it comes to Libya’s power dynamics. As the mudslinging escalates in Libya’s east-west divide, the country’s ruling elites double down on sidelining legal norms for political expediency, ultimately diminishing the linchpin role of key institutions in fostering unity between east and west.

While Libya has avoided large-scale conflict since the October 2020 ceasefire, reduced prospects for national elections have, on the other hand, left power in the hands of the inherently corrupt and deeply compromised. Foreign fighters and entrenched militias continue to erode Libya’s infrastructure and economic prospects, while the struggle for control over key institutions foreshadows an intensifying structural destabilization. The ensuing power vacuum is already responsible for the current environment of relentless greed as elites prioritize self-preservation over restoration and national stability.

The result is an increased intensity of episodic troubles of the constant power struggles, militia deployments outside key institutions and, more recently, the kidnapping of the central bank’s IT director, which has even prompted dire warnings from abroad. For instance, the US special envoy to Libya has called threats to the central bank’s staff and operations unacceptable in a rare show of international concern over events in Libya beyond impromptu reactions to the UN envoy’s periodic updates to the Security Council.

Of particular concern is the escalating power of nonstate actors over the national treasury and the oil sector, which threatens the nation’s fragile economic structure. This shift toward decentralized control worsens existing divisions and fuels rampant corruption, which has become endemic. Despite numerous interventions and diplomatic efforts, international actors have consistently failed to bridge Libya’s internal rifts or deter its entrenched factions from pursuing state capture.

Oil revenues and financial control are crucially intertwined when it comes to Libya’s power dynamics

Hafed Al-Ghwell

Libya’s oil sector, already hobbled by corruption, also finds itself enmeshed in a web of regional exploitation, complicating efforts to establish transparency and accountability in this vital sector, which is responsible for more than 90 percent of Libya’s gross domestic product. This convergence of domestic and international interests, manifesting through illicit activities and economic plundering, are glaring examples of Libya’s debilitating kleptocracy, as domestic grievances and global complicity deepen the country’s crises. It is very unlikely the global community will be as engaged, adequately equipped and highly motivated to address the current standoff beyond finger-wagging and penned rebukes.

However, as the quiet war on Libya’s institutions enters a new phase, self-interested middle powers are as emboldened as ever to preserve the quagmire as a means of asserting their own extraterritorial designs. This meddling is further exacerbated by the stunning ineptitude of more influential actors like the US and the EU, which consistently fail to find and speak with one voice concerning Libya’s milieu.

Meanwhile, there is growing momentum at the UN Security Council to unfreeze Libya’s assets, which could potentially flood the country with billions of dollars, empowering its sprawling kleptocracy and further entrenching the ruling elite. The ramifications of this influx of cash for Libya’s immediate neighborhood would be significant. Unchecked financial resources would likely sponsor spoilers, prompting renewed conflict, humanitarian catastrophes and mass migration.

Unfortunately, credible political and economic reforms will always remain elusive when power rests in the hands of individuals with little incentive to change. The failure to hold national elections has crippled Libyan governance almost permanently. The UN-brokered deal that installed Dbeibeh and created the Presidential Council was meant to unify the country, but political authority remains fragmented, combative and ineffective. The anticipated elections that never took place have since left Libya’s institutions, particularly the central bank, caught in the crossfire.

As political elites and militia factions conspire to undermine each other, Libya’s ability to effectively manage oil and its ensuing revenues will remain compromised. The failure to foster a robust environment to establish a stable and unified government is now not only jeopardizing Libya’s future, it is threatening to destabilize the region, which could spark difficult conversations on mounting a daunting, yet essential, forceful intervention to restore Libya.

• Hafed Al-Ghwell is a senior fellow and executive director of the North Africa Initiative at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies in Washington, DC. X: @HafedAlGhwell