Egypt-Turkiye detente to be tested by Libya crisis

The detente between Egypt and Turkiye culminated this year with Turkish President Recep Tayyip Erdogan’s visit to Cairo and Egyptian President Abdel Fatteh El-Sisi’s visit to Istanbul. Ending a bilateral rift that had lasted more than a decade, this detente has been touted as a milestone in resolving geopolitical conflicts in the Middle East. The recent crisis in the Central Bank of Libya has emerged as the first test for this detente, as international mediation is required in the fractured North African state, where Egypt and Turkiye have historically supported rival factions in the east and the west.

Sadiq Al-Kabir, the governor of the central bank since 2011, was removed last month at the behest of Abdul Hamid Dbeibeh, Libya’s prime minister under the Government of National Unity based in Tripoli. Al-Kabir fled to Turkiye, claiming a threat to his life from militias linked to the Tripoli government. Dbeibeh’s decision came as Al-Kabir’s authoritarian control over the bank was growing and amid accusations that he was mismanaging oil revenues. The Benghazi-based Libyan National Army, headed by Khalifa Haftar, and the House of Representatives opposed this decision and shut down Libya’s oil supply. Their opposition was allegedly motivated by the loss of a lucrative arrangement between warlords in the east and the Al-Kabir-led central bank.

The central bank is the sole depository for Libyan oil revenue that is recognized internationally and is crucial for the internal distribution of this wealth, as the government is splintered. The shutdown of the oil supply inflated global energy prices and triggered a power struggle between the rival factions. Libya has the largest oil reserves in Africa and the ninth-largest in the world, producing more than 1 million barrels per day. Nearly 90 percent of Libya’s oil reserves are located in the east, in the Sirte basin, giving the army control over 95 percent of the country’s oil revenue. Oil is the lifeline for the Libyan economy and rapidly depleting oil revenue has led to income insecurity, with inflation at a record high and the supply of petrol disrupted.

Further, the US Department of the Treasury’s advisory to banks to not deal with the Libyan central bank until a permanent administration is reinstated risks isolating Libya from the international banking system. This will hamper the country’s ability to import essential goods, including food items, and bring it closer to an economic crisis. In a country rife with socioeconomic volatility, if the current crisis prevails, it may lead to economic emigration at best and social unrest at worst. This is of particular concern to El-Sisi, who would then face security challenges along the 1,115-km border between Egypt and Libya.

This crisis is thus a test of the Egypt-Turkiye detente. Though the two countries have traditionally supported opposing sides, they will now need to work together toward a resolution.

Egypt, joined by the UAE and Russia, has long been an ally of Haftar and the army based on joint efforts against militancy, Islamism and the illegal arms trade and for border security. Turkiye, on the other hand, has supported the government in the west, having provided military backing to it during the 2020 Haftar offensive on Tripoli. Maritime, economic and strategic interests, as well as a shared affiliation with Islamist factions, have been the key drivers of Erdogan’s collaboration with Tripoli. In particular, Turkiye and the Government of National Unity entered into a maritime agreement in 2019 to create an exclusive economic zone in the Mediterranean Sea.

The two countries are also involved in Libya’s postconflict rebuilding. Egypt is a key player in reconstruction, particularly in western Libya. Egyptian labor and enterprises are now returning to Libya. Turkiye, too, is heavily invested in Libya’s postconflict development, with a focus on infrastructure, energy and offshore oil and gas exploration. Turkiye has announced plans to support Libya’s renewable energy programs and Turkish companies have previously been responsible for 20 percent of Libya’s major construction projects. Turkish companies are expanding their presence in eastern Libya and Egyptian businesses in the west. Notably, Turkiye is constructing the largest steel and iron production plant in the world in Benghazi.

Thus, traditional allegiances are bound to be questioned in favor of securing economic interests. Egypt and Turkiye must now influence Libya’s rival factions to resolve the leadership dispute and restore economic stability. “Egypt and Turkiye are trying to bury the hatchet because of strategic and financial interests in Libya. The Egyptian government is keen to be involved in any opportunity to reduce Egypt’s high level of debt,” according to Dr. Mamoun Fandy, president of the London Global Strategy Institute.

The Libyan crisis is particularly of concern for Egypt’s economic security. Egypt is recovering from an economic crisis, with investments by the UAE and potentially Saudi Arabia and Turkiye. This involves tourism projects on Egypt’s north coast, close to the Libyan border. As the economic situation in Libya threatens insecurity along the border, Egypt will prioritize the resolution of this crisis. Cairo also stands to benefit from financial aid from the EU should it succeed in curbing irregular migration from North Africa to Europe.

Though the two countries have traditionally supported opposing sides, they will now need to work together.

Zaid M. Belbagi

El-Sisi and Erdogan agreed to “turn the page on the protracted crisis in Libya” during the former’s visit to Istanbul this month. This will be challenging due to the two countries’ competing geopolitical interests and established relations with opposing Libyan factions and foreign mercenaries. There is also the prospect of mistrust among the Libyan factions, which may be wary of joint efforts by Egypt and Turkiye due to their divergent interests in Libya in the past. Nonetheless, Aguila Saleh, the speaker of the House of Representatives, has hailed the detente and its potential to resolve the Libyan crisis.

Despite its challenges, the crisis in Libya may well be a moment of opportunity for Egypt and Turkiye to test the durability of their detente and prevent the spillover of the crisis into a conflict within and beyond Libyan borders. A successful collaboration on Libya would project El-Sisi and Erdogan as two leaders who are integral to peace in the Middle East. It would also be in line with the two countries’ recent strategic alignment over Gaza, Sudan and Somalia. Crucially, stability in Libya is of economic interest for both Egypt and Turkiye. The coming weeks will therefore be a test of diplomacy for El-Sisi and Erdogan that the international community will be keenly watching.

• Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the Gulf Cooperation Council region. X: @Moulay_Zaid