One of Libya’s Rival Governments Takes Controls of Oil Revenue

One of Libya’s Rival Governments Takes Controls of Oil Revenue

One of the two factions battling for control of Libya took steps on Sunday to divert incoming oil revenue away from the central bank and into its own new account, a steep escalation in the contest over the country’s vast wealth.

Libya’s oil and money are the prizes that have driven much of the competition among militias and factions in the nearly four years since the overthrow of Col. Muammar el-Qaddafi, and as the fighting on the ground has slashed oil revenues, the legal and political battle for control of Libya’s assets has become overt and intense.

Over the past nine months, the many local militias that sprang up around Colonel Qaddafi have now broken into two warring coalitions, each with its own provisional government. Officials of the Central Bank of Libya, which holds the country’s roughly $90 billion in foreign reserves and receives the income of the National Oil Corporation, say they have tried to stay neutral, continuing to pay government salaries and consumer subsidies in the territory controlled by the rival governments.

But the faction that is recognized internationally as Libya’s legitimate government, now based in the eastern cities of Tobruk and Bayda, has repeatedly sought without success to exert control over those assets. On Sunday it fired the latest salvo in that battle.

That government’s prime minister, Abdullah al-Thinni, issued a directive for the National Oil Company to stop passing incoming revenue to the central bank and instead to direct those funds to its own bank account in the United Arab Emirates, a major backer of Mr. Thinni’s government and its faction.

The move could now set off a host of sweeping consequences, potentially including a breakup of the bank, a drastic rebalancing of what has appeared to be a stalemate in the day-to-day battle between the two factions or a Western intervention to seize and manage the bank’s foreign reserves.

But how the situation might play out is difficult to predict, in part because the prime minister’s directive appeared to contradict the position of the Western powers toward the status of the bank and the larger Libyan conflict.

Financial institutions in the United States, Britain and other Western powers hold much of Libya’s foreign reserves, so they may play a critical role in the disposition of those assets.

Mr. Thinni’s directive also comes as the Tobruk-Bayda government is experiencing an acute shortage of cash. With oil revenue down, the central bank has paid only for salaries and subsidies.

In recent interviews, military leaders and other officials supporting the Tobruk-Bayda government have complained that they desperately need military supplies and medicines, saying that the government had even turned to local commercial banks for a loan, possibly as much as $3 billion, because it could not obtain the funds it needed from the Libyan reserves.

“Our ammunition is running out; our light weapons are running out,” said Saqr al-Jaroushi, chief of a small air force of bombers and helicopters aligned with the Tobruk-Bayda government.

Supporters of that government contend that the bank’s posture of neutrality benefits the other side of the conflict, based in the cities of Misurata and Tripoli. That faction includes both moderate and extremist Islamists as well as some regional militias, and supporters of the Tobruk-Bayda government accuse their Misurata-Tripoli rivals of collaborating with Islamist terrorists like Al Qaeda and the Islamic State, also known as ISIS or ISIL.

But while they recognize the Tobruk-Bayda government as legitimate, the United States, Britain and other Western powers have given it only qualified support.

They recognize it as legitimate because it includes a Parliament elected last year (although only a slight majority of its members continue to meet there), but they are wary because it is aligned with an unpredictable military commander, Gen. Khalifa Hifter. Last year he promised to purge Libya of both moderate and extremist Islamists, and he now appears to dominate the Tobruk-Bayda government.

Instead of backing General Hifter and the Tobruk-Bayda government, the Western powers and the United Nations have sought to broker the formation of a single unity government that could reconcile the moderates from each side.

In part because of that stance, the West has also resisted the Tobruk-Bayda faction’s attempts to take control of the bank. The Tobruk-Bayda government has already tried to replace the bank’s chairman, Sadiq Omar el-Kabir, in an effort to assert its control.

But the United States, Britain and other governments have continued to recognize the bank’s current management. American officials have even applauded the management for its efforts to stay neutral and avoid either the breakup of the bank or the squandering of Libya’s assets.

Separately on Sunday, the Islamic State claimed responsibility for a suicide bombing that killed at least four people and wounded many others at a checkpoint near Misurata. Although the Misurata-Tripoli coalition includes some Islamist extremists, a militia from Misurata has recently clashed with fighters from the Islamic State who have taken control of the city of Surt.

Source: The New York Times


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