Central Bank Shakeup in Libya Sparks Intense Speculation

The ousting of Libya’s central bank governor could exacerbate the country’s political fragmentation.

At a Glance

Libya’s central bank governor, Sadiq al-Kabir, was dismissed by one of the country’s rival authorities.
Mohamed Abdul Salam al-Shukri, a former deputy governor, is appointed as the new governor.
Al-Kabir’s handling of Libya’s oil money has been contentious, leading to his removal.
Libya is divided between a government in Tripoli and rival authorities in the east.
The Central Bank halted its operations following the kidnapping of a senior official.

Central Bank Governor Dismissed

Libya’s political turbulence intensified with the recent removal of Sadiq al-Kabir from the helm of the Central Bank. Al-Kabir, who has been the governor since 2011, faced criticism over his management of the nation’s oil revenues. His dismissal underlines the deep divisions within Libya, which has struggled to find a stable governance structure since the 2011 revolution. The ousting of al-Kabir was unilaterally executed by one of Libya’s dueling authorities.

Libya’s political leaders in the east and west have been in a power struggle, hindering efforts toward national unity. The Central Bank, critical in managing Libya’s substantial oil revenues, is now in a state of operational limbo. Mohamed Abdul Salam al-Shukri, an economist and former deputy governor, has been appointed to replace al-Kabir. However, this move is being contested by rival authorities, exacerbating the country’s political impasse.

Suspension of Bank Operations

The tension escalated further following the abduction of Musab Msallem, the head of information technology at the Central Bank. This led the bank to announce the suspension of all its operations. Msallem was kidnapped from his home in Tripoli by unidentified individuals, leading to widespread condemnation. The bank has stated it will not resume operations until Msallem’s release. Consequently, this disruption threatens the continuity of Libya’s financial sector, already burdened by the prolonged political conflict.

The bank condemned the actions of “unlawful parties” threatening its employees. This incident followed a recent siege on the central bank’s headquarters in Tripoli, reportedly aimed at forcing al-Kabir’s resignation. U.S. diplomat Richard Norland condemned these coercive tactics, warning that such actions could compromise Libya’s access to international financial markets. The United Nations Support Mission in Libya (UNSMIL) also emphasized the bank’s critical role in national financial stability.

Political Fallout and Future Prospects

Libya’s east-based parliament and the Supreme Council of State in Tripoli have declared al-Kabir’s removal illegitimate, arguing that such a decision should involve both bodies as per U.N.-backed interim regulations. Libya’s current political landscape is marked by divisions, with a U.N.-supported government in Tripoli and rival authorities in the east. Periodic clashes between armed groups continue to unsettle the nation despite relative calm in recent years.

Claudia Gazzini, an analyst with the International Crisis Group, highlighted that the rapid succession of events adds to the uncertainty of Libya’s future. “After two years of paralysis, this is a rapid succession of events. Where it’s all heading, it’s too early to say,” she remarked. Gazzini expects all parties to use the current turmoil to pursue their interests, warning, “It’s a dangerous game.”

The United Nations reinforced the critical role the Central Bank plays in Libya’s economy. Disputes over the distribution of Libya’s wealth must be settled through transparent, inclusive negotiations, stressed Norland. The Security Council plans to hold an open briefing and closed consultations on Libya on August 20, focusing on political, security, and humanitarian developments.