PREVIEW
The rival Benghazi-based government has ordered a shutdown of eastern fields causing production to drop by half
A collapse in daily oil output has been one of the results of the chaos engulfing Libya’s central bank. After the rival Benghazi-based government of Osama Hammad, backed militarily by the warlord Khalifa Haftar, ordered a shutdown of eastern oilfields, output dropped by more than half in the past week to about 450,000 barrels.
The indefinite shutdown was ordered following attempts by the Tripoli-based government of Prime Minister Abdel Hamid Dubaiba to dismiss central bank governor El Sadeek Omer el Kabir.
Last week, Dubaiba’s Government of National Unity, which is internationally recognised, sent a delegation to take over the central bank governor’s office.
After more than a decade as governor, El Kabir had become increasingly critical of the Dubaiba government’s spending in recent months and was viewed as being supportive of Hammad (AC Vol 53 No 3, From Gadaffi to Qatar).
The United States ambassador to Tripoli, Richard Norland, has warned that the dispute over the leadership of the bank ‘undermines confidence in Libya’s economic and financial stability in the eyes of Libyan citizens and the international community, and increases the likelihood of harmful confrontation’.
El Kabir says he and other senior employees of the institution have been forced to flee the country to escape threats from armed militia groups, noting that four bank staff have been kidnapped.
The bank’s headquarters are now being guarded by western security guards and the United Nations and US have urged talks to mediate the dispute.
In the meantime, however, basic banking services and transactions have been suspended for a week now, and there are growing fears that salaries of public sector employees will be delayed. Abdel Fattah Ghaffar, the new interim deputy governor appointed by the Dubaiba government, has promised to restart operations and pay salaries within days, although it is far from clear that he will actually take office.
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