Monday, April 8, 2019

"Libya’s Looming Contest for the Central Bank"

The events of 2011, across the MENA from Libya to Syria, have yet to play out.
And the history of the U.S. and UK meddling has yet to be written.
I don't think "We came, we saw, he died" is going to be the final word.

From War on the Rocks, April 1:
Earlier this year, the armed coalition led by eastern-Libyan-based commander Khalifa Haftar took most of his country’s southwest, an oil-rich desert expanse three times as large as Syria called the Fezzan. This military operation has fueled speculation as to whether the aging general and former dissident is now considering a similar offensive into Tripoli, the capital on the Mediterranean coast. Haftar has not recognized the U.N.-backed Government of National Accord in Tripoli. Its prime minister Fayez al-Serraj and his cabinet coexist with a set of powerful militias there, but do not control them.

Although the seizure of the Fezzan has bolstered Haftar’s profile, a military takeover of Tripoli would be riskier. Haftar could increase his chances at ultimate victory by asserting greater sway over Libya’s oil money. To understand why this is, we need to look at the full picture, to include links between Libya’s petrodollars, feuding factions, and the foreign states backing them.

Libya’s Eastern-Based Army Moves West
The idea of Haftar’s self-proclaimed Libyan National Army invading the southwest before moving to the much-prized capital has been the subject of speculation for more than two years. In January, things came to a head. From northern Cyrenaica, where he is headquartered, the 75-year-old field marshal sent reinforcements, materiel, cash, and some of his most senior lieutenants into an airbase located near Sebha, the Fezzan’s largest city. From there, using a combination of peaceful entente deals, pecuniary promises, and brute force, the Libyan National Army, sometimes assisted by Darfurian mercenaries, proceeded to declare the allegiance of almost all cities in the long-neglected province, as well as that of its two main oil facilities, including the vital Sharara field, Libya’s largest. Haftar’s coalition has not, however, achieved full territorial control in every part of the Fezzan.
After meeting resistance late February in the Murzuq Basin, north of the border with Niger, many of the eastern-Libyan battalions moved back north into Jufra district in the center of the country, leaving a diminished level of security behind, including in the city of Sebha. While not a capitulation, the Libyan National Army’s partial withdrawal from the southwest is a reminder that Haftar’s hybrid tactics — peaceful co-option mixed with the use of violence — consumes a considerable amount of resources, not only military, but also financial. Concretely, this means that the psychological effect of the Fezzan operation may taper off if the Libyan National Army does not move to take advantage of it soon.

In Tripolitania, Friends and Foes Await Haftar
In Tripoli and its wide periphery, a tense mosaic of local armed groups could see local flashpoints flare up if Haftar is perceived to be progressing. Some actors have already assured their loyalty to his Libyan National Army. Others are undecided and are likely to side with Haftar if offered a small concession. Still others remain resolutely opposed to him and will fight his advance. Certain cities could slip into internecine violence. Those most at risk include Zawiyah, Gharyan, and Sirte, Qaddafi’s hometown in the central region. In Tripoli proper, select militia leaders are poised to suddenly “turn” pro-Haftar, while their peers don’t have that option. As a result, clashes among neighborhood militias could happen there, too.

Given the above, a shrewd way for Haftar to make headway may be to focus on Tripoli’s financial institutions while avoiding unnecessary risk-taking in the military sphere for the time being. The current frenzy on Libya’s financial frontline, including meetings abroad and white-collar arrests in Tripoli, indicates that such a logic may already be afoot indeed.
The financial heart of the country is the Central Bank of Libya, domiciled in the populous capital. Despite Haftar’s army holding eastern Libya’s main oil fields and terminals since 2016, the bank has thus far evaded his control. The paradox is a product of Muammar Qaddafi’s legacy. As a result of a system put in place under the late dictator, all proceeds from legal exports of hydrocarbons are received in U.S. dollars and funneled straight into accounts held at Western financial institutions. Sadiq al-Kabir, the incumbent governor based in Tripoli, has held the keys to those hard-currency accounts for more than seven years, and claims the Central Bank of Libya currently has more than $70 billion of foreign-exchange reserves in them. ......
...MORE

And why are we linking to this piece a week after it was published?
A headline at ZeroHedge yesterday:
US Forces Evacuate Tripoli As Fighting In Libyan Capital Heats Up

Related:
"The Real Reason Europe Finally Attempts To Stabilize Libya"
Millions of Euros Disappear From Gaddafi Account in Belgium - Reports
"Libya’s January Oil Production Highest In Nearly Five Years"
"Libya Threatens to Open Migrant Floodgates Into Europe"
Mr. Obama, Mr. Cameron, About that Libya Thing