Date: Sunday, 26 May 2019
A little examined aspect of the escalating war in Libya between the self-styled Libyan National Army (LNA) forces of Field Marshall Khalifa Haftar and militias supporting the internationally recognized government of Prime Minister Fayez al-Sarraj is the role of Libya’s Central Bank.
Beginning in 2014 and with the backing of the United Arab Emirates (UAE), Saudi Arabia, and Egypt, Haftar, based in the eastern city of Benghazi has come to dominate much of the country. Reflecting the political divide, the Central Bank has split, with its Benghazi branch operating autonomously from the bank’s headquarters in the capital Tripoli.
A new report by the International Crisis Group (ICG) suggests that the offensive launched by Haftar on April 4 against Tripoli was motivated at least in part by the crisis occasioned by the split. The Central Bank has attempted to regulate the behaviour of three banks which operate under the authority of the autonomous Benghazi branch. Those efforts have the potential to impact on the payment of civil service wages in the east and on Haftar’s ability to pay his LNA fighters.
As the ICG notes: “it is quite possible that financial pressures helped motivate (Haftar’s) decision to launch the offensive: he may have bet on a quick march into the capital to gain control of the central government and reconsolidate the Central Bank under his control.”
The quick win that Haftar hoped for has failed to materialize and the war is stalemated along a frontline just outside Tripoli. One of the ironies of the war is that the Central Bank has continued to transfer revenues, primarily from oil sales, to Benghazi to pay for civil servants and, as it turns out, some of those revenues are paying the wages of the LNA now laying siege to Tripoli. The temptation is great, then, for Sarraj to end the transfer of funds to the east.
The ICG report warns against such a move. “(That) strategy could make military sense,” it acknowledges. However, the financial chaos caused to Libyans in the east “would also compound Libya’s lingering economic crisis by orders of magnitude, with grave social, economic and political repercussions for the entire country.”
To underline their case the authors of the report could have pointed to Yemen and another central bank that is divided, with disastrous consequences already much in evidence. Again, it is the story of a bank split between two cities, with Aden holding the headquarters for the internationally recognised government of Abdrabbuh Mansur Hadi while the rebel Houthis run their version of the central bank in the capital Sana’a.
Talks in Amman in mid-May aimed at resolving the split ended in failure, meaning that hundreds of thousands of civil servants continue, after three years, to receive no salary. The impact on them and their families, coupled with the ongoing fighting between the Saudi- and UAE-led coalition forces and the Houthis and their allies, has been devastating.
But the similarities do not end there. In Yemen, the war is viewed by many commentators and by Washington, Riyadh and Abu Dhabi as a proxy struggle with Iran. Though the extent of their military support is widely debated, it is clear that the Houthis are backed by the Iranians, while the Yemeni government headed by Hadi is backed by the Saudis and the Emiratis.
In Libya, the Emiratis are supplying light and heavy weaponry and air cover to Haftar and have been doing so since 2014. One of the justifications for their support and that of the Saudis and the Egyptians is Haftar’s avowed opposition to the Muslim Brotherhood. All three have decreed the brotherhood a terrorist organisation.
However, Sarraj has the backing of the Muslim Brotherhood. In February he reportedly appointed a Muslim Brother to a senior position in the country’s Libyan Investment Authority. Turkey who also supports the Muslim Brotherhood and has taken sides with Qatar in an ongoing feud between the Qataris and a quartet of countries—Bahrain, Egypt, Saudi Arabia, and the UAE—is supplying arms to Sarraj’s Government of National Accord (GNA). The most recent was a shipment of Turkish BMC Kirpi light armoured vehicles(LAVs). The arms shipments are in flagrant violation of a UN Security Council resolution, one that has, admittedly, been ignored by all sides.
Thus, a second proxy war in the Middle East is gathering pace with major western powers either largely ignoring the situation or in the case of France playing both sides. Donald Trump, seemingly influenced by Egyptian president Sisi, phoned Haftar to register his support for the eastern commander, but the call went against the advice of both the State Department and the Pentagon with the result that America remains sitting on the diplomatic sidelines. The United Kingdom and the rest of Europe (save France) have taken no firm action, allowing regional powers such as Turkey and the UAE to fill the vacuum.
Finally, like Yemen, the war is heavily factionalized. Sarraj is supported by militias, the most prominent of which is the Misratan 301 Brigade. Haftar, for his part, has been accused of recruiting mercenaries to the LNA. It is worth noting too that a resurgent ISIS took credit for a recent attack on Haftar’s forces in the southern city of Sebha, leaving 9 dead.
One final similarity: peace talks in both countries are stalled. Haftar’s offensive on 4 April shattered the hope that he and Sarraj could forge a reconciliation pact. Indeed, the LNA attack coincided with the visit of UN Secretary General Antonio Guterres who had arrived in Tripoli to prepare for what was to have been peace talks between the two sides.
Martin Griffiths is the UN Security Council’s special envoy for Yemen. His efforts to resolve the war showed early promise with agreement in December about the port of Huydaydah but as the weeks and months pass the stalemate remains, with a fragile ceasefire holding there but fighting continuing elsewhere in Yemen.
The similarities beg a question. Is the Arab world slow-walking into another Yemen? All the signs indicate the answer is yes.