Libya’s central bank governor is fleeing the divided country in fear for his life

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The head of Libya’s central bank, which controls billions of dollars in oil revenue, said he and other senior bank employees were forced to leave the country to “protect our lives” from potential attacks by the armed militia.

Libya’s Central Bank and its governor Sadiq al-Kabir have been at the center of the latest political crisis, which this week halted most of the divided country’s oil production.

Tripoli-based Prime Minister Abdul Hamid Dbeibeh, leader of one of two rival administrations in the east and west of the country mired in chaos since a 2011 NATO-backed uprising that toppled Muammer Gaddafi, has pushed for Kabir’s ouster.

Tensions between the two men escalated, with Kabir accusing the prime minister of overspending and painting a misleadingly “rosy” picture of the economy in his speeches.

The disagreement came to a head this week when a committee of the Tripoli government took over the headquarters of the central bank in the coastal city. Armed groups intimidated the staff to make the institution work, after which Kabir said he fled to an undisclosed location.

“The militias threaten and terrorize bank staff and sometimes kidnap their children and relatives to force them to go to work,” Kabir told the Financial Times in a phone interview.

He also said Dbeibeh’s attempts to replace him were illegal and not in line with UN-negotiated agreements that require agreement between eastern and western governments on any new bank governor.

Most banking services in Libya were suspended as the crisis escalated and central bank operations were halted.

Kabir has the support of the eastern parliament and the rival administration in eastern Libya, which is dominated by warlord Khalifa Haftar. The eastern government responded to the takeover of the central bank by announcing a halt to oil production in most of the territory under the control of its forces.

About 750,000 bpd of Libyan oil production was offline on Thursday, according to research firm Energy Aspects, which added that another 250,000 bpd was at “imminent risk”. Libya pumped nearly 1.2 million bpd of oil in July.

Tankers are still being loaded from Libya’s oil depots to keep exports going, but Energy Aspects warned in a research note that key production sites are shutting down and “disruption could extend for months.”

While oil prices rose more than 3 percent on Monday on concerns about the situation in the country, they have since fallen below pre-crisis levels, with traders confident the well-supplied market could cover any disruption. . Benchmark Brent crude was trading around $79 a barrel on Thursday, having reached as high as $91 a barrel in early April.

For Libya, the escalation of the power struggle poses serious risks. “There are many dangers,” said Kabir. “The oil shutdown will have a negative impact on the economy and the value of the dinar. There are also tensions between forces on the ground in Tripoli supporting and opposing the move (to remove him). So I’m afraid it could lead to fights.”

Kabir also said that there are “valuable assets inside the central bank and we don’t know what is happening to them.”

According to UN Security Council resolutions, only the central bank in Tripoli is authorized to control and pay oil revenues. The UN and the US have called for dialogue to resolve the crisis.

Tim Eaton, a senior fellow at London-based think tank Chatham House, said Kabir, who has been governor since 2012, has concentrated enormous authority in his hands. As such, replacing him could be a challenge given that factions have been jockeying for increased access to the country’s oil revenues.

“It might be worse if the appointee comes in and is weaker and in charge of political interests,” he said, adding that the solution has to be about the bank “as an institution and it has to be about turnaround. checks and balances’.

Eaton called for the formation of a “council that is technically capable and could begin to dilute some of this power that has been monopolized in (the governor’s) office.”