In a significant move towards stabilizing Libya’s fragmented political landscape, the country’s two main legislative bodies reached an agreement on Tuesday to jointly appoint a central bank governor. This decision could potentially resolve a power struggle that has severely impacted Libya’s oil production.
The House of Representatives, based in Benghazi in eastern Libya, and the High State Council in Tripoli in the west, signed a joint statement following two days of talks mediated by the U.N. Support Mission in Libya. The agreement includes the appointment of a central bank governor and a new board of directors within the next 30 days. The Libyan central bank, as the sole legal entity responsible for managing the nation’s oil revenue, is crucial for paying state salaries across the country.
In addition to this, the two chambers agreed to extend their consultations for five more days, with a conclusion set for September 9.
Libya has been in turmoil since the 2011 NATO-backed uprising, and the country has remained deeply divided since 2014 between eastern and western factions. Although major conflicts subsided with a 2020 ceasefire, ongoing attempts at reunification have faced significant challenges.
Both the House of Representatives and the High State Council were internationally recognized in a 2015 political agreement, despite their alignment with opposing sides during much of Libya’s conflict.
The latest standoff began when the head of the Presidency Council in Tripoli attempted to remove long-serving central bank Governor Sadiq al-Kabir and replace him with a rival board. This action triggered a shutdown of oil production by eastern factions, who demanded that Kabir’s dismissal be reversed. The dispute threatened to unravel four years of relative stability.
Although some oil production has resumed, oil prices dropped nearly 5% on Tuesday, reaching their lowest levels in nearly nine months, signaling market optimism that the agreement will restore oil flow.
The battle over control of Libya’s central bank has left the institution unable to conduct transactions for more than a week, reflecting the broader political fractures within the country. The agreement between the legislative bodies marks a tentative step toward resolving these deep-seated divisions.
