Fallout from Libyan central bank governor’s dismissal presents immediate challenge for Sisi and Erdoğan
A new alliance between Egypt and Turkey designed to end a long-running dispute over events in the Middle East faces it first major test in the shape of a worsening political crisis in Libya linked to control of its oil wealth.
Egypt and Turkey fell out in the aftermath of the 2011 Arab spring, primarily because of the Egyptian president, Abdel Fatah al-Sisi’s coup against his Islamist predecessor Mohamed Morsi, an ally of the Turkish president, Recep Tayyip Erdoğan.
Nearly three years of rapprochement culminated last week with Sisi travelling to Ankara to meet Erdoğan. There the two signed more than 30 memorandums of understanding designed to increase trade to $15bn (£11.5bn) over five years. The two countries have been brought together by the need to boost their economies, as well as concern about the war in Gaza.
But analysts say that if the two countries remain at odds over how to end Libya’s political divisions, the promise of a wider new era of cooperation is likely to prove a false dawn. Libya’s political institutions have been divided between east and west since the fall of Muammar Gaddafi in 2011.
Turkey has supported the regime in Libya’s west, sending equipment and troops in 2019 when it looked as if Tripoli would fall to an attack being mounted by the authoritarian warlord Khalifa Haftar. Haftar, whose family dominate politics in eastern Libya, is backed by Egypt, the United Arab Emirates and Russia.
At last Wednesday’s meeting in Ankara, Sisi and Erdoğan agreed to turn the page on Libya, but the practical implications of such a bold goal were left vague.
The immediate challenge is to resolve a fresh crisis over Libyan resources which was sparked three weeks ago after the dismissal of the governor of Libya’s central bank, Sadiq al-Kabir. He fled to self-imposed exile in Turkey, saying he feared for his life after his removal by political bodies linked to supporters of the Tripoli-based government headed by Abdul Hamid Dbeibah.
The central bank oversees the internal distribution of the largest oil wealth in Africa, and has $80bn of foreign exchange reserves. Dbeibah believed Kabir had become too critical of his government’s corruption-fuelled spending, and had switched sides by channelling money to the east. But Kabir pointed out government expenditures for 2024 were planned to be 37.5% higher than revenues.
With eastern Libya demanding Kabir’s return and decrying his ousting as unconstitutional, the impasse has led to the closure of many oilfields and many of the central bank’s foreign exchange transactions to be frozen by global banks, which under US pressure will not support Kabir’s removal.
The central bank has been one of the few functioning Libyan institutions, and western powers have opposed Kabir’s sacking, regarding him as a flawed but rare source of stability.
In a sign of the importance of Libya to Turkey’s future relations with Egypt, the Turkish head of intelligence, Ibrahim Kalin, flew to Tripoli immediately after the Erdoğan-Sisi summit.
Kalin appears to be trying to persuade Dbeibah to let Kabir back into office on an interim basis, or to find a new consensus board to head the bank.
Alia Brahimi, a journalist and specialist in the politics of the Middle East and north Africa, says in a forthcoming piece in Atlantic Council that the disputes inside Libya are between elite families over economic resources and this changes the equation for Turkey, or at least makes the calculations different from in 2019.
She also points to growing financial partnership between Turkish and Libyan businesses in the country’s east, for instance the construction of the largest steel and iron production plant in the world in Benghazi, to say it is not predestined that Turkey would once more extend carte blanche military support to the government in Tripoli.
At the same time, western Libya has given Turkish troops near-total immunity in a memorandum of understanding, so it would be a large sacrifice to abandon Dbeibah’s quest to control the central bank
The UN and western ambassadors have called for the Kabir crisis to be resolved through consensus, probably involving his interim return.
One observer said: “The international community is back in full crisis mode about Libya because they realise such are its economic problems it could collapse very quickly, and turn into another failed state on the Med.
“The security implications in terms of migration and instability matter. But there is still no long-term plan to resolve the country’s divisions and the problem is that the corrupt financial interests of the elite have for years hollowed out Libya.”