The two sides of Libya’s political divide have agreed on a new leader for the country’s central bank — a settlement that officials hope will end months of escalating tensions that had raised fears that Libya could once again be sliding toward armed conflict.
The standoff over control of the Central Bank of Libya, which is key to distributing the country’s vast oil wealth, had led officials on one side to block oil exports for weeks and prompted the bank’s governor to flee the country.
The two sides announced on Thursday that they had agreed to appoint Naji Issa, a senior central bank official, as the bank’s new governor. They also agreed to form a new board of directors, an apparent attempt at preventing a repeat of what critics had said was the previous governor’s tendency to concentrate power in his own hands, with little transparency.
In the wake of the agreement, officials in eastern Libya also committed to lifting the oil blockade, according to the United Nations mission in Libya, which had convened talks to end the crisis.
Yet some bumps may still remain: Hadi al-Saghir, who represented the eastern-based Libyan Parliament in the negotiations, said in an interview on Thursday that it would not move forward with the deal until the ousted governor receives a guarantee that he can return safely to the country.
Libya has been mired in political deadlock, chaos and violence since 2011, when rebels overthrew the country’s longtime dictator, Col. Muammar al-Qaddafi, during the Arab Spring protests. In recent years, the country has been split between rival parallel governments in its east and west, a division that led to an all-out civil war until 2020.
Efforts to hold new elections have been fruitless, with most Libyan officials unwilling to relinquish power or access to Libya’s oil revenues.
Yet the country had experienced several years of relative stasis, with no major eruptions of violence or political conflicts, until August, when western Libyan leaders moved to seize control of the bank by force.
The bank, which funds both governments, maintains the currency, distributes oil revenues and pays salaries to Libya’s many civil servants, had been one of the few institutions that spanned the east-west divide, giving it some protection from political disputes. But tensions over matters like public spending were growing between the longtime governor, Sadik al-Kabir, and the head of the western government, Prime Minister Abdul Hamid Dbeiba.
The clash culminated in armed men showing up at the bank to oust Mr. al-Kabir from his office in August.
The bank quickly lost access to international financial institutions, and experts said the Libyan currency and the country’s access to imports would soon suffer without a resolution. Inflation rose, and oil exports fell sharply amid the blockade, affecting world oil prices and Libyan revenues.
It was such damage, analysts and diplomats said, that eventually pushed the two sides to strike a deal.
The banking system was also frozen for Libyan citizens, many of whom could already only withdraw money from A.T.M.s rarely, and only after waiting in long lines. Most Libyans with jobs work in the public sector, and their salaries would have gone unpaid if the central bank remained incapacitated.
The dispute over the bank’s leadership “has seriously threatened Libya’s financial and economic stability, fragile security and livelihood of all Libyans,” Stephanie Khoury, the United Nations mission’s acting head, said at a signing ceremony for the agreement on Thursday.
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