Tensions Between GNA Officials Threaten Government Response to Covid-19

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On April 2, Prime Minister Fayez Al-Sarraj of Libya’s Government of National Accord (GNA) called a meeting of the Board of Directors of the Central Bank of Libya (CBL) to challenge CBL Governor Sadiq al-Kabir’s “unilateral decision-making and unilateral control of monetary policy.”

The decision came amidst an ongoing public health crisis caused by the arrival of Covid-19 to Libya, exposing tensions between Prime Minister Sarraj and CBL Governor Sadiq al-Kabir.

Convening the Board of Directors of the CBL would be a step towards unifying the divided institution as it would entail the participation of the Governor of the parallel eastern-based CBL, Ali Al-Hibri.

“Sustained pressure resulting from the oil blockade entering its fourth consecutive month, coupled with the arrival of Covid-19 to Libya, has resulted in the role of the CBL coming under scrutiny and are determining factors to understand Sarraj’s hostility towards Governor al-Kabir,” says Oliver Crowley, Co-Managing Partner of Libya Desk, a specialized geopolitical risk consultancy that produces weekly analysis on Libya.

In a statement, the CBL rejected and denounced the GNA’s call for a meeting of its Board of Directors, arguing that the decision to convene the Board was made unilaterally by Sarraj without the approval of the entire Presidential Council, and thus held no merit.

The statement said that the CBL has been performing its duties in accordance with the Libyan Political Agreement and rejected claims of mismanagement or wrongdoing in regards to Libya’s funds.

The United States’ Embassy to Libya welcomed efforts to unite the Central Bank.

According to Crowley, this suggests that Sarraj’s attempt to convene the CBL’s Board was not accidental: “This should not come as a surprise given that the economic measures undertaken by the GNA have consistently been informed by foreign parties. Both UNSMIL and the US Embassy have contributed in crafting and approving economic policy in Libya over the past few years.”

Crowley argues that there is still much that is not being covered on the topic of the management of Libya’s funds. Specifically, Crowley noted that Sarraj’s office has been working to appoint a new head for the Libyan Investment Authority (LIA), as part of what he referred to as “a series of exit strategies being undertaken by Sarraj and his advisors.”

“Such strategies consist in placing close associates as Ambassadors to key countries — such as the UK, which still has no Ambassador — key financial institutions and state-owned enterprises. This is done to ensure that the outgoing political group still has some degree of access and influence over state funds, even after they are no longer in power,” says Crowley.

When it comes to many of these decisions, Sadiq al-Kabir is extremely influential as he has a seat on the majority of the boards of state-owned entities, particularly the LIA.

Sources reported a heated discussion between Prime Minister Sarraj’s advisors and Governor al-Kabir over the appointment of a new head of the LIA, just days before the call for a meeting of the CBL’s Board of Directors.

According to Libya Desk, political infighting within the GNA has increased in recent weeks as its officials have refused to meet one another and in some cases have attacked their political rivals.

The combination of these dynamics and the year-long war between the GNA and Field Marshal Khalifa Haftar’s Libyan National Army (LNA) is hampering the Tripoli-based government’s ability to effectively manage and respond to the Covid-19 pandemic.