Jacqueline Zaher wrote in Asharq Al-Awsat:
The crisis faced by the Libyan government, appointed by the House of Representatives, resulting from the closure of oil fields and ports has underscored the potential losses that the country might incur. Politicians and analysts believe Libya could confront “multiple crises” affecting citizens’ livelihoods, along with significant damage to the national economy.
Initially, Asaad Zahio, head of the founding body of the Libyan National Gathering Party, expressed regret over “the ruling elites’ involvement of oil, deemed the sustenance of the Libyans, in the ongoing conflict for nearly two weeks over control of the Central Bank.”
“Why should state employees, who constitute the largest sector of Libyans, bear the consequences of removing a key figure who has held his position since 2011?” Zahio questioned in a statement to Asharq Al-Awsat, noting that nearly the end of the month is approaching with everyone still anticipating their salaries to meet essential needs.
“Assurances about the situation will not alleviate the fears of the Libyans,” Zuhio remarked, emphasizing that “thanks to their past experiences with similar closures, they anticipate multiple crises ahead, including an increase in foreign currency exchange rates, liquidity shortages, and possibly a fuel crisis, alongside the risk of power stations being affected due to the halt in gas pumping.”
The Libyan government, appointed by parliament and led by Osama Hamad, announced the suspension of oil operations in response to the Presidential Council’s attempt to change the governor of the Central Bank in Tripoli.
Furthermore, Khalifa Al-Daghari, a member of the Libyan House of Representatives, expressed his concerns about the ramifications of the oil shutdown on the national economy and citizens’ livelihoods. In a statement to Asharq Al-Awsat, he stated that the recurrent closures “shake the trust of the Libyans and Libya in the global market; the uncertainty surrounding the future of the Central Bank conflict could threaten the country’s financial stability.”
The United Nations Support Mission in Libya declared its intent to convene an emergency meeting involving parties concerned with the Central Bank of Libya’s crisis to reach a consensus based on political agreements and applicable laws, upholding the principle of the Central Bank’s independence.
Al-Daghari raised questions regarding the future of salary payments and the government’s capacity to finance public services, including healthcare and education. He also expressed concerns about the suspension of reconstruction projects across the country, particularly in eastern and southern Libya.
Jalal Harchaoui, an analyst at the Royal United Services Institute, anticipated that “the current unrest due to the closures will last only a few weeks,” commenting to Asharq Al-Awsat that “it is premature to conclude that the closure will harm or halt reconstruction projects in the eastern part of the country,” while noting “an opportunity exists to resolve these projects,” despite the “greater damage” that may ensue in the lives of citizens owing to the oil shutdown, further weakening the value of the dinar.
Following the UN mission’s announcement, Presidential Council Chairman Mohamed Al-Menfi urged the House of Representatives to assume its role in appointing a new central bank governor through a “public and transparent” legal session in consultation with the State Council.
Libyan political analyst Islam Al-Hajji supported the previous opinions, stating that the decision to halt operations would exacerbate the struggles of citizens who have already been grappling with deteriorating economic conditions in recent months.
Despite the Central Bank’s warning on its website against disrupting its operations and the disbursement of August salaries, Al-Hajji downplayed the fears, stating to Asharq Al-Awsat, “Everyone will strive to ensure salary values are arranged and paid to avoid provoking the displeasure of more than two million citizens employed by the state.” He highlighted that while salary payments might occur, it wouldn’t resolve other crises, particularly the shortage of essential goods such as food and medicine, compounded by the oil shutdown and the cessation of bank transactions, including letters of credit for imports.
According to Al-Hajji’s perspective, the prevailing issue regarding the Central Bank, deepening with the oil stoppage decision, “will find resolution if the United States and Britain agree on a new board of directors for it.”
Jacqueline Zaher wrote in Asharq Al-Awsat:
The crisis of the Libyan government, assigned by the House of Representatives, closing the oil fields and ports has highlighted the losses that the country may suffer, as politicians and analysts believe that Libya may face “multiple crises” related to the livelihood of citizens, in addition to the many damages that may face the national economy.
Impact on Livelihood and the Economy
The shutdown of oil fields represents a significant blow to Libya’s economy, primarily because oil comprises a majority of the country’s revenue. Economic experts estimate that continued closures could lead to:
- Rising Prices: Expect price hikes for basic goods, exacerbating inflation.
- Increased Foreign Currency Rates: The Libyan dinar may lose value against major currencies.
- Liquidity Shortages: Accessibility to cash for everyday expenditures could diminish.
- Energy Crises: Disruptions in gas supply could lead to power shortages.
Key Opinions and Perspectives
Asaad Zahio, head of the Libyan National Gathering Party, expressed regret over the ruling elites utilizing oil—”the sustenance of the Libyans”—as a bargaining chip in their ongoing conflicts. He stated:
“Why should state employees, as the largest sector of Libyans, have to pay the bill for removing the great friend from his position that he has held since 2011?”
Zahio highlighted that as the month nears its end, citizens await salaries crucial for meeting basic needs. He reinforced that reassurances from political figures do not alleviate the collective fears among the populace, who anticipate further repercussions based on historical closures.
The Role of Government and Central Bank Tensions
The Libyan government’s decision, led by Osama Hamad, came in retaliation against the Presidential Council’s attempts to replace the governor of the Central Bank based in Tripoli. This power struggle raises valid concerns from political figures like Khalifa Al-Daghari, a member of the House of Representatives, regarding its effects on:
- Public Service Funding: Fears exist about the government’s capability to finance services vital for health and education.
- Reconstruction Proceedings: Concerns were raised about halting rebuilding projects, particularly in eastern and southern Libya.
International Responses
The United Nations Support Mission in Libya has proposed an emergency meeting, aiming to foster dialogue among the concerned parties to resolve the ongoing issues related to the Central Bank. The emphasis is on reaching a solution based on political agreements and applicable laws, emphasizing the independence of the Central Bank.
Analysts Weigh in on Economic Consequences
According to analysts like Jalal Harchaoui from the Royal United Services Institute, the unrest caused by the oil field closures may last only a few weeks. However, he noted:
“It is too early to say that the closure will harm or halt reconstruction projects in the east of the country.”
Nevertheless, he underscored the imminent threat to the citizens’ daily lives and the economy due to the shutdown, predicting a significant deterioration in the purchasing power of local currency.
Salary Payment Woes and Basic Commodity Shortages
Political analyst Islam Al-Hajji also echoed concerns over the increased burden on citizens, given the already fragile economic conditions in Libya. Despite assurances from the Central Bank that salary disbursements would proceed, there remains an overwhelming fear of shortages in essential commodities such as food and medicine due to halted oil production and banking transactions.
Looking Ahead: Potential Resolutions
Al-Hajji remains cautiously optimistic that a resolution will be found, especially if the United States and Britain agree on appointing a new board of directors for the Central Bank. This step could help stabilize the economy and restore confidence amongst Libyans, drastically needed in this tumultuous time.
Understanding the Broader Implications
The closures affect more than just economic factors; the social fabric of Libya may fray under continuous stress from governance disputes and economic instability. With civil unrest a looming threat, the urgency for dialogue and resolution becomes all the more critical for exiting the cycle of crisis.
Case Study: Oil Dependency and Economic Resilience
Historically, Libya’s economy has remained heavily reliant on oil revenue. However, opportunities exist for diversifying the economy through sectors like agriculture, tourism, and renewable energy. Strengthening these areas could reduce the economic shockwaves from such closures in the future.
Practical Tips for Libyans Amidst Crisis
While the situation remains precarious, Libyans can take proactive steps to safeguard their finances and well-being:
- Budgeting Wisely: Adjust household budgets to account for potential price increases and shortages.
- Community Support: Engage with local groups for sharing resources and assistance amidst shortages.
- Staying Informed: Keep updated on news regarding the situation to make informed decisions.
