Last month, the Libyan parliament passed a vote of no confidence in Prime Minister Abdul Hamid Dbeibah’s transitional government, which risked derailing elections scheduled for late December. But it’s not just political infighting, which threatens to block Libya’s twisted path towards a more stable and secure future — corruption within Libya’s financial system also continues to be a major stumbling block.
Libyan businesses and private citizens are too often unable to carry out basic financial transactions. Central Bank of Libya (CBL) Governor Sadiq al-Kabir and his allies allegedly control significant amounts of revenues and have built a network of businessmen-enablers who exploit a black market and shadow economy for illicit profits. Together, they undermine the Libyan economy and channel cash to the covert militias, which foment unrest in the country.
According to a recent Reuters report, “During the past seven years, a parallel administration emerged in the east with its own central bank, a rival oil company chief and other state institutions, claiming legitimacy from the Tobruk-based parliament that was elected in 2014.”
At the request of the U.N. Office for Project Services, accounting firm Deloitte performed an audit of the Libyan central bank. Deloitte concluded reunification of the banks was not only highly recommended but a requirement — a conclusion that Governor al-Kabir has firmly rejected.
International NGO Global Witness issued a report in February 2021 exposing what it said was rampant fraud in the CBL. The report outlined how abuses in the central bank’s letters of credit system is diverting millions of dollars of public funds and, at the same time, being exploited to fund militias and other malign actors devoted to destabilizing the country.
Since the 2011 revolution, Libya has relied on the letters of credit as the only official pipeline of foreign currency for Libyan businesses and public authorities to buy food, medicine, equipment, and services from overseas.
For the sake of Libya’s future, elections are the best means to ensure proper accountability and badly needed reform policies.
U.S. Ambassador to Libya Richard Norland recently emphasized, “Libyans do not wish to see a repeat of the civil conflict of the past. The best hope for stability lies in the elections scheduled for December. Political leaders on all sides bear a responsibility for agreeing immediately on a compromise solution that will enable those elections to take place as scheduled. The United States will support them in this process.”
A newly elected Libyan government would be in a position to reform the CBL and, if warranted, install new leadership with an eye towards establishing a stable and sustainable economy without the cronyism and criminality so prevalent today.
Libya is now locked in a power struggle and proxy war involving terrorists, tribal militias, and foreign mercenaries seeking power and control over the country’s vast oil wealth.
Terrorists, including the Islamic State of Iraq and the Levant and Ansar al Sharia, have taken full advantage of Libya’s power vacuum to grow exponentially. Libya, which has an expansive 1,000-mile coastline and has been a conduit for hundreds of thousands of African migrants and refugees seeking asylum in Europe, has been struggling with border control for years because of fractured politics and a weak central government.
It is, of course, in the national security interests of the U.S., and especially its allies on the Mediterranean, that Libya steps forward smartly towards an honest, functioning government, one that can deliver better security, economic growth, and political stability.
In particular, NATO and the U.S. were responsible for breaking dictator Moammar Gadhafi’s stranglehold on power by supporting an armed uprising with decisive airpower a decade ago. But the Obama administration and its allies failed to assist Libya with a timely and effective reconstruction plan, which would have stabilized the country and charted a productive economic and political future.
Libya’s upcoming elections and the fate of its financial system are hanging in the balance. Ambassador Norland’s statement was a good start, but the Biden administration needs to devote more of its attention to this one last best chance to rally its European partners and lead a coordinated Libya policy.
During his first speech as president to the U.N. General Assembly last month, Mr. Biden declared a “new era of relentless diplomacy.” There is much debate about what diplomacy might accomplish with the Taliban in Afghanistan, but Libya appears to be a far more propitious but fleeting opportunity for the Biden administration to put its strategy into practice.
• Daniel N. Hoffman is a retired clandestine services officer and former chief of station with the Central Intelligence Agency. His combined 30 years of government service included high-level overseas and domestic positions at the CIA. He has been a Fox News contributor since May 2018. Follow him on Twitter @DanielHoffmanDC.