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Tuesday, November 8, 2016

London meeting shows support for Libyan Government of National Accord

(Octoberj 31) In London, U.S. Secretary of State, John Kerry met with the Libyan Prime Minister Faiez Serraj, U.K. Foreign Secretary Boris Johnson, representatives from Italy, UAE, France, and Martin Kobler, UN Special Representative of the Secretary General (SSRG)

The group met to discuss efforts to support the UN-brokered Libyan Government of National Accord(GNA). Among the problems facing the GNA is an acute cash shortage with PM Faiez Serraj trading charges of blame with the Central Bank Governor Sadiq al-Kabir. In spite of oil production almost having doubled since the NOC was able to begin exports again after eastern commander Khalifa Haftar seized four key export ports, the financial crisis has not eased. As Reuters describes the situation: "A meeting convened by Britain and the United States in London on Monday is seen as a last-ditch effort to get Seraj and Kabir to work together and save Libya's economy from deeper failure."
The GNA faces not only a cash shortage but spiraling inflation and constant security problems as well. There has been no progress in getting the rival House of Representatives(HoR) government or its military commander Field Marshal Khalifa Haftar to approve the GNA. As an example of the frightful financial situation, Milad Lahmar, a physiotherapist with four children had not been paid his salary for nearly four months. Outside of a bank in Tripoli he said: "I have been waiting since dawn in front of the bank in a desperate attempt to get some cash." Wahda Bank, which is one of largest in the country said on Sunday that it would have no funds until further notice.
Libya is quite dependent on oil earnings through sales by the National Oil Company (NOC). The Central Bank receives all the earnings. It appears that the system is simply not functioning because relations between Serraj and Kabir appear to have gone sour and there is deadlock. The finance minister of the GNA has not taken up his post to make matters worse. While Kabir's mandate ran out in late last September under the GNA, the HoR has to approve any new Central Bank head.
Serraj has accused Kabir of not acting on calls to provide credit and release foreign currency saying: "We have exhausted our efforts ... with al-Kabir. Once again, his response was weak and sometimes non-existent." In response Kabir complained the Serraj's Presidency Council (PC) had come up with "loose proposals", which included devaluing the Libyan dinar and selling off "non-existent" U.S. dollars: "The Presidential Council did not submit any realistic, executive programs to be carried out on the ground."
Foreign exchange reserves three years ago were above $100 billion but are expected to be just $43 billion by the end of this year. On the informal exchange market the Libyan dinar fell to a new low of 5.25 to the U.S. dollar. Food prices have risen 31 percent in the first half of this year according to World Bank figures. According to economists the Libyan liquidity crisis will not be resolved until there is better security and trust in the banking system. The delivery of large amounts of new banknotes both from the U.K. and Russia appears not to have been much help. Residents of Tripoli complain that even though 800 million dinars arrived recently only the powerful have any quick access to funds.
The World Bank has said that the Libyan economy is near collapse. The Guardian speaks of the IMF and the World Bank as well as Kerry and Boris Johnson urging Serraj to carry out drastic reforms. Serraj was urged to mend fences with Kabir so as to cooperate in alleviating the situation.
However, the GNA is simply not meeting the basic needs of the population and is losing support. The GNA does not even have the power to dislodge the so-called Salvation government that took over the headquarters of the GNA's own High State Council in an attempted coup. The Presidential Guard, tasked with defending the GNA, has even defected to the coup plotters. The rival House of Representatives (HoR) government in the east is becoming militarized as Field Marshall Haftar replaces civilian mayors and other officials by military leaders. He now also has troops at crucial oil fields and export ports. There are reports that the UAE now operates out of an eastern air base to support Haftar.
The situation in Tripoli is dire. As the Guardian puts it: "With the GNA unable to form a security force of its own, Tripoli is at the mercy of warring militias, with murders, kidnappings and firefights a daily occurrence." Jalel Harchaoui, a Libya analyst at the University of Paris claimed: “Several measures must be taken simultaneously, a high level of coordination is required, but confidence in the banking system has evaporated.”
Boris Johnson the U.K. Foreign Secretary said:There is strong international support for the Government of National Accord (GNA), internationally recognised as the sole legitimate government of Libya, to succeed and the situation in Libya has implications not just for regional stability, but also for the U.K. Building a safe, secure and prosperous Libya that is able to confidently tackle the challenges in the region is in all of our interests. It is now imperative that the GNA makes swift progress on delivering public services: electricity in homes and cash in banks, for the benefit of all Libyans.
A statement from the U.S. government makes some of the same points. It also makes references to technical talks that are to follow in an attempt to further efforts to deal with Libya's financial problems:The ministers also emphasized the international community's ‎commitment to providing the Government of National Accord technical, economic, humanitarian, security and counter-terrorism assistance. They also emphasized the importance of the GNA moving forward with its work to form a new cabinet proposal that represents all parts of Libya.
It is not clear how the HoR government and Haftar are to be brought to support the GNA. There are no new ideas as to how to solve the political crisis facing the GNA. Until that is solved economic problems are likely to remain. Indeed with Haftar's seizure of the oil ports and oil fields in the east and also control of main oil fields in the west by allies of Haftar, the GNA is in an ever weakening situation. It is over two months since the last GNA was voted down by the HoR. There is no sign yet that there is any agreement on a new cabinet let alone one that the HoR will approve.


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