Libyan currency drops precipitously as country suffers from insecurity and lack of revenues

(November 20) Yesterday the Libyan dinar fell more than seven percent against the US dollar. On the black market the Libyan dinar surpassed the six to one ratio for the time time, trading at 6.2 dinars to one U.S. dollar.

The Prime Minister of the UN-backed Government of National Accord (GNA), Faiez Serraj blamed the collapse of the dinar on Saddek Elkabir, governor of the Central Bank of LIbya(CBL). A spokesperson for the bank, Essam al-Oul, disputed the charge, claiming that the CBL had nothing to do with the decline: “What happened today is the logical result of different factors including the decrease in oil exports and international prices, the sharp political splits and civil war which has torn the country apart, the chaos from the absence of security, in addition to the freezing of the operations of some important government bodies such customs and anti-smuggling organizations”. Oil exports have actually been increasing not decreasing. Some of Serraj's difficulties surely stem from the CBL not providing sufficient funds for the GNA government.

The dinar's plunge on Friday came after it had closed at 5.82 to the dollar on Thursday. On Saturday, the price of a dollar rose quickly to 5.82 and then eventually surpassed the 6.0 mark. When the dinar rose above 5.0 in July this was then called a watershed moment. Some think that money dealers are actually manipulating the market. A gold market trader said that although prices cannot be predicted, that large traders worked with each other to influence the rate and were making a lot of money by doing so. At least one observer, Siraj Abunab of Tripoli claimed to the Libya Herald that there were foreign hands behind the fall who were seeking to fabricate a crisis in the country. The official rate is just 1.4 dinars to the U.S. dollar.

A meeting designed in part to support the dinar was held in Rome attended by the Presidency Council of the GNA, the Central Bank of Libya(CBL), the National Oil Corporation(NOC) as well as the Audit Bureau. The meeting was also attended by representatives of the UN, the World Bank, the International Monetary Fund (IMF) and a number of ambassadors from countries supporting the GNA. The meeting was chaired by Ahmed Maetig a PC deputy. The meeting agreed to press for increased oil production. It was agreed that the 2016-17 budget should make health care and education priorities for the 2016-17 budget. A clear timetable for implementation of economic decisions should be ready by the beginning of December.

A report in the Guardian notes that the economic proposals include an end to fuel subsidies a move that will make the Serraj government even more unpopular. Although a further consignment of cash arrived from the U.K. there were still shortages at many banks and long queues. The Libyan financial crisis is now being managed by foreigners through meetings first in London and now in Rome.

Serraj has been blocked from providing better services by the refusal of the CBL governor al-Kabir to release funds to him. Al-Kabir has accused Serraj of having no policy to fix the economy and claims to be defending the dinar. It is not clear how Al-Kabir can be defending the dinar when it is losing value continuously. Kabir argues the oil production and exports should be increased. However, most everyone would agree with that.

Western pressure finally forced the bank to release $6 billion to pay salaries. Just three years ago, Libya's foreign exchange reserves were at $100 billion but by the end of this year they are expected to be just $43 billion. The GNA has been hampered by its inability to come to an agreement with the rival House of Representatives (HoR) government in the east and the powerful commander of its armed forces Field Marshal Khalifa Haftar. The CBL argues that technically it would be illegal under Libyan law to provide the GNA with funds not approved by the HoR. This is ludicrous. There is no GNA legislature at present because the HoR has not voted approval of the GNA. Surely the CBL has been dispensing funds to the GNA up to now or they would not have been able to survive. The HoR mandate as an elected government ran out over a year ago and was not legally extended. The illegality argument is a pitiful excuse for a policy that has been hamstringing Serraj. Added to its other problems, Libya now seems to be under control of foreign financial institutions which will bring it austerity and policies that may provoke even further unrest.

GNA appears to be winning over GNC for control of Tripoli

Members of the Presidential Council from the Libyan Government of National Accord (GNA) led by PM Faiez Serraj recently arrived in a naval base adjacent to Tripoli. While at first there were threats to arrest the group from the rival General National Congress (GNC) and there were a few clashes during the first day, things have quieted down and the GNC appears to be in no position to launch any significant opposition to the GNA. While the description of what happened described in a recent Digital Journal article may not be accurate, the GNC might as well have vanished. The GNA has been able to meet with a number of local officials and 10 cities in the west of Libya have come out in support of the UN-brokered government. . There have also been demonstrations in support of the GNA in Tripoli. The PC has also met with the chair of the Central Bank. The GNA wants to gain control of it and other institutions and block off funds to the GNC. The chair of the bank appears to be cooperating with the GNA.

In a statement on Thursday, PM of the GNC Khalifa Al-Ghawell said he was not interested in power and he will abide by any GNC decision on the GNA. However, there appears to be no official statement yet from the GNC. Al-Ghawell said: "My rejection to the so-called Presidency Council will be in a peaceful and legal manner without any use of force." He said rumors of his departure and handing over power to the GNA were baseless. However, there is not a word about arresting members of the GNA or taking any actions that would block the GNA from taking power. He is under sanction now by the EU. Perhaps they will be lifted for good behavior.

The president of the GNC, Nuri Sahmain, also made a statement. He described the arrival of the GNA in Tripoli as an "illegitimate coup" yet said he still supported the Libyan Political Dialogue. This is rather senseless since there has been no dialogue since Kobler took over and said that there would be no more amendments to the Libyan Political Agreement. Of course he then went ahead and amended it. Sahmain ignores the fact that the GNA is simply using its power to bribe, support of the big powers, and the UN security power to create its own legitimacy. Once it gains control of the Central Bank, the GNC will have no means of financing itself. Sahmain however still thinks the GNA needs more national agreement before it begins operation:He said that there remained “disputed issues” in the Skirhat Libyan Political Agreement which would have to be resolved before the Government of National Accord under Faiez Serraj would have any authority. He said that there needed to be more national agreement before the GNA could start to operate.Apparently the statement was on behalf of the GNC as well. It ended by calling for self-control by all sides and avoidance of bloodshed. No talk of arrests of the presidency council members from the GNA. Sahmain is also sanctioned by the EU.

Kobler, Faiez, and international supporters are busy cheering and posting photos of the GNA crew in Tripoli. However, there is no news of what is happening in Tobruk and in the HoR. There is complete silence from Khalifa Haftar. Will the HoR meet Monday to vote on the GNA and amend the constitutional declaration of 2011? What happened to the two sections 8 of the LPA which took away Haftar's job? Are they "frozen"?

Imhamed Shouaib, the deputy president of the HoR had some revealing comments after arguing that the LPA should not be re-opened or amended: ".. he stressed that at times measures must be taken that are not strictly democratic. This is forced upon us by the situation that Libya finds itself in, he explained. He explained that the national interest of the country had to be balanced politically with strict legalistic or democratic practices. "Surely the UN, the GNA, or the international community would not do anything illegal.

Internationally-recognized HoR Libyan government may try to sabotage Glencore oil deal

Before the rebellion against Gadaffi, Libya was pumping 1.6 million barrels of oil a day. Now, it is pumping about one quarter of that amount with new problems constantly popping up.

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The National Oil Company and the Libyan Central Bank have been key institutions in retaining whatever unity there is in Libya. The National Oil Company deposits the money it receives for oil exports in the Libyan Central Bank and then distributes the funds to pay salaries and expenses for both rival governments. The internationally-recognized government the House of Representatives(HoR) is located in Tobruk while the rival government the General National Congress(GNC) is located in Tripoli. The UN Support MIssion in Libya(UNSMIL) has warned the rival governments several times not to endanger the neutrality of these key institutions and threatened possible sanctions against those who do so:In this regard, UNSMIL calls on the parties to safeguard the national institutions by refraining from taking any steps that could compromise the neutrality of these institutions that are crucial for Libya’s economic survival.

The internationally-recognized HoR government went ahead and set up its own National Oil Company(NOC) in competition with the existing neutral National Oil Company located in the capital, Tripoli, and also set up a rival head of the Libyan National Bank. So far oil companies and tankers have insisted on registering only with the National Oil Company in Tripoli. This annoys the HoR, which has been attempting to force companies to register with its own NOC in the east. Recently, militia guarding a port in the east refused to load an oil tanker and closed the port to any tankers not registered with the eastern NOC.

The UN did nothing before to stop the actions of the HoR and it is doing nothing now. It is not even mentioning the actions any more. The Glencore situation is simply a continuation of the HoR drive to sabotage the operations of the neutral NOC, since it wants eastern exports to go only through its own rival firm. This threatens the economy as well as the success of negotiations for a unity Government of National Accord that the new UN Special Envoy to Libya, Martin Kobler, has been pressing for. Yet the UN not only does not attempt to stop what is going on but does not even mention it, nor does the international community.

News reports on what is happening obscure the reality that I just described. Here is a very misleading account of what happened, coming from a no less reputable news source than the Guardian which says of Glencore:The Switzerland-based firm agreed last week to buy up to half of Libya’s oil exports from the western division of the National Oil Company in Tripoli, where an Islamist-backed government is based.There are no eastern and western divisions of the National Oil Company. There is the neutral National Oil Company based in Tripoli that serves all of Libya, or is supposed to. There is also the rival NOC in the east, set up by the HoR against the wishes of the UN and in spite of the threat of sanctions. The HoR wants to keep oil revenues from ports it controls to itself and sign the contracts. Glencore would be loading crude oil from the Sarir and Messia fields and exporting from Marsa el-Hariga port in the east at Tobruk. The Guardian reports: " The eastern government says it does not recognise any agreement signed with Tripoli." However, the deal is not signed "with Tripoli" but with the National Oil Company that serves the whole of Libya, or did until the HoR attempted to sabotage the arrangement.

Other reports also repeat the Guardian misrepresentation:The eastern Libyan government's half of state-owned oil company NOC may seek to physically prevent tankers of commodity company Glencore from loading oil purchased from the western half of the company.There are not two halves of NOC, one in the east and one in the west. This is bizarre reporting.

[url=http://ww4report.com/node/14475http://ww4report.com/node/14475 t=_blank]The agreement signed in September covers 150,000 barrels a day with an option to renew the deal in December. The HoR is again snubbing its nose at the UN and the international community which has always dealt with the neutral NOC. The HoR is now forcing the business community to deal with its own rival company that was set up in spite of warnings from the UN not to do so as it will divide the country even further. If this move is successful the division between the rival governments will be increased while the UN Special Envoy to Libya is busy flogging the dead horse of the Libya Political Agreement that neither government has approved.