Rival Rebel Faction Seizes Benghazi Branch Of Libyan Central Bank

Rival Rebel Faction Seizes Benghazi Branch Of Libyan Central Bank
Libya is effectively in a civil war

AFRICANGLOBE – Fighters for one of the factions battling for control of Libya seized the Benghazi branch of the country’s central bank on Thursday, threatening to set off an armed scramble for the bank’s vast stores of money and gold, and cripple one of the last functioning institutions in the country.

The central bank is the repository for Libya’s oil revenue and holds nearly $100 billion in foreign currency reserves. It is the great prize at the center of the armed struggles that have raged here since the imperialist-led overthrow of Muammar Gaddafi in 2011. Western leaders had hoped that it might play a crucial role in helping to bring the rest of the country back together.

Since Libyan rebels backed by the United States and NATO toppled Colonel Gaddafi after seven months of western aerial bombardments, the country has slipped into chaos, as militias grounded in particular locations or ideologies have battled for turf, money and influence. Rival coalitions of these armed groups have divided the country into hostile camps, shutting down the two largest airports, crippling the ports, bombing and shelling civilian neighborhoods, and burning refineries and oil depots.

Though the country has vast energy resources, people living in its cities now face daily electricity blackouts, long lines to obtain scarce fuel, and shortages of staple products like cooking oil.

The central bank has been the main force sustaining a semblance of order and holding off dire deprivation and utter collapse in Libya. Its leaders have managed so far to stay above the factional fray, continuing to pay public employees’ salaries and consumer subsidies all across the country. But in the process, the bank has also financed the budgets of the Interior and Defense Ministries, including salaries and supplies for thousands of rebels on all sides of the struggle.

The bank’s neutrality has come under increasing strain as the warring factions established rival national governments, one based in Tripoli in the west and the other in the eastern cities of Tobruk and Bayda. The central bank has two facilities, one in each side’s home region.

The Tobruk-Bayda government includes a recently elected parliament. It has sought since October to replace the central bank’s chairman, Sadik el-Kaber, and take control of the bank’s assets. But Mr. Kaber has refused to resign, and has kept the bank’s headquarters in Tripoli, the nominal capital, which is controlled by a rival coalition of moderate Islamists, extremists and regional militias.

The taking of the Benghazi branch by forces loyal to Hifter raised fears that the rival militias in Tripoli might seek to seize the bank’s assets there.

Mr. Kaber has pleaded with both sides to respect the bank’s neutrality and keep it above politics, in order to safeguard Libya’s wealth. Those arguments appear to have won important support among NATO countries, which have a critical voice in the bank’s future because much of the bank’s assets are held in Western financial centers.

Mr. Kaber flew to Washington last month for two days of meetings with American and British diplomats, as well as with officials from the White House and the State and Treasury Departments, signaling that the West continues to regard him as the person in charge despite the Tobruk-Bayda’s efforts to replace him.

The seizure began late Wednesday night, when some of  Hifter’s fighters invaded the bank’s building in Benghazi, near the front lines of a continuing fight with local Islamist militias.

The attackers beat back the bank guards and the Islamists and took control of the bank premises. But they posted video images online that appeared intended to show that they had not broken into the vaults, at least not yet.

“We are the youth of the naval base, and we are here to guard the bank,” a fighter in a camouflage uniform is heard to say in a video, as he leads the camera on a tour of the bank’s interior and its flooded basement. Gunfire is audible in the background, apparently coming from the streets outside.

Pointing proudly to a parked white Toyota Camry and a closed safe numbered 835, the fighter in the video says, “There is more inside, but we don’t want to enter, so they don’t call us thieves.”

Officials in Washington have said in recent days that they met with Mr. Kaber because they were focusing on protecting the bank.

“We want very much to bring the conflict to a close, and to do everything we can to help the Libyans preserve the patrimony of the Libyan bank and the Libyan people,” said a senior administration official, speaking on the condition of anonymity to discuss sensitive diplomacy. “We want their money to be intact after the conflict, so that they can rebuild their country.” The official said the United States and its allies are exploring economic sanctions as a way to press both sides to form a unity government.

News of the seizure in Benghazi prompted a sharp fall in the value of the Libyan currency, which traded at 2.0 dinars to the American dollar, compared with 1.8 before.

The conflict in Libya had already posed a serious threat to the country’s assets. In a statement last week, the central bank warned that Libya had brought in only 21 billion dinars in revenue last year, almost all of it from oil sales — a figure far short of the country’s projected budget of 57 billion dinars, most of it for public subsidies and wages. The bank said the regimes would have to cut budgets for diplomatic missions and scholarships for Libyans studying abroad. The Tobruk-Bayda government has taken out large loans from commercial banks to finance its operations.

In a statement on Thursday, the central bank condemned the seizure of the Benghazi facility as “a heinous crime” and warned of “dangerous consequences that it could bring at home and abroad.”

Some leaders on each side of the conflict in Libya agreed to a conditional United Nations-brokered cease-fire last Friday in Geneva, but the fighting has gone on. The Tripoli faction said on Thursday that it would no longer take part in the talks.

“There has been an escalation of fighting in the past two days by troops of the wanted Khalifa Hifter,” the Tripoli government said in a statement. “This escalation peaked today with the storming of a sovereign institution, the central bank in Benghazi.”

Mohamed Hejazi, a spokesman for General Hifter’s forces, confirmed on Thursday that they had taken control of the bank, and said they had also seized “80 percent” of Benghazi’s seaport. Referring to the general’s forces as “the national army of Libya,” Mr. Hejazi said of its opponents that “it is our duty to secure the central bank until we rid the city of those terrorists.”

Mr. Hejazi said Mr. Kaber no longer had authority over the bank’s assets. Col. Farraj al-Barasi, a commander of General Hifter’s forces in Benghazi, told reporters that the forces were forming a committee to decide what to do with the bank’s money. “We’ve moved out the technical equipment,” he told the news agency. “The cash is still in the safes.”

In its statement on Thursday, the bank called the attack “a dangerous escalation that endangers the fortunes and livelihood of the Libyan people and threatens to bring down the last defense of the Libyan state.”

The statement went on to say, “The bank had worked very hard to stay away from any political disagreements and to remain an institution for all Libyans and all of Libya,” and urged all sides “to go to the dialogue table to negotiate, because that is the only way to steer Libya to safe shores.”