Libya agrees to appoint central bank governor in bid to ease crisis

Libya’s two legislative bodies agreed on Tuesday to appoint a central bank governor, potentially defusing a battle for control of the country’s oil revenue that has slashed production.

The House of Representatives based in Benghazi, in eastern Libya, and the High State Council in Tripoli in the west signed a joint statement after two days of talks hosted by the U.N. Support Mission in Libya.

They agreed to appoint a central bank governor and board of directors within 30 days. Libya’s central bank is the sole legal repository for Libyan oil revenue, and it pays state salaries across the country.

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The two chambers also agreed to extend consultations for five days, concluding on Sept. 9.

Libya has had little peace since a 2011 NATO-backed uprising and it split in 2014 between eastern and western factions. Major warfare ended with a ceasefire in 2020 and attempts to reunify, but divisions persist.

The House of Representatives parliament and the High State Council were both recognised internationally in a 2015 political agreement, although they backed different sides for much of Libya’s conflict.

The standoff began when the head of the Presidency Council in Tripoli moved last month to oust veteran central bank Governor Sadiq al-Kabir and replace him with a rival board.

This prompted eastern factions to declare a shutdown to all oil production, demanding Kabir’s dismissal be halted. The dispute threatened to end four years of relative stability.

Some oil output has since resumed, and oil prices dropped nearly 5% on Tuesday to their lowest levels in almost nine months in a sign that traders expect the latest agreement to get more oil flowing.

Libya’s central bank has been paralysed by the battle for its control, leaving it unable to conduct transactions for more than a week.

Underlying the issue is the country’s fractured political landscape of rival governing institutions with tenuous claims to legitimacy.