(Bloomberg) -- Libya’s rival political factions agreed to a road map to appoint a central bank governor, a tentative step toward easing a deadlock that’s led to the halt of much of the OPEC nation’s oil production.
The two legislative bodies, the Tripoli-based High State Council in the west and the House of Representatives in Benghazi to the east, are to appoint a governor and board of directors within 30 days, according to a document from the United Nations Support Mission in Libya, which is mediating the talks, seen by Bloomberg. The UN body said discussions will continue through Sept. 9.
Disagreements remain about who should be Libya’s central bank governor, the manager of billions of dollars in oil wealth. Many other challenges also lie ahead before the impasse — which global oil traders are watching closely — can be fully resolved.
While the west and east administrations broadly agree on the process of making an appointment, some negotiators want Benghazi-aligned Sadiq Al-Kabir to keep his job, while others want a replacement.
The eastern faction ordered a freeze of the nation’s crude output after the internationally recognized government in Tripoli replaced Al-Kabir last month. The central bank effectively controls the nation’s economy, making it a strategic asset in the broader power struggle.
Energy resources have been a key battleground for the competing factions as they vie for access to petrodollars, causing frequent stoppages. The western side is the wealthier of the two, while the east is home to most of Libya’s oil production and export terminals.
Libya’s oil production has dropped by more than half a million barrels a day from roughly 1.2 million, mainly as a result of the stalemate. It’s expected that the east will restart output if and when a deal is made, according to people with knowledge of the situation.
Oil prices slumped almost 5% on Tuesday after Al-Kabir told Bloomberg he was confident of a resolution soon. They fell again on Wednesday, with Brent trading below $73 a barrel.
Agreeing on a candidate to lead the central bank is a major challenge in a country which has been ravaged by fighting and unrest since the ouster of dictator Moammar Al Qaddafi in 2011. It has been essentially split in two since 2014. While a cease-fire backed by the UN in 2020 was meant to lead to new elections, they haven’t yet taken place.
No candidate for central banker stands out as one who could garner unqualified backing from all sides, according to people involved in the consultations. Al-Kabir, governor since October 2011, has backing from eastern allies to remain in the job, but is accused of mishandling funds in favor of the historically marginalized east, the people said, asking not to be identified because the consultations are private.
A long-running feud exists between Al-Kabir and Tripoli-based Prime Minister Abdul Hamid Dbeibah, who the central banker publicly embarrassed with claims of corruption and over-spending. That erupted into the open in mid-August when authorities in Tripoli ordered a complete change of management then forcibly took control of the bank.
Another candidate is Mohamed Abdel Salam al-Shukri, an economist and former deputy governor, who was appointed by the presidential council to lead the regulator but declined the post, saying he doesn’t want to be caught in the middle of a divisive situation. He said he will only accept the job with the backing of the two councils.
--With assistance from Sherif Tarek.
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