After weeks of tension that saw the Central Bank of Libya (CBL) shut, salaries unpaid and cash disappearing, the country's two rival governments appeared willing to accept a United Nations-brokered deal to resume operations, before returning once again to a stalemate familiar to many in the country.
The internationally recognised Government of National Accord (GNA) in the west had sought to replace the CBL governor, Sadiq al-Kabir, accusing him of mismanaging oil revenues and going so far as to send gunmen to remove him from office.
Angered, Libya's eastern Government of National Unity (GNU), which is backed by renegade commander Khalifa Haftar, shut down much of the country's oil production, which it controls, in protest.
“This is serious,” said Jalel Harchaoui, an associate fellow at the Royal United Services Institute in London. “The CBL, while weaker now than a few years ago, remains a linchpin for the country’s access to hard currency.”
He added that the CBL finances most of Libya's imports of food, medicine and other basic goods, without which the country cannot survive for long.
The standoff is the latest battleground in the 13-year rivalry between political and military elites that has dogged Libya since the ouster of long-time ruler Muammar Gaddafi in 2011.
Since then, analysts say, life in Libya has deteriorated as fighting between rival Libyans has continued and the international community has sought to preserve the rule of a political and military elite convinced they are best suited to stability and the proclaimed goal of “unifying Libya.”
Why the central bank?
In addition to guarding Libya’s vast oil wealth, the CBL unified the “central banks” of eastern and western Libya into a single body to administer the salaries of civil servants and soldiers in both governments and to generate confidence that recovery was possible.
Following a fight between the GNA and GNU over who would run the CBL, al-Kabir fled the country, claiming he took access codes to bank deposits with him, leaving the bank cut off from international financial networks.
Asim al-Hajjaji, director of CBL's compliance department, said international contacts had been restored, although Al Jazeera understands that most international trade remains suspended.
Meanwhile, oil exports have fallen to a new low, wages are uncertain and the daily lives of some six million Libyans are in crisis.
“The United Nations is talking about talks, which is a sure sign that we are far from a resolution,” said Tarek Megerisi, a senior fellow at the European Council on Foreign Relations, of negotiations to restart operations at the CBL.
The West, which usually supports the GNA despite being responsible for much of the uncertainty, “does not know what to do, or does not really have the capacity to do it. They are dealing with wars in Gaza and Ukraine,” he said.
“It is too much. In Libya, international efforts to achieve some kind of fair solution have lost momentum.”
And this is not the first time.
For more than a decade of uncertainty and war, analysts say, the international community's efforts focused on shoring up the country's elites in the hope that might lead to stability.
The latest CBL talks do not appear much different: access to millions of dollars in assets of primary interest to the country's elites and access to services and certainty longed for by much of the population appear to be an afterthought, analysts told Al Jazeera.
Elite negotiations preside over endless turmoil
“Preventing armed war has come to be seen as the only international strategy in Libya,” Tim Eaton, a senior fellow at Chatham House who contributed to a paper on the international practice of prioritising powerful elites, told Al Jazeera.
“It’s a death by a thousand cuts,” Harchaoui said.
“Everyone is talking about a return to the status quo as if there ever was a static, orderly equilibrium,” he said. “That was never the case. Even when things seemed calm, agreements were continually deteriorating and degrading. And that gradual deterioration is what suddenly became visible last month with the CBL crisis.”
National elections, or even a framework that could lead to them, remain a distant prospect after the last vote, initially scheduled for December 2021, was postponed due to infighting.
“Any attempt to hold national elections has been blocked,” Eaton said. “Both [Abdul Hamid] Dbeibah [head of the GNA] and Haftar may say he wants elections tomorrow, but in reality he only wants his side, or at least his representatives, on the ballot papers.”
Both governments continue to rule separately, while their members, allies and militias profit from people and fuel smuggling and unregulated cross-border trade.
Yet as individual members jockey for position within small, exclusive circles, the systems designed to support everyday life in Libya continue to deteriorate and fail.
Eaton notes that the city of Derna, which was flooded in September 2023 following the collapse of a dam for which the GNU was responsible, remains unrebuilt.
“To get medical care, Libyans have to go abroad,” he said. “And if someone is in an emergency situation, there is no number or department they can call.
“Meanwhile, the super-rich who are supposed to look after the people are getting even richer.”
Both sides, he explained, claim to be working to establish a central government, while the state institutions needed to oversee any future state, such as a strong central bank, have been hollowed out and captured by elites on both sides.
At the regional level, throughout its 13 years of sporadic conflict and political uncertainty, Libya has become a constant source of instability within an already unstable region.
In a divided Libya, various actors have come to use the east of the country as a staging point to project their own international ambitions in Sudan, Syria and beyond.
An overwhelming human cost
Adding to the uncertainty for the Libyan population are the more than 1,000 refugees, irregular migrants and asylum seekers who have died or disappeared this year on the Central Mediterranean migration route, of which Libya is a key part.
“The West and the UN in Libya are playing diplomatic theatre as the country falls apart,” said Anas El Gomati of the Sadeq Institute.
“They have a toolbox of influence that is gathering dust. Instead of applying pressure, they are facilitating corruption by legitimizing those who have no electoral mandate or political credibility. That is not diplomacy, it is complicity in slow motion.”
El Gomati continued: “In both the east and the west, Libya's compass points to chaos and corruption. Haftar and his sons carve out a fiefdom through war crimes in the east, while Dbeibah runs a 'pay-as-you-go' loyalty scheme with armed groups in the west.
“The irony? The elites don’t trust the very banking system they have bled dry, so they keep their assets offshore, which the West could freeze, but they are too busy shaking hands with the very hands that are stealing Libya’s future.
“Western policymakers and Libyan elites are locked in a race to the bottom of illusion and greed,” El Gomati concluded. “The West sees a finish line; the elites see a never-ending buffet. This is not naivety, it is wilful blindness, and the Libyan people are paying for it. In the Libyan elite’s casino, the house always wins, and corruption is the never-ending chip.”
