Economy /

In a new blow to Turkey’s power in Libya, the interior minister of the Tripoli-based Government of National Accord (GNA) Fathi Bashagha has imposed a travel ban on Libyan Central Bank Governor Sadik Al-Kabir.

Why Did the GNA Crack Down on the Central Bank Governor?

In a strongly-worded statement, the GNA Interior Ministry said all Libyan officials will be subject to the new travel restrictions without mentioning al-Kabir by name. However the ban came shortly after the bank governor filed a complaint with the Attorney-General’s office about having been prevented from travelling outside the country, making the linkage clear.

The rift between the two allies of Turkish President Recep Tayyip Erdogan surfaced against the backdrop of accusations that al-Kabir of squandering billions of dollars.

The Government Believes al-Kabir and his Associates are Corrupt

Last week, Libya’s National Oil Corporation (NOC) said in a statement that it would not transfer money crude oil sales to the central bank until it shows a “clear transparency” about how it spends money.

The NOC cited that the central bank reported $1.77 billion in oil revenues in the first 10 months of the year, although the corporation’s estimates showed that it had deposited more than twice that amount of revenues — $3.7 billion — at the central bank during this period.

NOC President Mustafa Sanalla suggested that some officials in Tripoli were involved in wasting millions of dollars, accusing al-Kabir of benefitting from exchanging dollar at different rates. Sanalla explained that the bank governor exchanged the dollar for 1.40 Libyan dinars for some people, before reselling it at prices ranging between 6 and 10 dinars.

Interior Minister: ‘Corruption is a Scourge’

In a tweet, Bashagha vowed to take action against officials involved in corruption and money-laundering. “Corruption is a scourge that threatens every country’s present & future. We are dedicated in MoI to fight against corruption, trace money-laundering offences & determined to prosecute all who are involved in these crimes no matter who was it,” he tweeted.

The rift between Bashagha and al-Kabir comes as a bad news for Turkey, the only foreign backer of the Tripoli-based government. The two men are strong supporters of the Turkish military intervention in Libya in favor of the GNA against the Libyan National Army of eastern strongman Khalifa Haftar.

Signs of a split between Turkey and Bashagha have emerged in recent weeks after the Libyan interior minister visited Ankara’s main rival Egypt and France, a move that angered the Erdogan administration.

Last month, Bashagha held talks with Egyptian officials in Cairo, in a visit seen as an attempt by Tripoli to reassure Egypt about the GNA amid UN-sponsored talks for reaching a peace deal between Libya’s warring rivals.

Intervention Threat

In June, Egypt threatened to militarily intervene in Libya if Turkey-backed Libyan forces continued to advance on the oil-rich city of Sirte. The threat has helped to pacify the situation on the ground.

After his talks in Egypt, Bashagha travelled to France where he held talks on mutual security cooperation between Tripoli and Paris. The Libyan minister described his talks in Paris as “fruitful”.

Watching its close ally courting its regional rivals in Libya, Erdogan, who invested billions of dollars to gain a foothold in the oil-rich country, voiced resentment at Bashagha’s moves.

According to sources cited by the London-based Al-Quds Al-Araby newspaper, Erdogan said during a meeting with Libyan officials that Bashagha’s talks in Egypt and France served efforts by both Cairo and Paris to exclude Turkey from any deal in Libya. Both Egypt and France, along with the UAE, are major backers of General Khalifa Haftar and the Libyan National Army (LNA) in eastern Libya.

Bashagha’s rapprochement with Egypt and France is seen as part of his bid to replace Prime Minister Fayez al-Sarraj as leader of the GNA. Al-Sarraj has announced his intention to resign by October, before he rescinded his decision under Turkish pressure.

The Importance of Libya for Turkey

Turkey has been counting on Libya to give a much-needed boost to its ailing economy and ease the country’s growing economic woes. The Turkish government has been battling with double-digit inflation, high unemployment and weak Turkish lira, which fell to its lowest level against the dollar during the coronavirus pandemic.

Turkey has sought the help of its foreign allies, including Libya and Qatar, to boost its fast-depleting foreign reserves. According to the Dubai-based Al-Arabiya television channel, al-Kabir, the central bank governor, has deposited $8 billion in the Central Bank of Turkey for about four years without interest to help stabilize the Turkish lira.

The Qatari government has signed last month investment deals worth billions of dollars, including buying a big chunk of shares in the Borsa Istanbul stock exchange, in a move aimed to boost the Turkish economy.

Turkey Wants a Key Stake in Libya’s Reconstruction

Turkey is also looking for taking a big share of Libya’s reconstruction operations in any future deal between the country’s warring rivals. Murtaza Karanfil, the chairman of the Turkey-Libya Council of Foreign Economic Relations (DEIK), said in May that Turkish investors eye $120 billion investments in Libya.

Turkish Energy and Natural Resources Minister Fatih Domnez also told the Turkish state-run Anadolu Agency that Ankara — which is looking to lower its energy imports — is evaluating opportunities to cooperate with Libya on oil and natural gas exploration. According to Donmez, Turkey’s energy imports cost $40 billion annually, which is inflating its current account deficit.

Therefore, news of a rift between its main allies in Libya comes as a deadly blow to Erdogan’s efforts to rejuvenate the Turkish economy. It also plays into the hands of Ankara’s rivals and their hopes of ending Turkish influence in the North African nation.