Could Freezing Libya’s Budget Help Political Dialogue?
The Atlantic Council has published an article by Nedal M. Swehli exploring the financial situation underlying the crisis in Libya. Swehli argues that to end the civil war, the international community must freeze Libyan financial assets and control the budget. The author suggests:
Imposing restrictions on Libya’s budget could enhance the current political dialogue—not replace it—in three ways. First, it would undermine the power of the militia leaders who rely on government sources to pay the salaries of their followers and, without the ability to fight, would force them to come to the bargaining table. Second, it would put a halt to the spread of corruption within the banking sector and the duplicated government entities. Third, and most importantly, it would save Libya from a looming bankruptcy. Since 2012, the consecutive governments ran an unprecedented deficit of $55 billion, which is nine times its 2016 revenues. At the end of 2016, the total foreign assets held by the central bank were down by half from 2012. Matters will only get worse from there if Libya’s central bankers continue to finance the civil war with public money.
The message should be clear to all the militias and rebellious institutions: either engage in the UN-backed political dialogue process or defy it at your own expense. To achieve stability, the political and financial incentives of all the parties involved must be aligned.
Click here to read the article in full.