Malta impounds Russian-produced Libyan banknotes bound for parallel CBL

On 1 November, reports emerged that, at the end of September, Maltese authorities seized and impounded two 2,000 cubic feet containers packed with Russian-printed Libyan currency destined for eastern Libya as the shipment docked in Malta.  Maltese authorities have allegedly informed the Government of National Accord’s (GNA) Foreign Ministry that they will temporarily hold on to the banknotes and proceed in coordination with the Tripoli-based Central Bank of Libya (CBL)Russian customs data published by Reuters on 29 October shows an increase in the amount of Russian-printed Libyan bank notes delivered to the parallel CBL in eastern Libya this year – both prior to and after the Libyan National Army (LNA) launched its assault on Tripoli. From February to June, four shipments with around 4.5 billion Libyan dinars in total were shipped to the East.Aside from concerns about the influx of cash undermining confidence in Libya’s currency and disrupting efforts to address the country’s monetary policy, these revelations highlight what appears to be the LNA’s dependence on cash deliveries to finance its military machine and campaign in Tripoli. It is unclear whether the diversion of this cash delivery will directly undermine the LNA’s ability to fund its military activities in the short term or whether it will simply look to access funds from elsewhere. In the longer term, the LNA will either need to access more of Tripoli’s financial resources (by force or through a political agreement) or find alternative ways to maintain the funds it needs to keep operating (through predatory economic behaviour, international support or de facto partition). Russia’s willingness to supply the cash and Malta’s move to impound the shipment clearly highlight the growing proxy nature of Libya’s conflict, a destabilizing factor which is unlikely to disappear in the short term.