Libyan Dinar Tanks as International Actors Mull Intervention
The news cycle and the blogosphere are heating up with condemnation of possible attempts by major Western actors to mount a joint operation against IS in Libya. Recent statements from both the Pentagon and the White House confirmed reports of American interest in extending the fight against IS to Libya. Paradoxically, the same flawed methods of aerial strikes combined with insufficient and incompetent training methods appear to be the preferred formula.
Given these developments, prospects for the stabilisation of Libya by any internationally brokered Libyan power sharing government continue to look bleaker with each passing day. A bottom up approach is truly needed to forge an anti-IS coalition. However this seems unlikely as the pro-GNA coalition is fracturing.
The implicit endorsement of Haftar by GNA PM Fayez Serraj due to his visit could trigger violence between rival militias in the capital. The hardline faction controlling Tripoli, represented by a majority of the current members comprising the GNC, is still opposing the UN-mediated agreement, despite attempts by members of the GNC in the UN-mediated dialogue committee (Saleh Al-Makhzoum) to bring them on board. His attempts are even less likely to succeed given Serraj’s visit to Haftar.
On the economic front, IS attacks on the Oil Crescent, and the global collapse of oil prices have removed any opportunity for a return to a balanced budget in Libya in the short-to-medium term, making it likely that the country will spend almost all its remaining reserves on salaries and basic subsidies by the end of 2016. Unsurprisingly, the value of the Libyan Dinar has tanked in the black market. This translates into higher prices of basic foods and goods for regular Libyan families. The worsening socio-economic situation is likely to quickly rob the UN-mediated LPA of its modicum of popularity with the population , and at worst may lead to a hardening of local suspicions against the GNA.