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Libyan Fighters Seize Benghazi Branch of Central Bank Libyan Fighters Seize Benghazi Branch of Central Bank
(about 2 hours later)
BAYDA, Libya — Fighters for one of the factions battling for control of Libya seized the Benghazi branch of the country’s central bank on Thursday, threatening to set off an armed scramble for the bank’s vast stores of money and gold. BAYDA, Libya — Fighters for one of the factions battling for control of Libya seized the Benghazi branch of the country’s central bank on Thursday, threatening to set off an armed scramble for the bank’s vast stores of money and gold, and cripple one of the last functioning institutions in the country.
The central bank is the repository for Libya’s oil revenue, and holds nearly $100 billion in foreign currency reserves. It is the great prize at the center of the armed struggles that have raged here since the overthrow of Col. Muammar el-Qaddafi more than three years ago. Until now, it was also virtually the last functioning public institution in Libya, and Western leaders had hoped that it might play a crucial role in helping to bring the rest of the country back together. The central bank is the repository for Libya’s oil revenue and holds nearly $100 billion in foreign currency reserves. It is the great prize at the center of the armed struggles that have raged here since the overthrow of Col. Muammar el-Qaddafi in 2011. Western leaders had hoped that it might play a crucial role in helping to bring the rest of the country back together.
The bank’s leaders have managed so far to stay above the fray and to continue to pay public employees’ salaries and consumer subsidies across the country. Those payments have held off economic collapse and dire deprivation. But in the process, the bank has also financed the budgets of the Interior and Defense Ministries, including salaries and supplies for thousands of fighters on all sides of the struggle. Since Libyan rebels toppled Colonel Qaddafi with the help of Western airstrikes, the country has slipped into chaos, as militias grounded in particular locations or ideologies have battled for turf, money and influence. Rival coalitions of these armed groups have divided the country into hostile camps, shutting down the two largest airports, crippling the ports, bombing and shelling civilian neighborhoods, and burning refineries and oil depots.
The bank’s neutrality has come under increasing strain as the warring factions established rival national governments, one based in Tripoli in the west and the other in the eastern cities of Tobruk and Bayda. Though the country has vast energy resources, people living in its cities now face daily electricity blackouts, long lines to obtain scarce fuel, and shortages of staple products like cooking oil.
The central bank has been the main force sustaining a semblance of order and holding off dire deprivation and utter collapse in Libya. Its leaders have managed so far to stay above the factional fray, and they continue to pay public employees’ salaries and consumer subsidies all across the country. But in the process, the bank has also financed the budgets of the Interior and Defense Ministries, including salaries and supplies for thousands of fighters on all sides of the struggle.
The bank’s neutrality has come under increasing strain as the warring factions established rival national governments, one based in Tripoli in the west and the other in the eastern cities of Tobruk and Bayda. The central bank has two facilities, one in each side’s home region.
The Tobruk-Bayda government is under the de facto control of Gen. Khalifa Hifter, and includes a recently elected parliament. It has sought since October to replace the central bank’s chairman, Sadik el-Kabir, and take control of the bank’s assets. But Mr. Kabir has refused to resign, and has kept the bank’s headquarters in Tripoli, the nominal capital, which is controlled by a rival coalition of moderate Islamists, extremists and regional militias.The Tobruk-Bayda government is under the de facto control of Gen. Khalifa Hifter, and includes a recently elected parliament. It has sought since October to replace the central bank’s chairman, Sadik el-Kabir, and take control of the bank’s assets. But Mr. Kabir has refused to resign, and has kept the bank’s headquarters in Tripoli, the nominal capital, which is controlled by a rival coalition of moderate Islamists, extremists and regional militias.
Mr. Kabir has pleaded with both sides to respect the bank’s neutrality and keep it above politics, in order to safeguard Libya’s wealth. Those arguments appear to have won important support among Western nations, which have a critical voice in the bank’s future because much of the bank’s assets are held there. In a major blow to the Tobruk-Bayda government’s attempts to remove him, Mr. Kabir flew to Washington this month for two days of meetings with American and British diplomats, as well as officials from the White House and the State and Treasury Departments, signaling that the West continues to regard him as the person in charge of Libya’s assets. The taking of the Benghazi branch by forces loyal to General Hifter raised fears that the rival militias in Tripoli might seek to seize the bank’s assets there.
Participants in the meetings in Washington said they focused not only on how to safeguard the assets but also on how to use economic sanctions to press both sides of the Libyan fighting to work toward forming a unity government. Such sanctions might serve to isolate the Islamist extremists backing the Tripoli government, but also target General Hifter or others in eastern Libya who oppose compromise. Mr. Kabir has pleaded with both sides to respect the bank’s neutrality and keep it above politics, in order to safeguard Libya’s wealth. Those arguments appear to have won important support among Western nations, which have a critical voice in the bank’s future because much of the bank’s assets are held in Western financial centers.
Beginning late Wednesday night, some of General Hifter’s forces stopped waiting and hoping that the Western nations would press the bank to replace Mr. Kabir with a central banker more to the Tobruk-Bayda government’s liking. A group of fighters loyal to the general attacked the bank’s building in Benghazi, which was near the front lines of a continuing fight with local Islamist militias. In a major blow to the Tobruk-Bayda government’s attempts to remove him, Mr. Kabir flew to Washington this month for two days of meetings with American and British diplomats, as well as with officials from the White House and the State and Treasury Departments, signaling that the West continues to regard him as the person in charge of Libya’s assets.
The seizure began late Wednesday night, when some of General Hifter’s forces stopped waiting and hoping that the Western nations would press the bank to replace Mr. Kabir with a central banker more to the Tobruk-Bayda government’s liking. A group of fighters loyal to the general invaded the bank’s building in Benghazi, which was near the front lines of a continuing fight with local Islamist militias.
The attackers beat back the bank guards and the Islamists and took control of the bank premises. But they posted video images online that appeared intended to show that they had not broken into the vaults, at least not yet.The attackers beat back the bank guards and the Islamists and took control of the bank premises. But they posted video images online that appeared intended to show that they had not broken into the vaults, at least not yet.
“We are the youth of the naval base, and we are here to guard the bank,” a fighter in a camouflage uniform is heard to say in a video, as he leads the camera on a tour of the bank’s interior and its flooded basement. Gunfire is audible in the background, apparently coming from the streets outside.“We are the youth of the naval base, and we are here to guard the bank,” a fighter in a camouflage uniform is heard to say in a video, as he leads the camera on a tour of the bank’s interior and its flooded basement. Gunfire is audible in the background, apparently coming from the streets outside.
Pointing proudly to a parked white Toyota Camry and a closed safe numbered 835, the fighter in the video says, “There is more inside, but we don’t want to enter, so they don’t call us thieves.”Pointing proudly to a parked white Toyota Camry and a closed safe numbered 835, the fighter in the video says, “There is more inside, but we don’t want to enter, so they don’t call us thieves.”
Officials in Washington had said in recent days that they had met with Mr. Kabir because they were focusing on protecting the bank and its assets from being destroyed by the fighting.
“We want very much to bring the conflict to a close, and to do everything we can to help the Libyans preserve the patrimony of the Libyan bank and the Libyan people,” said a senior administration official, speaking on the condition of anonymity to discuss sensitive diplomacy. “We want their money to be intact after the conflict, so that they can rebuild their country.”
The United States and its allies are exploring economic sanctions as a way to press both sides to form a unity government. “If we start to see the talks break down,” the official said, “then people are going to look at the tools that are available, and sanctions have got to be at the top of that list — it’s not the only thing at the top of the list, but one of the most useful strategies.”
News of the seizure in Benghazi prompted a sharp fall in the value of the Libyan currency, which was trading at 2.0 dinars to the American dollar, down from 1.8 before.
The conflict in Libya was already posing a serious threat to the country’s assets before the seizure. In a statement last week, the central bank warned that Libya had brought in only 21 billion dinars in revenue over the past year, almost all of it from oil sales — a figure far short of the country’s projected budget of 57 billion dinars, most of it for public subsidies and wages.
In a statement on Thursday, the bank said “armed gangs” had taken over its Benghazi facility. It condemned the seizure as “a heinous crime” and warned of “dangerous consequences that it could bring at home and abroad.”
Some leaders on each side of the conflict in Libya agreed to a conditional cease-fire last Friday in Geneva, in a deal brokered by United Nations diplomats, but the agreement has not appeared to stop the fighting. The Tripoli faction said on Thursday that because of the seizure of the bank building in Benghazi, it would no longer return to the talks as planned.
“There has been an escalation of fighting in the past two days by troops of the wanted Khalifa Hifter,” the Tripoli government said in a statement. “This escalation peaked today with the storming of a sovereign institution, the central bank in Benghazi.”
Mohamed Hejazi, a spokesman for General Hifter’s forces, confirmed on Thursday that they had taken control of the bank, and said they had also seized “80 percent” of Benghazi’s seaport. Referring to the general’s forces as “the national army of Libya,” Mr. Hejazi said that its opponents were “terrorists” and that some had robbed banks.
“It is our duty to secure the central bank until we rid the city of those terrorists,” he said.
Mr. Hejazi said Mr. Kabir no longer had authority over the bank’s assets. Col. Farraj al-Barasi, a commander of General Hifter’s forces in Benghazi, told Reuters that the forces were forming a committee to decide what to do with the bank’s money. “We’ve moved out the technical equipment,” he told the news agency. “The cash is still in the safes.”
In its statement on Thursday, the bank called the attack “a dangerous escalation that endangers the fortunes and livelihood of the Libyan people and threatens to bring down the last defense of the Libyan state.”
The statement went on to say, “The bank had worked very hard to stay away from any political disagreements and to remain an institution for all Libyans and all of Libya,” and urged all sides “to go to the dialogue table to negotiate because that is the only way to steer Libya to safe shores and preserve the security and safety of the land.”