Libyan Central Bank deposits "billions" of dollars in Turkey

Governor of Libya's Central Bank meets Erdogan in Istanbul on Monday
The logo of the Central Bank of Turkey (TCMB) at the entrance of the headquarters in Ankara

REUTERS/UMIT BEKTAS  -   The logo of the Central Bank of Turkey (TCMB) at the entrance of the headquarters in Ankara

Recep Tayyip Erdogan's Turkey continues to plan its future in Libya after the announcement of military victory over Tripoli by the Government of National Accord (GNA), led by Prime Minister Fayez Sarraj, on June 4. On June 29, the governor of Libya's Central Bank (CBL), Al-Siddiq Al-Kabir, traveled to Istanbul, Turkey, to meet Erdogan. He also held meetings with his Turkish counterpart, Murat Uysal, and the Turkish Minister of Finance and Treasury, Berat Albayrak. During the meetings, they "reviewed issues of mutual interest", as reported in a brief statement from the CBL Media Office.  

However, according to Al-Arabiya, other issues were on the table, relating to "financial transfers and deposits", the management of which has undergone "a major change following the Turkish intervention in Libya". Ramzi Al-Agha, head of the Liquidity Crisis Committee of the CBL's Al-Bayda branch, denounced these changes in operations, as reported by the local daily Libya Review. He said the meeting between Erdogan and Al-Kabir "violated international protocols", since such meetings, according to Libyan law - and specifically No. 2. of 2001 - are supposed to include at least the head of the Libyan Government of National Accord (GNA), Fayez Al-Sarraj, and that communication between administrative and government units of the state with any external body should be done through the Ministry of Foreign Affairs. In practice, this means that both the Prime Minister and the Minister of Economy and Finance should have travelled to Istanbul. 

During the meeting, as reported by Libya Review, "Al-Kabir has transformed the operations of managing the financial reserves and created a set of time deposits with a period of about 4 years, without any returns, called “zero deposits”." According to the publication, "their value is thought to have reached $8 billion and deposited in its entirety in the Central Bank of Turkey. These deposits, according to the agreement signed between Al-Sarraj and Erdogan, will remain in Turkish banks for 4 years, without any interest or costs. This is for the stability of the Turkish lira and to support the Turkish economy."

Murat Uysal, gobernador del Banco Central de Turquía
AFP/OZAN KOSE - Murat Uysal, Governor of the Central Bank of Turkey

Libya Review also reported that "there are instructions to direct all financial credits to Turkish banks and to transfer Libyan funds and deposits that were present in European banks to Turkish banks" and that, several operations in this framework have been recently undertaken".

These actions have generated strong criticism within the Libyan House of Representatives, led by Aguila Saleh in Tobruk, which does not recognise the GNA. The parliamentarian Mesbah Douma has denounced in the Egyptian newspaper Youm 7 that it is necessary to "change the board of directors of the CBL" because otherwise "the governments of the mafia will continue to steal the wealth of the Libyan people".  

The MEP also referred to the continuing disruptions to the Libyan oil market and in this regard he showed his support "for the process of closing down the oil fields instead of plundering their revenues for the benefit of the countries sponsoring the war in Libya", with a clear allusion to Turkey. Douma has assured that "the Mafia of the North", as he has called the GNA, has exhausted the resources of the southern regions, controlled by the rival faction, the National Liberation Army (LNA) commanded by Marshal Jalifa Haftar, giving undue priority to the areas under its control. In particular, he has targeted the southern region of Fezzan, rich in oil and gas fields, which currently lacks the most essential needs such as water and food, a situation that has been aggravated by becoming one of the areas of Libya most affected by the incidence of the coronavirus pandemic. 

El Banco Central de Libia en Trípoli
REUTERS/ISMAIL ZITOUNY - The Central Bank of Libya in Tripoli

Given this scenario, the parliamentarian has requested "the establishment of a new executive authority that unifies the sovereign institutions and designates personalities who can manage them efficiently without suspicion of corruption, something that particularly affects the CBL".  

It should be recalled at this point that the Libyan financial institution has been involved in numerous suspicious activities linked to Turkey. Last week, it became known that it had received an order to transfer approximately EUR 169 million to the account of a Turkish company called SSTEK Defense Industry Technologies Inc, in which the Turkish Defense Industry, led by Erdogan, holds 55% of the shares. Previously, it also came to light that Sarraj had paid the Turkish president 12 billion dollars to stay in power, 4 billion of which had been deposited in the Central Bank of Turkey and the remaining 8 billion had been destined to pay for the cost of the Turkish military intervention in the North African country in favour of the GNA. 

In addition, according to Arab News, the accumulation of Turkish contracts in Libya amounts to $16 billion, including $400-500 million for projects that have not yet begun.