The head of the Presidency Council, Mohamed Menfi reported that he had met yesterday with the Director General of the Libya Development and Reconstruction Fund, Belgasem Khalifa Haftar, ‘‘as part of ongoing national consultations aimed at strengthening stability and advancing reconstruction and development across the country’’.
Menfi’s personal media page (as opposed to the Presidency Council’s official page) reported that the meeting addressed the latest developments in the reconstruction process, emphasizing the strategic importance of development programmes as a cornerstone for achieving stability and consolidating national unity.
The statement said Menfi commended the Fund’s role in reconstruction and development, particularly praising the efforts undertaken in Derna to address the aftermath of Cyclone Daniel and the progress being made in the city’s reconstruction efforts, including project implementation and infrastructure rehabilitation.
For his part, the report continued, Haftar praised Menfi’s role in supporting development and reconstruction initiatives and his continued commitment to unifying national efforts and overcoming obstacles to the implementation of vital projects.
The report said Hafter noted that this contributes to improving the quality of life and reviving economic activity in various regions, especially in affected cities.
Advancing the political process, holding elections
The meeting also addressed the need to advance the political process as the framework for ensuring sustainable stability. Both sides emphasized the importance of creating the conditions necessary for holding national elections, thereby ending the division and establishing a phase based on consensus and national partnership.
Unified institutions, sound financial management and a unified national budget
Menfi stressed that the success of reconstruction efforts requires unified institutions and sound financial management. He emphasized the importance of working towards a unified national budget that guarantees a fair distribution of resources and supports the implementation of development projects according to clear national priorities.
Both sides also stressed the need to strengthen oversight and transparency mechanisms to ensure the protection of public funds and achieve the highest levels of efficiency in resource management. They further emphasized the importance of enhancing coordination among national institutions and engaging in regional and international partnerships to support reconstruction efforts and bolster Libya’s economic recovery.
What was the meeting really about?
Away from the official language used in the report, analysts say the meeting was a follow-up on the meeting held by Belgasem Hafter and Jeremy Berndt, Chargé d’affaires at the US Embassy in Libya.
It was also a follow up on the meeting held yesterday between Berndt and Mohamed Shahoubi, in his dual roles as Minister of Transport and Aldabaiba’s Financial Advisor.
Averting Libya’s economic collapse?
While unifying all Libyan national institutions, including the army and the police and holding elections are permanent and ideal international goals, both meetings were predominantly seen as being concerned in the short term with averting Libya’s economic collapse.
Unchecked governments spending, loss of value of the dinar
This looming economic collapse is seen as being caused by unchecked spending by both western and eastern-based Libyan governments causing a recurring and accumulating hard currency deficit over the years. This is seen as the main contributor to the devaluation of the Libyan dinar on the foreign exchange black-market.
Economic crisis threatening Libya’s stability further
This loss of value has resulted in skyrocketing price-increases in all imported goods, including the politically sensitive prices of food, rising inflation and a loss in standards of living. This price pressure led to a series of demonstrations in the month of Ramadan during which gunshots were fired – threatening to further destabilise Libya’s security and political status quo.
The US-brokered Unified Development Programme
In this regard, the US had brokered an agreement, held quietly in Tunis in February, between the two parties in which ostensibly they had agreed to reduce public spending to within the limits of Libya’s actual revenues. Currently these hard currency deficits are being covered by Libya’s fast diminishing hard currency reserves and Central Bank of Libya (CBL) investments.
This agreement is dubbed by the US Embassy as the Unified Development Programme.
Aldabaiba calls on CBL to freeze all development/projects spending
For balance, it must be pointed out that the CBL has accused both governments of unchecked public spending. Aldabaiba has accused the eastern authorities of overspending by LD 300 billion. He refers to this as ‘‘parallel spending’’ – spending that is outside the official state budget.
Moreover, when the east seemed to refuse to stick to the US-brokered Unified Development Programme, Aldabaiba called on the CBL Governor to stop all development / project spending across all Libya.
Hafter threatens to continue to increase spending on projects
However, alarmingly, Belgasem Hafter’s seemed to have jettisoned the US-brokered agreement. Speaking to a gathering of eastern and central Libyan tribal leaders in mid-March, he stressed the need to continue public spending on development and reconstruction. He stressed that spending should be continuous and increasing every year. He said to his sympathetic audience “just give me the money and then hold me accountable’’.
Veiled threat to cut off oil supplies
As Belgasem Hafter ended his speech, and sending a clear but veiled threat of the Hafter’s intention to the Tripoli government, one of the regional tribal elders and sheikhs responded on cue, saying: “The oil is under our feet. If reconstruction stops, then let the oil stop, let everything stop; we are losers, losers… and reconstruction is a red line.”
It is believed that it is this rhetoric by Hafter, including continued unchecked spending and cutting off oil supplies, and the threat by Aldabaiba to force the CBL to stop all development spending, that has led to the flurry of meetings including those by Chargé d’affaires Berndt and between Menfi and Hafter.
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