17 July 2024: HoR passes budget for 179 billion LYD creating political turmoil
This week we look at the HoR's budget and reactions to it, the abductions of prominent journalists and activists in western Libya, and efforts by the NOC to paint a positive picture of the oil sector.
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HoR passes budget for 179 billion LYD; HSC rejects budget and further engagement on the political process
Incident: On 10 July, in a closed session chaired by Speaker Aqeela Saleh (and carried over from the previous day’s session), the House of Representatives (HoR) ‘voted unanimously to approve an additional allocation for the state's general budget for 2024’ submitted by the Government of National Stability (GNS) led by Osama Hammad. It approved an additional budget of 88 billion LYD (around 18.3 billion USD), on top of the 90.5 billion LYD budget which was approved at the end of April subject to HoR comments being taken into account, meaning a budget totalling around 179 billion LYD was approved. This makes it the largest budget in Libya’s history.
In a statement the GNS thanked all those who contributed to the budget being approved, including the HoR Speaker and HoR members, the Committee for Restructuring and Arranging the General Budget, the HoR Finance Committee of the House, and the Governor of the Central Bank of Libya (CBL) and his deputy. The GNS noted that the total budget approved is for 179.54 billion LYD and said it is divided into four chapters: 59. 24 billion on Salaries (Chapter One); 16 billion on Operations (Chapter Two); 46.78 billion on Development (Chapter Three); and 57.515 billion on Support (Chapter Four) – with the latter seemingly covering the special financial arrangements for the NOC and GECOL. Neither the HoR nor GNS has published a detailed breakdown of the budget, nor has it been leaked so far.
There was immediate backlash against the budget on the basis it was not a unified budget, that key Libyan players had not been consulted and over the sheer size of the budget. On 11 July, the High State Council (HSC) head Muhammed Takala addressed a letter to Saleh rejecting the approval of the budget for an ‘unprecedented’ value, claiming that there were ‘serious and multiple violations that marred the session’ citing statements made by HoR members to media outlets. Takala also stressed the HoR’s failure to consult with the HSC on the budget law, as required by the Libyan Political Agreement (LPA). Takala also sent a letter to CBL Governor Sadiq al-Kabir urging him not to implement the budget on the basis that it violates the LPA as the HSC was not consulted on the draft budget law. Takala warned that disbursing the budget would intensify the political and economic divisions in Libya.
Takala also sent a letter on 11 July to the Secretary-General of the Arab League Ahmed Abu al-Gheit rejecting his invitation to participate in a second round of dialogue with the Presidential Council head Muhammed al-Menfi and HoR Speaker Saleh due to the HSC’s belief ‘in the futility of attending such meetings due to the unwillingness of some parties in the HoR to achieve any progress towards resolving the crisis.’ The HSC said as such it is suspending its participation in any consultations of dialogue with the HoR until outstanding issues are addressed, most notably the budget law.
On 15 July, the HSC held an extraordinary session to discuss the 2024 budget approved by the HoR, agreeing to reject the budget ‘for its clear violation of the constitution, in addition to the violations it contained in form and content.’ The same day, Saleh stated that there is no single text which gives the HSC authority to approve the general budget, noting that the HoR is the sole legislative authority in the transitional phase according to the LPA (as the HSC is technically a consultative body).
Comment: Some sources are reporting that an agreement has been reached to split the disbursement and control over Chapters 2, 3 and 4 between the Government of National Unity (GNU) and GNS, with each getting their own ‘pot’ of money, while salaries will continue to be paid via the GNU.
Many of those criticising the budget argue that approving such a large budget with the aim of sharing it out between two rival governments is a recipe for accelerated corruption and increased economic uncertainty and division. Those defending the budget argue that in light of the failed efforts to agree a unified government and given the need to fund and oversee development projects, a budget is needed to facilitate financial oversight. HoR members indicate that Kabir and his deputy Marai al-Barassi in Benghazi have agreed to each disburse funds to the governments in their regions.
The HoR gave nominal approval to the GNS’s budget for 2024 on 30 April, subject to HoR comments being taken into consideration and agreement being reached on Chapter 3 (Development). The initial GNS budget was for 90.562 billion LYD, with 56 billion of this reportedly going on Chapter 1 (Salaries). However, it excluded Chapter 3 (Development). An HoR committee was established to iron out the details. In the intervening period, many HoR members have reportedly been pushing for a larger budget to be approved, claiming that the initial budget was not enough, especially if it is to cover all areas of Libya.
Kabir held several international meetings in run-up the budget being passed, and the issue had been discussed in HoR sessions also. Notably, on 6 July, Kabir met with Saleh in Cairo, where they almost certainly finalised the plans for the budget. Prior to that, Kabir had been in France. It comes as the next Cairo meeting was due to take place on 17 July in Morocco, with Takala last week saying that he was willing to engage with the process.
Significance: The passing of this huge budget by the HoR has brought the pre-existing political and economic rifts and rivalries within Libya to the forefront and highlights the challenges Libya faces in overcoming them. The questions of legality and legislative integrity around the HoR’s authority to approve the budget without HSC input and the circumstances under which it occurred are largely irrelevant, insofar as the legitimacy of all of Libya’s political or economic institutions is questionable and can be challenged or ignored based on political expediency. Furthermore, Saleh would have understood that the HSC would reject the budget due to lack of consultation – but probably also would have rejected it if they had been consulted. What is notable from a political perspective is the timing, as passing the budget in the run up to the next planned PC-HoR-HSC meeting gives Takala an easy excuse not to participate and to claim that Saleh has no interest in building consensus or agreeing a unified roadmap out of the political crisis.
The most important question in this case is whether the CBL will disburse the budget and to whom. While the speculation is that funds will go to both governments, the Libyan public are unlikely to be given further details as this could fuel additional anger and accusations of partisan and corrupt activities. From an economic standpoint, Kabir has been pushing for a unified budget to be agreed for months. However, it seems likely that any dual disbursement system will create greater opportunities for corruption and the expansion of patronage networks. This budget, and the uncertainty and division around it, is likely to intensify economic instability in the short term – with the longer term outlook dependant on if and how funds are distributed.
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Crackdown on dissent on the rise in western Libya as political activists kidnapped in Misrata and anti-corruption journalist seized in Tripoli
Incident: On 8 July, in the centre of Misrata, political activist Moatassim Billah al-Araibi and his companion Muhammed Ishtewi were abducted by unidentified armed men in civilian clothes and taken away in two blacked-out cars. A couple of hours later, Ishtewi was released after being beaten. On 9 July, the Municipal Council of Misrata and the Nobles & Elders of the city strongly condemned the kidnapping of al-Araibi and Ishtewi, stressing that the Council has been following up on the incident in cooperation with security agencies and judicial authorities.
On 10 July, UNSMIL called for the immediate and unconditional release of the abducted political activist and of all other arbitrary detainees in the whole of Libya. On 11 July, al-Araibi was released by his kidnappers.
NOC pushes positive message on product as North Hamada pipeline starts; Dabaiba discusses Ras Lanuf refinery with Abdul Sadiq
Incident: The National Oil Corporation (NOC) has had a PR push around its efforts to increase production this week.
On 9 July, the NOC said the Waha Oil Company had increased its daily production rate to 322,000 bpd. On 11 July, the NOC announced that operations had begun on the new pipeline from North Hamada oilfield (operated by Nafusa Oil Operations Company) to the Mellitah port (via the al-Feel-Mellitah pipeline), a distance of 250km. The NOC said the field's production will gradually increase in the coming days as wells are successively brought online so that production reaches 8,000 bpd by mid- July, and will increase to 10,000 bpd in August, which is the first phase program for developing the field.
On 13 July, the NOC published a summary of some of its key recent successes in increasing production including drilling more new wells, carrying out maintenance operations on existing wells, and bringing some of the stopped fields and wells back into production.
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Crackdown on dissent on the rise in western Libya as political activists kidnapped in Misrata and anti-corruption journalist seized in Tripoli
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