Egypt and Turkey’s Emerging Alliance Faces a Test Amid Libyan Crisis

Département de recherche, d’études stratégiques et de relations internationales 10–09-2024

The dismissal of Libya’s central bank governor poses an immediate challenge to Presidents Sisi and Erdoğan, threatening to test their newly formed alliance.

A fresh political crisis in Libya, tied to the control of its vast oil resources, has become the first significant hurdle for the developing alliance between Egypt and Turkey, which aims to resolve longstanding Middle Eastern disputes.

The two nations had fallen out after Egypt’s President Abdel Fatah al-Sisi led a coup in 2013, overthrowing Mohamed Morsi, an Islamist leader who had close ties with Turkish President Recep Tayyip Erdoğan.

However, almost three years of diplomatic efforts culminated last week when Sisi visited Ankara to meet with Erdoğan, resulting in the signing of over 30 memoranda of understanding. These agreements seek to increase trade between the two countries to $15bn over the next five years. Economic concerns and the conflict in Gaza have driven both nations to seek closer ties.

Yet, analysts caution that unresolved differences over Libya’s internal conflicts could undermine this promising new cooperation. Since the 2011 fall of Muammar Gaddafi, Libya’s political landscape has been split between eastern and western factions.

Turkey has supported the western Libyan government, notably providing military aid in 2019 when the capital, Tripoli, was under threat from an assault led by eastern warlord Khalifa Haftar. Egypt, along with the UAE and Russia, backs Haftar and his family, who hold significant power in eastern Libya.

During last week’s meeting, Sisi and Erdoğan agreed to address the issue of Libya, but the specifics of how they would approach the conflict were not clearly defined.

The most pressing issue is the recent dismissal of Libya’s central bank governor, Sadiq al-Kabir, which occurred three weeks ago. Kabir, fearing for his safety, fled to Turkey after being ousted by factions aligned with the Tripoli-based government led by Abdul Hamid Dabaiba. The central bank, which manages Libya’s oil revenue distribution, oversees $80bn in foreign exchange reserves, making its leadership a point of contention.

Dabaiba argued that Kabir had become overly critical of the government’s corruption and had started supporting the eastern factions. Kabir, in contrast, cited the government’s unsustainable spending, with planned expenditures for 2024 projected to exceed revenues by 37.5%.

Eastern Libya has condemned Kabir’s removal, calling it unconstitutional and demanding his reinstatement. The resulting deadlock has led to the shutdown of several oilfields and the freezing of the central bank’s foreign exchange transactions by global financial institutions, influenced by U.S. pressure against supporting Kabir’s ouster.

The central bank remains one of Libya’s few functional institutions, and western powers have voiced opposition to Kabir’s dismissal, viewing him as a flawed but stabilizing figure.

Highlighting Libya’s importance to Turkey-Egypt relations, Turkish intelligence chief Ibrahim Kalin traveled to Tripoli shortly after the Erdoğan-Sisi summit. Kalin is reportedly attempting to negotiate Kabir’s temporary return or facilitate the creation of a consensus board to lead the bank.

Alia Brahimi, an expert on Middle Eastern and North African politics, noted in an upcoming Atlantic Council piece that Libya’s internal conflicts revolve around elite families vying for control of economic resources, complicating Turkey’s role. Furthermore, growing financial ties between Turkish and Libyan businesses, such as a massive steel and iron plant being constructed in Benghazi, indicate that Turkey may not be as willing to extend unconditional military support to Tripoli as it did in 2019.

At the same time, western Libya has granted Turkish troops near-complete immunity under a memorandum of understanding, making it a significant decision for Turkey to potentially withdraw support for Dabaiba’s control over the central bank.

The UN and western diplomats have called for a consensus-based resolution to the Kabir crisis, likely involving his interim reinstatement.

A regional observer remarked, “The international community is once again alarmed by Libya’s instability, recognizing that its severe economic problems could lead to a swift collapse, turning it into another failed state on the Mediterranean. The security risks in terms of migration and regional instability are considerable. However, no long-term solution to Libya’s divisions has been proposed, and the entrenched financial interests of its elite continue to erode the country from within.”