Insights

A new alliance between Egypt and Turkey is facing its first significant challenge due to a political crisis in Libya, which is tied to the control of the country's oil wealth. The relationship between the two nations had been strained since the 2011 Arab Spring, particularly after Egypt's President Sisi ousted the Islamist leader Morsi, who was supported by Turkey's President Erdoğan. Recent diplomatic efforts included Sisi's visit to Ankara, signaling a potential thaw in relations. The immediate issue arises from the dismissal of Libya's central bank governor, Sadiq al-Kabir, who fled to Turkey fearing for his safety. His removal has sparked tensions, particularly as eastern Libya, which is backed by Egypt and other regional powers, demands his reinstatement. The central bank plays a crucial role in managing Libya's oil wealth and has significant foreign exchange reserves, making the situation economically sensitive. The political divide in Libya has persisted since Gaddafi's fall, with competing factions controlling different regions. The Tripoli-based government, led by Abdul Hamid Dabaiba, is accused of corruption and mismanagement, which has led to increased expenditures without corresponding revenues. This financial instability has resulted in the closure of oilfields and frozen transactions, further complicating the crisis. International actors, including the UN, are urging a consensus solution, potentially involving Kabir's interim return. The situation remains precarious, with the risk of Libya descending into a failed state, which would have significant implications for regional stability and migration issues.