Diplomats fear economic chaos as new Russian-made banknotes are distributed in Libya

by WorldTribune Staff, June 2, 2016

The distribution of new Russian-made banknotes in Libya is raising alarms among diplomats who fear it will lead to economic crisis in a country already wracked by chaos.

The U.S. said the banknotes “would be counterfeit and could undermine confidence in Libya’s currency, as well as the Central Bank of Tripoli’s ability to manage the monetary policy to enable economic recovery.”

Currency is exchanged in Tripoli. /Mahmud Turkia/AFP/Getty Images
Currency is exchanged in Tripoli. /Mahmud Turkia/AFP/Getty Images

The banknotes, worth a total of 200 million Libyan dinar (about $145 million U.S.) were flown in from Moscow to Labraq airport on May 31. The Beida Central Bank is distributing the cash in the east and plans to circulate the notes in the west by the weekend. Banks will extend opening hours to meet demand.

Diplomats say the Russian-made notes, with their own watermarks, serial numbers and design, will open an economic divide and add to the chaos that the UN-backed Government of National Accord (GNA) in Tripoli is seeking to overcome.

Western sources said reports that the Central Bank of Tripoli cleared the new banknotes for distribution were untrue. The central bank is run largely by technocrats unaligned to any party in Libya.

The GNA has said it is aware that a lack of liquidity in the banking system has led to staff across the public sector not being paid, sometimes for weeks or months. A consignment of notes from the UK designed for the Central Bank has yet to arrive, increasing the pressure on the economy and leading to widespread use of post-dated checks.

Meanwhile, Migrant Offshore Aid Station (MOAS) is proposing the use of civilian drones to help find and rescue migrants in distress on boats attempting to cross from Libya to Europe. Hundreds of migrants have died after their overcrowded and less-than-seaworthy boats failed to make the journey.

MOAS said, beginning on June 6, it would deploy two remotely piloted aircraft to monitor large areas of the Mediterranean. The craft can stay aloft for about 6 hours, cover 97 nautical miles and send back high-resolution images using sensitive day or night optics.