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BENGHAZI — Libya’s eastern central bank branch demanded cash from Tripoli on Tuesday, accusing it of ignoring the bank’s reunification after years of division during the conflict and indicating it could resume operations ticket printing.

The Central Bank of Libya (CBL) split with other state institutions after rival eastern and western factions entered the war in 2014, but began work to reunite in 2020 as part of a process of peace after a ceasefire.

However, peacemaking is under increased pressure, with rival factions again backing different governments and any further moves towards economic division could make a wider escalation more likely.

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The split between central banks, when Tripoli cut off the eastern branch of electronic money clearing operations, contributed to a major liquidity crisis as exchange rates diverged and individuals and businesses resorted to cash .

In the east, when the commercial banks were facing major financial problems, the eastern branch of the CBL had its own banknotes printed in Russia. Russia, along with the United Arab Emirates and Egypt, supported eastern forces during the civil war.

Eastern CBL said on Tuesday it had stopped printing money “as a sign of goodwill” during the reunification process, but accused the Tripoli CBL headquarters of being divisive and to deprive it of cash.

“If we are not endowed with liquidity of 500 million dinars ($104 million), the door will open to alternative solutions,” he said in a statement, without elaborating.

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This month, the eastern-based parliament, which appointed Fathi Bashagha as prime minister despite the Tripoli administration’s refusal to step down, approved a 90 billion dinar budget for his government.

However, the Tripoli CBL has not yet recognized the parliament’s budget and still appears to be working with the government of Abdulhamid al-Dbeibah in the capital.

The United States is pushing for a financial oversight mechanism to ensure a transparent and fair distribution of Libyan oil revenues to prevent either party from viewing disputes over access to public funds as a cause of conflict.

However, as the political crisis escalated, factions in the east blocked some Libyan oil production, depriving the state of revenue as a tactic to demand Bashagha’s settlement in Tripoli.

(Reporting by Ayman al-Warfali and Ahmed Elumami, Writing by Angus McDowall; Editing by Jon Boyle and Mark Heinrich)

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