Abstract

This paper examines the contemporary economic and political status of Libya within the North African regional context as of early 2026, drawing upon official data from international financial institutions, United Nations Security Council briefings, and specialized regional analysis. The research identifies a fundamental paradox at the heart of Libya’s regional positioning: the country possesses Africa’s largest proven oil reserves and experiences dramatic GDP growth fluctuations driven by hydrocarbon production, yet remains politically fractured between rival administrations in Tripoli and Benghazi, with parallel institutions undermining state unity. This paper argues that Libya’s regional influence is constrained by its internal divisions, even as its hydrocarbon resources make it an unavoidable actor in North African energy markets and European security calculations. The analysis proceeds in three main sections: economic performance characterized by extreme volatility and hydrocarbon dependence; political fragmentation manifested in institutional paralysis and judicial division; and regional implications including migration, security spillovers, and great power engagement. The conclusion assesses Libya’s trajectory and the prospects for reunification.

Keywords: Libya, North Africa, state fragmentation, hydrocarbon economy, political instability, regional security

1. Introduction

Libya occupies an anomalous position in the North African geopolitical landscape. As the holder of Africa’s largest proven crude oil reserves and a state with a small population relative to its resource endowment, Libya possesses the material basis for prosperity and regional influence. Its Mediterranean coastline, proximity to European markets, and historical role as a transit hub for migration and trade confer strategic significance that transcends its modest demographic weight.

Yet Libya’s contemporary reality stands in stark contrast to its potential. More than a decade after the 2011 NATO-backed uprising that toppled the Gaddafi regime, the country remains fundamentally fractured. Two rival administrations—the internationally recognized Government of National Unity (GNU) based in Tripoli, and an eastern-based government appointed by the House of Representatives and operating from Benghazi—claim authority over the territory . Parallel institutions, including competing central banks and now rival supreme courts, threaten the very unity of the state .

This paper provides a deeply researched analysis of Libya’s economic and political status as of early 2026, drawing upon International Monetary Fund and World Bank data, United Nations Security Council briefings by Special Representative Hanna Tetteh (February 2026), diplomatic statements, and comprehensive reporting from Libyan media. The timing is significant: early 2026 has witnessed a further deterioration in political cohesion, with the establishment of a parallel Supreme Constitutional Court in Benghazi, a 15 per cent currency devaluation by the Central Bank, and the assassination of Saif al-Islam Gaddafi—developments that collectively illuminate the trajectory of contemporary Libya.

The analysis proceeds in three main sections. Section two examines Libya’s economic performance and structural characteristics, analyzing the extreme volatility of GDP growth, the dominance of the hydrocarbon sector, fiscal challenges arising from parallel institutions, and the deteriorating living conditions documented by UN officials. Section three analyses the domestic political landscape, including the consolidation of institutional division, the judicial crisis threatening state unity, the failure of UN-facilitated political dialogue, and the security situation characterized by armed group proliferation and transnational crime. Section four addresses Libya’s regional position, examining relations with North African neighbours, its role in migration and energy markets, and the engagement of external powers. The conclusion synthesizes these findings to assess Libya’s overall regional standing and the prospects for reunification.

2. Economic Status: Volatility, Dependence, and Deterioration

2.1 Extreme Growth Volatility and Hydrocarbon Dominance

The Libyan economy is characterized by extreme volatility, with growth rates that fluctuate dramatically based on the single factor that dominates all others: oil production. According to the International Monetary Fund’s October 2024 World Economic Outlook database, Libya’s real GDP growth has followed a wildly erratic trajectory: 10.2 per cent in 2023, followed by a sharp deceleration to 2.4 per cent in 2024, then a projected surge to 13.7 per cent in 2025 before moderating to 4.1 per cent in 2026, 2.0 per cent in 2027, and stabilizing around 2.1-2.3 per cent through 2029 .

These fluctuations are not the product of normal business cycles or policy adjustments; they reflect the fundamental reality that Libya’s economy moves in lockstep with the oil sector. As the IMF explicitly states, “The outlook continues to be dominated by developments in the oil sector” . The slowdown in 2024 was directly linked to contraction in the hydrocarbons sector, while the projected recovery for 2025 depends entirely on oil production expansion .

The World Bank’s December 2024 economic report provides additional granularity on these dynamics. With oil production expected to average 1.1 million barrels per day in 2024, GDP was anticipated to shrink by 2.7 per cent. As oil output recovers to 1.2 million bpd in 2025 and 1.3 million bpd in 2026, GDP growth is expected to rebound to 9.6 per cent and 8.4 per cent respectively . These figures underscore the economy’s complete dependence on a single commodity and its vulnerability to any disruption in production or export.

The hydrocarbon sector’s dominance extends beyond growth figures to encompass the entire economic structure. Oil and gas constitute a significant portion of Libya’s GDP, the overwhelming majority of government revenue, and virtually all export earnings . This extreme concentration creates acute vulnerability to global price fluctuations, production disruptions, and the policy decisions of OPEC+, of which Libya is a member.

2.2 Non-Hydrocarbon Sector: Government Spending as Driver

The non-hydrocarbon sector, while secondary to oil, plays an important role in employment and domestic economic activity. The IMF projects that “non-hydrocarbon growth is set to remain between 5 and 6 per cent in the medium term” . However, this growth is not driven by private sector dynamism or structural diversification; it is “supported by sustained government spending” .

The mechanism is straightforward: hydrocarbon revenues flow into state coffers, are distributed through public sector wages and subsidies, and generate demand for goods and services in the domestic economy. This model creates a circular dependence—the non-oil sector thrives only to the extent that oil revenues sustain government expenditure. It does not represent genuine economic diversification or reduce vulnerability to oil sector disruptions.

The public sector dominates formal employment, with nearly 80 per cent of government expenditures consumed by salaries and subsidies . This leaves minimal fiscal space for investment in infrastructure, human capital, or productive capacity that might generate alternative sources of growth and employment. The economy remains trapped in a rentier structure inherited from the Gaddafi era and reinforced by post-2011 fragmentation.

2.3 Fiscal Crisis and Parallel Institutions

Libya’s fiscal position has deteriorated markedly, driven not only by hydrocarbon revenue fluctuations but more fundamentally by the institutional fragmentation that prevents unified budget management. As UN Special Representative Hanna Tetteh reported to the Security Council in February 2026, “with parallel institutions operating without a unified budget, public spending remains rigid and largely unproductive” .

The absence of a unified national budget means that two rival administrations—the Tripoli-based GNU and the eastern-based government—conduct uncoordinated public spending, drawing on the same resource base without coherent allocation mechanisms . This “uncoordinated public spending by parallel institutions, combined with declining oil revenues, has depleted foreign reserves” .

The IMF projects that the fiscal balance will remain in deficit “due to continued high levels of public spending” . This structural deficit persists despite the country’s substantial hydrocarbon revenues because expenditure is not disciplined by unified budgetary processes and because the political economy of fragmentation incentivizes both administrations to maximize spending to maintain constituent support.

2.4 Currency Crisis and Inflationary Pressures

The fragmentation of state institutions has manifested acutely in the monetary domain. The Central Bank of Libya, traditionally one of the country’s most respected institutions, has itself become a site of contestation, with parallel claims to authority. The January 2026 decision to devalue the Libyan dinar for the second time in nine months—by nearly 15 per cent—reflects the mounting pressures on the currency .

While the devaluation aims to ease foreign currency pressures by making exports more competitive and reducing demand for imports, it carries severe social consequences. As Tetteh noted, the devaluation is “impacting the purchasing power of vulnerable households” . For ordinary Libyans, this translates directly into deteriorating living standards.

The broader picture is one of profound economic distress. Tetteh’s briefing painted a grim picture: “Libyans are facing worsening living conditions driven by currency devaluation, rising prices and persistent fuel shortages” . A report by the Minister of Economy of the Government of National Unity indicates that 30 per cent of Libyans live in poverty, with higher rates in marginalized areas such as the south . The cost of the basic food basket increased by 24 per cent between 2024 and 2025 , placing immense strain on household budgets.

These economic pressures are not merely statistical abstractions; they generate real human suffering and create conditions that can fuel renewed conflict. Tetteh warned that “deteriorating economic conditions, rising poverty and a fragile security environment could trigger unexpected political and security challenges” .

2.5 External Sector: Current Account and Reserves

Libya’s external position reflects the same contradictions evident throughout the economy. The IMF projects a small current account surplus of 0.7 per cent of GDP for 2025, followed by small deficits in the medium term . The current account records the country’s transactions with the rest of the world—exports, imports, income flows, and transfers.

The surplus projection for 2025, if realized, would represent a positive development, but it must be understood against the backdrop of depleted foreign reserves. The accumulation of current account deficits in previous years, combined with the inability to manage reserves coherently due to institutional fragmentation, has left Libya with diminished buffers against external shocks.

The country’s heavy reliance on oil exports and high volume of imports expose it to “global downside risks” . Any decline in global oil prices, any sustained production disruption, or any supply chain shock affecting imports would rapidly transmit to the domestic economy with limited cushioning capacity.

2.6 Investment and Production Prospects

Despite the political chaos, there are indications of renewed international investor interest in Libya’s hydrocarbon sector. Tetteh noted that “recent licensing agreements in the hydrocarbon sector suggest a degree of renewed investor interest” . This interest reflects the global appetite for new oil and gas supplies, particularly in the context of energy security concerns following the Russian invasion of Ukraine.

However, the UN envoy cautioned that these agreements “are unlikely to alleviate fiscal pressures this year” . The time lag between licensing and production means that any benefits will accrue only in the medium term, assuming political stability allows projects to proceed. Moreover, the fragmented institutional environment creates significant risks for investors, who must navigate competing authorities and uncertain legal frameworks.

The World Bank’s production forecasts assume that oil output will increase from 1.1 million bpd in 2024 to 1.3 million bpd in 2026 . Achieving these targets requires not only investment but also sustained stability in production areas and reliable export routes—both contingent on political developments that remain deeply uncertain.

3. Political Status: Institutionalized Fragmentation

3.1 The Two-Government Reality

Libya’s political landscape is defined by the consolidation of rival administrations, each claiming legitimate authority over the country. As Anadolu Ajansı’s reporting from the February 2026 UN Security Council session summarizes, “Libya remains split between two rival administrations: the internationally recognized Government of National Unity, led by Abdul Hamid Dbeibah and based in Tripoli, which governs western Libya, and an eastern-based government appointed by the House of Representatives in early 2022 and headed by Osama Hammad, operating from Benghazi and administering the east and much of the south” .

This division is not merely a matter of competing political claims; it has crystallized into parallel state structures. Each administration maintains its own governing institutions, security forces, and now increasingly, judicial bodies. The United Nations has for years sought to bridge these divisions and pave the way for long-delayed parliamentary and presidential elections aimed at reunifying the country , but progress has been minimal.

The House of Representatives (the national parliament based in the east) and the High Council of State (the country’s top advisory political body based in Tripoli) have failed to advance the agreed political roadmap. As Tetteh reported, “their inability to use their agreed mechanism and follow-on unilateral actions has further eroded their credibility” . Libyan public perceptions reflect a growing belief that these bodies are “unable or unwilling” to deliver on their mandates .

3.2 The Judicial Crisis: A Red Line Crossed

The most alarming political development of early 2026 is the accelerating fragmentation of Libya’s judicial system. Historically, the judiciary had remained largely unified despite prolonged political challenges, with the Supreme Court in Tripoli and its Constitutional Chamber serving as the highest constitutional judicial body . This judicial unity provided a last thread of institutional coherence binding the country together.

That thread has now snapped. After the House of Representatives established a Supreme Constitutional Court in Benghazi in late 2025, this parallel body began issuing rulings that conflict with those of the Constitutional Chamber of the Supreme Court in Tripoli . These “contradictory, parallel judicial decisions put into jeopardy the unity of the legal and judicial systems” .

The implications extend far beyond legal technicalities. As Tetteh warned in stark terms, “If actions are not taken to preserve the unity, coherence and independence of the judiciary, the conflicting legal systems that emerge will impact the economy, elections, governance, security and human rights. It is a red line that, if crossed, can undermine the unity of the state” .

The Libya Observer’s detailed reporting on the Security Council briefing captured the gravity of Tetteh’s warning: “She explained that this situation has led to jurisdictional disputes and conflicting rulings, threatening the unity of the legal system and weakening accountability. She urged Libyan leaders to refrain from escalation and cooperate with the independent judicial mediation committee, warning that continued judicial division ‘will undermine the unity of the state'” .

Tetteh went further, calling on the Security Council to “hold individuals who continue to take actions towards dividing the judiciary and administration of justice, to be held accountable for taking actions that seek to undermine the unity of the country” . This unprecedented call for accountability reflects the seriousness with which the UN views the judicial fragmentation.

3.3 The Political Roadmap and UN Mediation

The United Nations Support Mission in Libya (UNSMIL), under Special Representative Hanna Tetteh, has pursued a structured dialogue process aimed at breaking the political deadlock. This process involves four working groups focused on economy, governance, security, and reconciliation/human rights, which have held multiple rounds of discussions in Tripoli .

The governance and security groups have focused on recommendations to create a conducive environment for elections, while the economic group has stressed the need to address excessive spending and diversify revenues . Tetteh has also commended the role of the “Women’s Bloc” in promoting women’s participation in the political process .

However, progress has been minimal. The House of Representatives and High Council of State have failed to complete the first two steps of the agreed roadmap, including establishing a mechanism to select the board of the High National Elections Commission and advancing electoral legislation . Tetteh described their agreed mechanism as “unworkable” .

In response to this impasse, Tetteh has initiated consultations on an alternative two-step approach aimed at restoring momentum. Should a smaller group of Libyan representatives fail to agree on the roadmap’s milestones, she warned, a broader convening would be required. Her message was unequivocal: “We cannot wait indefinitely” .

China’s representative at the Security Council, Counselor Teng Fei, expressed support for UNSMIL’s continued efforts while emphasizing the need for Libyan ownership. “The international community should support all parties in Libya in putting the interests of the state and the people first, engaging in sincere dialogue and consultation, and reaching consensus on key electoral issues as soon as possible,” he stated .

3.4 Security Situation: Armed Groups, Assassinations, and Foreign Forces

The security landscape in Libya remains deeply concerning, characterized by the proliferation of armed groups, sporadic violence, and the presence of foreign forces and mercenaries. Tetteh’s briefing noted that “the current security situation in Libya remains concerning, with sporadic conflicts and violence” .

A dramatic development in early February 2026 was the assassination of Saif al-Islam Gaddafi, son of the former ruler, who was subject to an International Criminal Court arrest warrant. Tetteh reported that he was killed in the town of Zintan on February 3 “under mysterious circumstances” , calling for a swift and transparent investigation to ensure accountability.

China’s representative echoed this concern, noting that “the recent assassination of Saif al-Islam Gaddafi may further exacerbate tensions” and calling on all parties to “cease all forms of violence, resolve political differences through peaceful means, and avoid any unilateral actions that could trigger new conflicts and undermine the prospects for dialogue” .

The UN also noted the deaths of senior military figures in a December plane crash, including Chief of General Staff Lieutenant General Mohammed Haddad and Major General Al-Fitouri Ghribeel, a member of the Joint Military Commission (5+5) . Tetteh paid tribute to them as “advocates for the unification of the military institution” .

The presence of foreign forces and mercenaries remains a critical issue. The ceasefire agreement signed in October 2020 called for the withdrawal of all foreign fighters, but implementation has been partial at best. China called for foreign countries to “cease undue interference in Libya, implement the Security Council arms embargo, cut off illegal flow of weapons to Libya, and promote the expeditious withdrawal of foreign forces and mercenaries” .

Despite these challenges, there have been modest positive developments. Tetteh welcomed the completion of municipal elections in three western municipalities on February 7, bringing the total number of elected municipalities over the past 14 months to 119 . These local-level elections demonstrate continued civic engagement and provide a foundation for potential broader political processes.

3.5 Transnational Crime and Migrant Abuses

Libya’s fragmentation has created fertile ground for transnational criminal networks. Tetteh warned that these networks “continue to expand, turning Libya into a major transit hub for drug trafficking and sustaining illicit economies linked to corruption and armed groups” . A UN Office on Drugs and Crime report cited by the envoy classifies Libya as “a major hub for drug trafficking linked to arms and human smuggling” .

The human cost of this criminal economy is devastating, particularly for migrants attempting to transit Libya toward Europe. A joint report issued on February 17 by the High Commissioner for Human Rights and UNSMIL highlighted severe abuses associated with human trafficking . In recent weeks, the bodies of 21 migrants were found in a mass grave in Ajdabiya, while more than 400 others—including women and children—were freed from detention sites bearing signs of torture .

Tetteh emphasized that “these incidents are not isolated” . They represent systematic abuses enabled by the collapse of state authority, the complicity of armed groups, and the demand for migrant labour and trafficking services. She urged Libyan authorities and international partners to dismantle trafficking networks and bring perpetrators to justice.

The Libya Observer’s reporting added chilling detail: migrants rescued from trafficking sites in Ajdabiya, Tobruk, and Kufra included women and children bearing signs of torture . These abuses occur with impunity in a country where the state’s writ does not extend to large swathes of territory and where armed groups operate as law unto themselves.

4. Regional Position: Between Potential and Paralysis

4.1 Relations with North African Neighbours

Libya’s relations with its North African neighbours—Egypt, Tunisia, Algeria, and to a lesser extent Morocco—are shaped by its internal fragmentation, its hydrocarbon wealth, and the security spillovers generated by its instability. Each neighbour pursues a distinct approach calibrated to its interests and threat perceptions.

Egypt has historically been the most deeply engaged external actor in Libya, viewing developments there through the lens of national security. The Egyptian government has supported the Libyan National Army under Khalifa Haftar, seeing it as a bulwark against Islamist and extremist groups that could threaten Egypt’s western frontier. Cairo maintains significant influence in eastern Libya and has hosted political dialogues aimed at advancing a resolution. The large presence of Egyptian workers in Libya and the countries’ shared border make Egyptian interests in Libyan stability direct and immediate.

Tunisia shares an extensive border with western Libya and has been profoundly affected by Libyan instability. The collapse of Libyan state institutions generated cross-border smuggling, weapons proliferation, and at times, influxes of refugees. Tunisia’s own political and economic crises have limited its capacity to engage proactively, leaving it largely reactive to Libyan developments.

Algeria, with its own history of civil conflict and its traditional suspicion of external intervention, has pursued a policy of encouraging Libyan reconciliation while maintaining distance from the rival factions. Algeria shares a long southern border with Libya and is concerned about Sahelian instability spilling over. Its diplomatic approach emphasizes African solutions and coordination with the UN.

Morocco has positioned itself as a neutral venue for Libyan dialogue, hosting multiple rounds of inter-Libyan talks. This role enhances Morocco’s regional profile and aligns with its broader strategy of positioning itself as a hub for African diplomacy. However, Morocco’s geographic distance and limited direct stakes in Libya constrain its influence relative to Libya’s immediate neighbours.

4.2 The Unfulfilled Maghreb Integration Vision

Libya’s fragmentation has profound implications for the broader Maghreb region. The Arab Maghreb Union (UMA), established in 1989 to promote regional integration among Morocco, Algeria, Tunisia, Libya, and Mauritania, has been paralyzed for decades, largely due to the Morocco-Algeria dispute over Western Sahara. Libya’s instability adds another layer of paralysis.

The vision of a integrated Maghreb economic space—with Libya’s hydrocarbon wealth complementing Morocco’s agriculture and industry, Tunisia’s manufacturing, and Algeria’s energy resources—remains unrealized. Instead of contributing to regional prosperity, Libya generates security externalities that impose costs on its neighbours and divert resources from development.

The Libya Observer’s reporting on Tetteh’s briefing noted her warning that “deteriorating economic conditions combined with a fragile security landscape could trigger unforeseen political and security crises” with implications “for the country and the region” . This regional dimension is critical: Libya’s problems do not stop at its borders.

4.3 Energy: The European Connection

Libya’s hydrocarbon resources give it enduring significance for European energy security, a fact that has shaped external engagement since the 2011 intervention. European countries—particularly Italy, France, and Germany—maintain active diplomatic and commercial interests in Libya, seeking to secure energy supplies and influence political outcomes.

Italy, the former colonial power and historically Libya’s most important European partner, has been particularly active. Italian energy company Eni has maintained operations in Libya throughout the conflict and has signed new exploration and production agreements. Italy also bears the primary burden of migration from Libya and has sought to manage flows through engagement with Libyan coast guard and militia groups.

France has pursued a more complex and sometimes contradictory policy, at times appearing to support rival factions. French companies have interests in Libya’s energy sector, and France has been active in UN-led diplomatic efforts. However, French policy has at times generated friction with Italy and other European partners.

The European Union as an institution has invested significant resources in Libya, including through naval operations in the Mediterranean, capacity-building programs for Libyan institutions, and humanitarian assistance. However, EU influence is limited by the absence of a unified Libyan interlocutor and by the competing interests of member states.

4.4 Migration: The Mediterranean Crucible

Libya’s position as the primary departure point for migrants attempting to reach Europe by sea has made migration management a central dimension of its external relations. The collapse of state authority has enabled human smuggling networks to operate with impunity, generating profits estimated in the hundreds of millions of dollars annually.

The human cost of this system is staggering. Migrants face abuse, torture, extortion, and death. The mass graves and torture sites documented by UN investigators represent the extreme end of a continuum of violence that encompasses detention centres, informal holding sites, and transit routes across the country.

European policy has focused on supporting the Libyan coast guard to intercept migrant boats and return them to Libya, a approach that has drawn fierce criticism from human rights organizations given the conditions migrants face upon return. The underlying dilemma—how to manage migration pressures without legitimizing abuses—remains unresolved.

Tetteh’s briefing brought the migration issue to the Security Council’s attention, highlighting “severe abuses associated with human trafficking” and calling for perpetrators to be brought to justice . The combination of criminal impunity, state fragmentation, and external demand for migration management creates a toxic dynamic that perpetuates abuse.

4.5 Great Power Engagement: Competition and Caution

Libya has become an arena for great power competition, albeit one where no external actor has been able to impose its preferred outcome. Russia, Turkey, the United Arab Emirates, Egypt, and Qatar have all provided varying degrees of support to Libyan factions, prolonging the conflict and complicating UN mediation efforts.

Turkey’s military intervention in support of the Tripoli-based Government of National Accord in 2019-2020 shifted the balance of power and established Turkey as a decisive external actor. Turkish forces and Syrian mercenaries remain present in Libya, and Turkey has signed economic and maritime agreements with the GNU that have regional implications.

Russia’s engagement, channeled through the Wagner Group (since reorganized) and other private military companies, has provided support to eastern-based forces. Russian presence in Libya gives Moscow a foothold in the central Mediterranean and leverage over European security. The assassination of Saif al-Islam Gaddafi may also have implications for Russian interests, given reported contacts between his network and Russian actors.

The United Arab Emirates and Egypt have supported eastern-based forces, viewing them as allies against political Islam and as partners in maintaining regional stability. Qatar has historically supported Islamist-aligned factions in western Libya.

China’s position, articulated in the Security Council by Counselor Teng Fei, emphasizes support for Libyan sovereignty and UN mediation, while calling for implementation of the arms embargo and withdrawal of foreign forces . China’s economic interests in Libya, including infrastructure and energy investments, give it a stake in stability, but Beijing has maintained a relatively low profile compared to other external actors.

The multiplicity of external actors with competing agendas creates what analysts term a “proxy war” dynamic, in which Libyan factions can draw on external support to maintain positions rather than compromise. Tetteh’s call for “coordinated international engagement”  reflects recognition that external divisions perpetuate internal fragmentation.

4.6 Frozen Assets and International Obligations

A persistent dimension of Libya’s international engagement concerns the more than $70 billion in Libyan assets frozen abroad since 2011. These assets, held in various countries including the United States, United Kingdom, and Switzerland, represent a critical resource for Libya’s future reconstruction and development.

China’s representative at the Security Council emphasized that “the Security Council has the responsibility to protect Libya’s frozen overseas assets” and that “any misappropriation or erosion of those assets is unacceptable” . The sanctions committee is developing an implementation assistance notice on reinvestment of cash reserves pursuant to Resolution 2769, a technical but important step toward preserving asset values.

The frozen assets issue intersects with broader questions of recognition and authority. Which Libyan institutions have the legitimacy to request release or management of these assets? How can they be protected from depreciation while frozen? These questions have no easy answers in the context of institutional fragmentation.

5. Conclusion: Libya’s Trajectory and Regional Standing

Libya in early 2026 presents a profound paradox: a country of immense hydrocarbon wealth and strategic significance that remains unable to translate these assets into stability, prosperity, or regional influence. The economic picture is one of extreme volatility driven by oil production fluctuations, with dramatic growth surges followed by sharp contractions. The non-hydrocarbon sector grows only because government spending—itself dependent on oil revenues—sustains it. Fiscal deficits persist, foreign reserves are depleted, and ordinary Libyans face deteriorating living conditions, currency devaluation, and rising poverty.

The political picture is even more concerning. Institutional fragmentation has deepened to the point where parallel governments, central banks, and now supreme courts threaten the very unity of the state. The judicial division that UN envoy Hanna Tetteh identifies as a “red line” represents a qualitative escalation in the disintegration of state structures. If crossed, it will create conflicting legal systems that undermine governance, elections, security, and human rights.

The security situation remains dire, with armed groups proliferating, transnational criminal networks expanding, and foreign forces and mercenaries present across the country. The assassination of Saif al-Islam Gaddafi adds another layer of uncertainty and potential violence. Migrants continue to suffer horrific abuses with impunity, their bodies found in mass graves or freed from torture sites.

Yet there are flickers of possibility. Municipal elections proceed in some areas, demonstrating continued civic engagement. International interest in Libya’s hydrocarbon sector suggests that investors see long-term potential. The UN’s structured dialogue process, however halting, maintains a framework for political engagement. China and other Security Council members continue to affirm support for Libyan sovereignty and UN mediation.

Libya’s regional standing is fundamentally constrained by its internal divisions. It cannot exercise the influence that its resources would otherwise confer because it lacks unified institutions and a coherent foreign policy. Its neighbours must contend with security spillovers rather than benefit from economic complementarity. The vision of a integrated Maghreb, with Libya as a cornerstone, remains a distant aspiration.

Looking forward, Libya’s trajectory will be shaped by several key variables: the durability of institutional fragmentation and whether the judicial division can be reversed; the capacity of the UN to facilitate meaningful political progress; the evolution of external engagement and whether competing international actors can coordinate; and the resilience of Libyan society in the face of economic deterioration and political paralysis.

The warning from UN Special Representative Tetteh is stark but accurate: “The main cause of this dysfunction is a divided government, with limited coordination and unilateral actions on both sides” . The only way forward, she insists, is “a political solution that brings Libyans together” . Whether Libyan actors can rise to this challenge, and whether the international community can support rather than obstruct their efforts, will determine whether Libya’s paradox can be resolved—or whether the country continues its tragic trajectory toward consolidated fragmentation.

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