Libya all about oil, or central banking?
By Ellen Brown
Several writers have noted the odd fact that the Libyan rebels took time out
from their rebellion in March to create their own central bank - this before
they even had a government. Robert Wenzel wrote in the Economic Policy Journal:
have never before heard of a central bank being created in just a matter of
weeks out of a popular uprising. This suggests we have a bit more than a rag
tag bunch of rebels running around and that there are some pretty sophisticated
Alex Newman wrote in the New American:
statement released last week, the rebels reported on the results of a meeting
held on March 19. Among other things, the supposed rag-tag revolutionaries
announced the "[d]esignation of the Central Bank of Benghazi as a monetary
authority competent in monetary policies in Libya and appointment of a Governor
to the Central Bank of Libya, with a temporary headquarters in Benghazi."
Newman quoted CNBC senior editor John Carney, who asked, "Is this the first
time a revolutionary group has created a central bank
while it is still in the midst of fighting the entrenched political power? It
certainly seems to indicate how extraordinarily powerful central bankers have
become in our era."
Another anomaly involves the official justification for taking up arms against
Libya. Supposedly it's about human rights violations, but the evidence is
contradictory. According to an article on the Fox News website on February 28:
the United Nations works feverishly to condemn Libyan leader Muammar al-Qaddafi
for cracking down on protesters, the body's Human Rights Council is poised to
adopt a report chock-full of praise for Libya's human rights record.
The review commends Libya for improving educational opportunities, for making
human rights a "priority" and for bettering its "constitutional" framework.
Several countries, including Iran, Venezuela, North Korea, and Saudi Arabia but
also Canada, give Libya positive marks for the legal protections afforded to
its citizens - who are now revolting against the regime and facing bloody
Whatever might be said of Gaddafi's personal crimes,
the Libyan people seem to be thriving. A delegation of medical professionals
from Russia, Ukraine and Belarus wrote in an appeal to Russian President Dmitry
Medvedev and Prime Minister Vladimir Putin that after becoming acquainted with
Libyan life, it was their view that in few nations did people live in such
[Libyans] are entitled to free treatment, and their hospitals
provide the best in the world of medical equipment. Education in Libya is free,
capable young people have the opportunity to study abroad at government
expense. When marrying, young couples receive 60,000 Libyan dinars (about
50,000 US dollars) of financial assistance. Non-interest state loans, and as
practice shows, undated. Due to government subsidies the price of cars is much
lower than in Europe, and they are affordable for every family. Gasoline and
bread cost a penny, no taxes for those who are engaged in agriculture. The
Libyan people are quiet and peaceful, are not inclined to drink, and are very
They maintained that the international community
had been misinformed about the struggle against the regime. "Tell us," they
said, "who would not like such a regime?"
Even if that is just propaganda, there is no denying at least one very popular
achievement of the Libyan government: it brought water to the desert by
building the largest and most expensive irrigation project in history, the
US$33 billion GMMR (Great Man-Made River) project. Even more than oil, water is
crucial to life in Libya.
The GMMR provides 70% of the population with water for drinking and irrigation,
pumping it from Libya's vast underground Nubian Sandstone Aquifer System in the
south to populated coastal areas 4,000 kilometers to the north. The Libyan
government has done at least some things right.
Another explanation for the assault on Libya is that it is "all about oil", but
that theory too is problematic. As noted in the National Journal, the country
produces only about 2% of the world's oil. Saudi Arabia alone has enough spare
capacity to make up for any lost production if Libyan oil were to disappear
from the market. And if it's all about oil, why the rush to set up a new
Another provocative bit of data circulating on the Net is a 2007 "Democracy
Now" interview of US General Wesley Clark (Ret). In it he says that about 10
days after September 11, 2001, he was told by a general that the decision had
been made to go to war with Iraq. Clark was surprised and asked why. "I don't
know!" was the response. "I guess they don't know what else to do!" Later, the
same general said they planned to take out seven countries in five years: Iraq,
Syria, Lebanon, Libya, Somalia, Sudan, and Iran.
What do these seven countries have in common? In the context of banking, one
that sticks out is that none of them is listed among the 56 member banks of the
Bank for International Settlements (BIS). That evidently puts them outside the
long regulatory arm of the central bankers' central bank in Switzerland.
The most renegade of the lot could be Libya and Iraq, the two that have
actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted
that "[s]ix months before the US moved into Iraq to take down Saddam Hussein,
the oil nation had made the move to accept euros instead of dollars for oil,
and this became a threat to the global dominance of the dollar as the reserve
currency, and its dominion as the petrodollar."
According to a Russian article titled "Bombing of Libya - Punishment for
Ghaddafi for His Attempt to Refuse US Dollar", Gaddafi made a similarly bold
move: he initiated a movement to refuse the dollar and the euro, and called on
Arab and African nations to use a new currency instead, the gold dinar. Gaddafi
suggested establishing a united African continent, with its 200 million people
using this single currency.
During the past year, the idea was approved by many Arab countries and most
African countries. The only opponents were the Republic of South Africa and the
head of the League of Arab States. The initiative was viewed negatively by the
USA and the European Union, with French President Nicolas Sarkozy calling Libya
a threat to the financial security of mankind; but Gaddafi was not swayed and
continued his push for the creation of a united Africa.
And that brings us back to the puzzle of the Libyan central bank. In an article
posted on the Market Oracle, Eric Encina observed:
One seldom mentioned
fact by western politicians and media pundits: the Central Bank of Libya is
100% State Owned ... Currently, the Libyan government creates its own money,
the Libyan Dinar, through the facilities of its own central bank. Few can argue
that Libya is a sovereign nation with its own great resources, able to sustain
its own economic destiny. One major problem for globalist banking cartels is
that in order to do business with Libya, they must go through the Libyan
Central Bank and its national currency, a place where they have absolutely zero
dominion or power-broking ability. Hence, taking down the Central Bank of Libya
(CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is
certainly at the top of the globalist agenda for absorbing Libya into its hive
of compliant nations.
Libya not only has oil. According to the
International Monetary Fund (IMF), its central bank has nearly 144 tonnes of
gold in its vaults. With that sort of asset base, who needs the BIS, the IMF
and their rules?
All of which prompts a closer look at the BIS rules and their effect on local
economies. An article on the BIS website states that central banks in the
Central Bank Governance Network are supposed to have as their single or primary
objective "to preserve price stability".
They are to be kept independent from government to make sure that political
considerations don't interfere with this mandate. "Price stability" means
maintaining a stable money supply, even if that means burdening the people with
heavy foreign debts. Central banks are discouraged from increasing the money
supply by printing money and using it for the benefit of the state, either
directly or as loans.
serve only the single purpose of strengthening the international private
banking system, even at the peril of national economies. The BIS does to
national banking systems what the IMF has done to national monetary regimes.
National economies under financial globalization no longer serve national
... FDI [foreign direct investment] denominated in foreign currencies, mostly
dollars, has condemned many national economies into unbalanced development
toward export, merely to make dollar-denominated interest payments to FDI, with
little net benefit to the domestic economies.
"Applying the State Theory of Money, any government can fund with its own
currency all its domestic developmental needs to maintain full employment
without inflation." The "state theory of money" refers to money created by
governments rather than private banks.
The presumption of the rule against borrowing from the government's own central
bank is that this will be inflationary, while borrowing existing money from
foreign banks or the IMF will not. But all banks actually create the money they
lend on their books, whether publicly owned or privately owned. Most new money
today comes from bank loans. Borrowing it from the government's own central
bank has the advantage that the loan is effectively interest-free. Eliminating
interest has been shown to reduce the cost of public projects by an average of
And that appears to be how the Libyan system works. According to Wikipedia, the
functions of the Central Bank of Libya include "issuing and regulating
banknotes and coins in Libya" and "managing and issuing all state loans".
Libya's wholly state-owned bank can and does issue the national currency and
lend it for state purposes.
That would explain where Libya gets the money to provide free education and
medical care, and to issue each young couple $50,000 in interest-free state
loans. It would also explain where the country found the $33 billion to build
the Great Man-Made River project. Libyans are worried that North Atlantic
Treaty Organization-led air strikes are coming perilously close to this
pipeline, threatening another humanitarian disaster.
So is this new war all about oil or all about banking? Maybe both - and water
as well. With energy, water, and ample credit to develop the infrastructure to
access them, a nation can be free of the grip of foreign creditors. And that
may be the real threat of Libya: it could show the world what is possible.
Most countries don't have oil, but new technologies are being developed that
could make non-oil-producing nations energy-independent, particularly if
infrastructure costs are halved by borrowing from the nation's own publicly
owned bank. Energy independence would free governments from the web of the
international bankers, and of the need to shift production from domestic to
foreign markets to service the loans.
If the Gaddafi government goes down, it will be interesting to watch whether
the new central bank joins the BIS, whether the nationalized oil industry gets
sold off to investors, and whether education and healthcare continue to be
Ellen Brown is an attorney and president of the Public Banking Institute,
http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books,
she shows how a private cartel has usurped the power to create money from the
people themselves, and how we the people can get it back. Her websites are
http://webofdebt.com and http://ellenbrown.com.