September 2, 2014 / 3:05 PM / in 5 years

Libya's central bank warns warring sides to leave it out of conflict

BENGHAZI, Libya, Sept 2 (Reuters) - Libya’s central bank on Tuesday warned all parties involved in the conflict gripping the country to leave the institution alone as its violation could prompt the international community to freeze Libya’s foreign assets again.

The central bank is one of the last functioning state institutions in the North African country where armed groups seized the capital Tripoli last month. The government and elected parliament have relocated to a remote eastern city.

The latest turmoil is part of a wider struggle gathering pace since Muammar Gaddafi was toppled in 2011 over who holds political power and controls the country’s vast oil reserves.

On Sunday, the central government said it had lost control of most ministries in Tripoli, leaving oil and other trading partners puzzled whether the central bank was still under official control. Oil revenues, Libya’s dominant source of income, are booked at the bank.

“The central bank is the last defence line of state institutions and it is very important that it stays far away from political struggles,” the bank said in a statement, adding that it would remain neutral and follow the law.

The international community might freeze assets again if “pressure continued on the central bank and attempts to violate its stability,” the statement said.

Earlier on Tuesday, a British envoy visited the House of Representatives at its new seat in the eastern town of Tobruk to show support against a rival assembly set up by armed groups in Tripoli.

The international community froze most of Libya’s assets during the eight-month uprising that toppled Muammar Gaddafi in 2011 and until now the central bank has struggled to retrieve all of them.

Libya held around $109 billion in foreign cash reserves and equity stakes abroad, the latest data released in June showed. Its foreign reserves are mostly held on bank accounts abroad.

Western powers and Libya’s neighbours fear the country will turn into a failed state and become a safe haven for Islamist militants. (Reporting by Ulf Laessing and Feras Bosalum; Editing by Raissa Kasolowsky)

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