Fireworks exploded, celebrants danced, and flags soared in Benghazi after the government pledged to return the National Oil Company, Libyan Airlines, the Libya Company for Insurance and the Internal Investment Company—four of Libya’s largest businesses—to their original city last week. The decision came after more than forty years of Tripoli-based control under the Qaddafi regime. Was Libya’s economy finally benefiting from some much-needed reform?

Nope, say business analysts. In fact, experts suggest that Benghazi’s deteriorating security situation will actually decrease investors’ interest in Libya. Instead, many consider the companies’ move a government ploy to mollify Libyans in the eastern region of Cyrenaica who are demanding self-government.

Though celebrated locally, the move represents another step down the troubling path Libya’s politics have taken since the 2011 revolution. With a weak central government and a dysfunctional security apparatus, Libya’s politicians are prioritizing immediate political gains over longer term reform.

Under Ottoman and Italian colonial rule, Libya was divided into three separate regions: Tripolitania in the Northwest, Fezzan in the Southwest and Cyrenaica in the East. From 1951 until 1963 a federal governing system united the regions. They shared a bicameral parliament in which one of the houses was comprised of eight representatives from each of the three regions. The federalist system ended in 1963 when an amendment abolishing it passed through Libya’s legislature. Qaddafi—who led the military coup in 1969—ruled over all three provinces jointly but favored the West, relocating the four companies from Benghazi to Tripoli and concentrating government control there.

Now Cyrenaica wants its power back. And a small but vocal group of Cyrenaicans are making daring moves to get it. Self-proclaimed “federalists” pushed the Transitional National Council (Libya’s transitional government from February 2011 until August 2012) to add two amendments to its interim constitution that evened out regional representation on its constitutional committee.

And recently, federalists took a more drastic step by declaring Cyrenaican self-governance. 3,000 federalists gathered in Eastern Libya in early June to announce their autonomy; the group’s plans involved returning to the 1951 constitution and forming a Cyrenaican parliament and regional governance system.

Why not let Cyrenaica govern itself? Because federalism isn’t actually that popular in Libyan public opinion. A poll recently found that only eight percent of Libyans want a federal state. And prominent national groups including the Muslim Brotherhood and the Union of Revolutionary Brigades oppose federalism, too. Even in Benghazi, the largest city in Cyrenaica, thousands of Libyans have demonstrated against federalist plans.

And although federalists claim just to want autonomy, Libyans fear that Cyrenaican self-government will lead to its independence anyway. Other worry that self-government will tighten Cyrenaica’s control over the vast oil reserves it houses. According to the Libya Herald, many believe that the fears over federalist self-governance prompted the government to relocate Libya’s largest companies back to Benghazi.

It’s not just Cyrenaicans, though, whose demands are pressuring the Libyan government into action. At the beginning of May armed militias took over government buildings in Tripoli to force a “Political Isolation Law” into passage.

The results have been disastrous. The takeover not only highlighted the government’s inability to counter militias, but also forced the passage of a law that bars any politicians ever associated with the Qaddafi government from holding public office. In doing so, it forced Mohamed al-Magariaf, the president of Libya’s General National Congress and a leader of the revolution, to preemptively resign.

Real reform in Libya requires more than moving companies and forcibly passing laws. It requires drastic political and economic change. Ordering militias to either join the army or disband is a promising first step. But Libyans must also answer fundamental questions about their future: should a strong central authority rule? Or should various decentralization options be considered? How would funding be allocated in a decentralized state? How will security be ensured?

Libyan politicians have a hefty load of country planning ahead of them. So although relocating the companies was an important victory for Cyrenaican federalists, it’s not time for Libyans to be exploding celebratory fireworks just yet.