There something distinctly fishy about the Treasury Department’s lightning fast and allegedly “surprise” discovery of over $30 billion in Libyan Government assets stored in U.S. banks. The Obama administration has lauded this as a major and unexpected victory in its effort to dislodge the Gaddafi regime. That may be so, but the implications of such a large deposit by Libya have deeper and far more disturbing implications. Could Libya have been in the process of purchasing a major stake in America’s critical infrastructure?
First, it is strange that Libya -- a Government that has traditionally been wary of storing its’ assets in a place where they could be confiscated by the U.S. government -- would keep almost half of its estimated $70 billion sovereign wealth fund (Libyan Investment Authority or ‘LIA’) in U.S. banks. After all, Libyan assets had been frozen before, most notably in 1986. In fact, most Arab nations, even those friendly to the U.S. had been reluctant to keep their assets within U.S. jurisdiction after the U.S. froze Iranian government assets in 1979. Admittedly, relations with Libya have warmed in recent years since it was removed from the U.S. list of official state sponsors of terrorism in 2005. Still, the old wounds run deep, and Qaddafi is, if nothing else, a shrewd operator. Clearly, if he were taking such a big risk he must have had assurances from on high.
The Treasury official interviewed by the Post, Stuart Levy – an obscure bureaucrat who recently left the Treasury to assume a post at the Council on Foreign Relations – indicated that the holdings were concentrated primarily in one bank. Levy declined to disclose the name of the bank, but others -- notably Ted Truman of the Peterson Institute for International Economics – have suggested that the funds were held at the Federal Reserve Bank of New York. If that is the case, someone knew about it.