U.S. aims to funnel seized funds to Libya rebels

Reuters News
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Posted: Mar 21, 2011 3:38 PM

By Matt Spetalnick and Glenn Somerville

WASHINGTON (Reuters) - The Obama administration put Libya's foreign minister on a blacklist on Tuesday and sought ways to tap into some of the billions of dollars of seized Libyan assets to aid an embattled Libyan opposition.

The Treasury Department put Foreign Minister Moussa Koussa on a blacklist shortly after the White House said it was exploring ways to funnel cash to rebels fighting forces loyal to Libyan leader Muammar Gaddafi.

The United States and other world powers so far have held back on the assistance the opposition is pleading for -- more weapons and a no-fly zone -- to fend off being overrun by Gaddafi's forces.

"We are exploring authorities to free up some of the seized regime assets, the $32 billion-plus that has been seized, to provide financial support for the opposition," White House spokesman Jay Carney told reporters.

It was unclear, however, whether such funds would be of much immediate use to Gaddafi's foes, who are facing a fierce air and ground offensive by government loyalists.

The U.S. Treasury said Koussa and 16 Libyan firms were being designated as supporters of the Libyan government and that any of their assets that fall under U.S. jurisdiction will be seized.

The firms are involved in Libya's banking, oil, aviation and investment sectors and include Afriqiyah Airways, National Oil Corporation and First Gulf Libyan Bank.

Koussa, a former head of Libya's intelligence service who attended university in the United States, has been a well-known figure in Washington and was a chief contact for U.S. officials seeking to convey messages to the embattled Libyan strongman during the current crisis.

U.S. officials had hoped the threat of sanctions and possible prosecution for war crimes could help persuade members of the Gaddafi inner circle to abandon their leader, but in recent days indicated that Koussa in particular was seen as unwavering in his support for the Libyan leader.

Gaddafi's forces seized a strategic town in eastern Libya on Tuesday, opening the way to the rebel stronghold of Benghazi while world powers failed to agree to push for a no-fly zone, which is considered crucial for thwarting air raids on rebel-held areas.

U.S. Secretary of State Hillary Clinton met Mahmoud Jebril, a member of the anti-Gaddafi Libyan National Council, in Paris on Monday. She said in Cairo on Tuesday that Washington was looking at ways to support the opposition group but made no mention of using seized Libyan assets.

President Barack Obama signed an executive order on February 25 freezing the assets of Gaddafi, his family and top officials, as well as the Libyan government, the country's central bank and sovereign wealth funds. The U.S. Treasury said at least $30 billion in assets in the United States had been blocked.

Obama planned to meet his national security team on Tuesday to discuss how to put more pressure on Gaddafi to step down.

"We have acted with the utmost urgency ... together with our international partners to put pressure on Muammar Gaddafi and his regime," Carney said.

(Additional reporting by Andrew Quinn; editing by Mohammad Zargham)