Turkey froze Libya's holdings in a Turkish bank on Monday, a day after it recognized Libya's rebel leaders as the country's legitimate representatives and quietly removed its ambassador from Tripoli.
Turkey's banking regulatory fund said it was temporarily controlling Libyan Foreign Bank's 62 percent stake in Turkey's Arap Turk Bankasi A.S. in line with U.N. Security Council decisions to freeze Libya's foreign assets.
Turkey on Sunday also formally withdrew its ambassador in Tripoli, according to the Official Gazette, an official record of government decisions. Turkish Foreign Ministry officials said the ambassador has been reassigned a post in Ankara and it was not known when a new ambassador for Libya would be named.
Turkey had already removed its staff from the embassy for security reasons in May.
Turkey initially balked at the idea of military action in Libya and Turkish companies were involved in Libyan construction projects worth billions of dollars before the outbreak of an anti-Gadhafi uprising in February. But, the regional power has increasingly broken ties with Libyan leader Moammar Gadhafi and as a NATO member, Turkey is supporting the alliance's airstrikes against targets linked to his regime.
Turkey has repeatedly called on Gadhafi to give up power to allow the transition to a more democratic government. Last month, Prime Minister Recep Tayyip Erdogan said he had offered Gadhafi guarantees in return for him leaving Libya but had not received a response.
Since the beginning of the uprising in Libya, the European Union has frozen the accounts of the country's state-controlled companies and investment funds, as well as those of key members of the Libyan regime. EU states also said they would not provide the Gadhafi regime with any new funding by buying up oil and gas from the country.
On Sunday, Turkish Foreign Minister Ahmet Davutoglu visited the Libyan rebel's stronghold of Benghazi, recognized the rebel's National Transitional Council as Libya's representatives, and promised an additional $200 million in aid.
Turkey joins several other countries, including France, Qatar and Italy, in officially recognizing the rebels.
The rebels control Libya's eastern third, but Gadhafi clings to power in the west where he has been unable to crush pockets of resistance.