Hillary Clinton: US to use Qaddafi's frozen assets against him

US is moving to free up some of the $30 billion in frozen assets of Libyan leader Muammar Qaddafi to aid the 'Libyan people' and rebels, Secretary of State Hillary Clinton said Thursday.

Jacquelyn Martin/AP
Secretary of State Hillary Rodham Clinton meets with Italy's foreign minister Franco Frattini at the Ministry of Foreign Affairs, during the Second Contact Group Meeting on Libya, in Rome, on Thursday, May 5.

Libya’s rebels are pleading for billions of dollars in international assistance to continue fighting the Qaddafi regime and to meet humanitarian needs – and the United States hopes to tap into the $30 billion in frozen Libyan assets it holds to answer their call.

The US is moving to free up some of the frozen assets of Libyan leader Muammar Qaddafi and his government, to “help the Libyan people,” Secretary of State Hillary Rodham Clinton told the 22-nation Libya Contact Group meeting Thursday in Rome.

Using the frozen assets will require new legislation, but Secretary Clinton told the group the Obama administration is already working with Congress to make changes to allow Libya’s money to be used for Libyans caught in the country’s conflict.

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The Italian government, as the meeting’s host, announced the creation of a temporary international fund to aid the rebel government – the Transitional National Council (TNC) – headquartered in the eastern Libyan city of Benghazi.

Italian Foreign Minister Franco Frattini said the fund will start out with $250 million from multiple donors – a fraction of the $3 billion minimum the rebels say they will need in coming months to fight and keep themselves and civilians under their command alive.

Fierce fighting continued in Libya as the contact group met. The United Nations’ International Office for Migration announced that it was finally able to evacuate about 800 stranded migrant workers and other refugees from the embattled port city of Misurata Wednesday, despite intense shelling. Misurata is the rebels’ one foothold in the western part of Libya.

The contact group’s fund would allow for international oversight of the rebels’ use and management of the money. Last month, the TNC proposed in a letter to US Treasury Secretary Timothy Geithner that a kind of trust fund be set up to tap the frozen assets, to be jointly managed by the international community and the rebel leaders.

One TNC leader, interim Prime Minster Mahmoud Gibril Elwarfally, is to visit Washington next week to meet with administration officials and members of Congress. The rebel government’s official representative in Washington, Ali Aujali, says Dr. Gibril will “help to fill out the picture and the plans of the opposition and its leadership in its efforts to establish a free and democratic Libya.”

Unlike France, Italy, Qatar, and some other countries, the US has yet to recognize the transitional council as Libya’s “legitimate” government, although President Obama has dispatched an envoy to Benghazi.

The Libyan opposition representatives are expected to press Congress to act quickly to pave the way for the Qaddafi regime’s frozen assets to be tapped.

Iraq is the most recent case of a government's or leader's seized assets being unfrozen and made available to a replacement government, according to the US Treasury Department. But in that case the blocked assets were not made available for several years, a timeline that probably would not serve the Libyan rebels' purposes.
Current law governing the holding and disposition of foreign assets seized by the US government allows for two options for releasing the funds, according to a Treasury official who spoke on condition of anonymity. Either the president can, in the case of armed hostilities, issue an executive order to release seized funds, or Congress can direct the president to make the blocked assets available.
It is not clear why the Obama administration has chosen the congressional option for releasing the funds, other than what may be a desire to engage Congress in the administration's Libya policy.

The European Union has also frozen Libyan assets and could use the same mechanism for contributing to the new rebel fund.

Clinton also announced at the Rome meeting that the US is investigating ways the opposition government can proceed with oil sales to generate revenue.

IN PICTURES: Libya conflict

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