The new leadership wants access to Qaddafi's $160 billion, but it won't be easy
A protester burns a Libyan dinar bill with the face of Libyan leader Muammar Gaddafi / Reuters
Imagine you just inherited $160 billion. Now imagine that United Nations sanctions, unilateral sanctions, and layers of property law stand between you and your money. Now imagine that most of that money is tied up in investments and property, so that you can't get to it right away. Now imagine you're at war.
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As Libyan rebels take control of Tripoli, the pressure to release the frozen assets of Muammar el-Qaddafi's regime is rising. Libya's Transitional National Council argued on Wednesday that it urgently needs at least $5 billion of the money to fund stabilization efforts, the Financial Times reported.
According to officials from Germany to Qatar, the estimated $160 billion in frozen assets now belong to the rebels and should be diverted to them as quickly as possible. The United States wants "to give back to the Libyan people, managed by the legitimate governing authority, the Transitional National Council, their own money," State Department spokeswoman Valerie Nuland told reporters earlier this week.
Easier said than done.
The negotiations over the Qaddafi regime's holdings are especially complex because so many layers of national and international law are involved, according to financial sanctions experts who work with the U.N. They anticipate long, tedious legal struggles.
Let's start with the two layers of sanctions that need to be lifted: The United Nations Security Council resolution, and then the unilateral and multilateral sanctions put in place by various U.N. member nations.
To release funds without waiting for U.N. permission would be a violation of international law. Officials from the United States, United Kingdom, and Germany have stressed that they would prefer to move through U.N. channels. But U.N. channels are slow moving.
The United States was granted a humanitarian exemption to the asset freeze from the U.N. sanctions committee on Thursday, after seeking such an exemption for weeks. The measure will allow $1.5 billion in U.S.-held liquid assets to be diverted in aid to Libya, and responds to requests for aid the TNC itself submitted to Secretary of State Hillary Rodham Clinton earlier this month.
The U.N. resolution, according to those who've seen it, outlines conditions for the Libyan opposition to meet in order to get the money that's easiest to transfer: the Libyan government's own cash and investment portfolios. The resolution will tap funds belonging to the Central Bank of Libya, the Libyan Investment Authority, the Libyan Foreign Bank, the Libyan African Investment Portfolio, and the Libyan National Oil Corporation.
There's no specific reference to bank accounts controlled by Qaddafi.
Lifting the U.N. sanctions, or rewording the U.N. resolution to allow the transfer of frozen assets to the TNC, would be a complicated diplomatic and legal issue, according to U.N. diplomats.