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.
"We would prefer for the U.N. Sanctions Committee to take action,"
but if negotiations fail, the U.S. will "find ways to do this
unilaterally," Nuland said this week.
Treasury itself said last month's recognition of the TNC as the
legitimate governing authority in Libya helped pave the way toward
making some of the frozen assets in the United States available to the
Libyan opposition, but legal issues remain.
American sanctions against the Qaddafi regime remain in place, and
all property and interests in property of the Qaddafi regime and others
sanctioned by Treasury remain blocked.
Once banks get the go-ahead to transfer the funds, the real fun
begins. We're talking mixed portfolios of assets, held by a range of
entities from individuals to state agencies. Of the estimated $37
billion held by the United States, only $3 billion is considered liquid.
Most of the money is caught up in securities investments.
Perhaps the biggest hurdle: making the legal argument that the money
no longer belongs to Qaddafi and his cronies, and that it belongs to the
TNC instead. Should the assets go back to the original owners, or to
somebody else? Financial sanctions experts say the transfers will need
to stand up to challenges in a variety of courts around the world.
