Libya Receiving $1.5 Billion in Financial Assets Frozen in U.S.

26 August 2011

As Libyans celebrate the end of the Qadhafi regime, U.S. officials are urging countries to release frozen Libyan assets to help meet the country's urgent needs.

The United States is releasing $1.5 billion in Libyan assets that had been frozen under U.N. sanctions directed against Muammar Qadhafi’s regime, and Secretary of State Hillary Rodham Clinton urged other countries that are holding Libyan assets to expedite their release.

“We have secured the release of $1.5 billion in Libyan assets that had been frozen in the United States. This money will go toward meeting the needs of the people of Libya,” Clinton said in an August 25 statement.

“We urge other nations to take similar measures. Many are already doing so,” she said.

The political transition from Qadhafi’s 42-year rule is being led by Libya’s Transitional National Council (TNC). Clinton urged the council to “fulfill its international responsibilities and the commitments it has made to build a tolerant, unified, democratic state — one that protects the universal human rights of all its citizens.”

Financial analysts have estimated that nearly $110 billion in Libyan assets is frozen in banks worldwide, according to press reports.

State Department spokeswoman Victoria Nuland told reporters August 25 that the $1.5 billion represents the TNC’s “assessment of their urgent needs.”

She said U.S. and TNC officials have been working for weeks on how to release the funds. “We’ve been sitting with the TNC and taking them through the necessary safeguarding and auditing processes. We have high confidence that this is the right amount from us now, and that we have set in place structures and ways to ensure that this money gets to the right people and is used … for humanitarian and civilian needs,” she said.

One-third of the money will be used for “urgent humanitarian needs,” with $120 million paying U.N. agencies for the services they are already providing in Libya and the remaining $380 million “held for future needs that will come through the U.N. system as the Libyan people and the TNC assess what would be appropriate,” Nuland said.

A second portion of $500 million will go for civilian fuel needs associated with electricity and desalination, particularly in hospitals and other public facilities, Nuland said. About $300 million of the funds will reimburse entities that have been helping Libya meet its civilian fuel needs, and the remaining money will be held to pay future civilian fuel bills.

The last third of the money will be deposited in the temporary financial mechanism (TFM) that was established by the Libya Contact Group to facilitate financial contributions and in-kind assistance to the TNC.

“That money will be held in the TFM, and the Libyan people will be able to draw on it to meet needs in the following three categories: health, education and urgent food needs,” Nuland said. “As the TNC establishes its requirements in these areas, comes up with bills that need paying in the area of health, education and food, it will be able to submit those bills to the TFM steering board for payment.”

Nuland said the focus on humanitarian needs, civilian fuel and funding the TFM are priorities that the Libyans themselves made.

“They are based on their assessment of what their people need, not only in the areas that they controlled, but also in Tripoli and other places where they’ve had contacts throughout this crisis,” she said.

The TNC is working to establish an interim government and extend its control throughout the country. Nuland said previous transitional states have shown they can establish effective governing institutions, but it requires hard work.

“We have to remember what this country’s been for 42 years — a state where the only rule of law came out of the head of Qadhafi. So they’ve got work to do. They’re going to need international support as they do it,” she said.