Cash-Strapped Libyan Rebels Fly Out of Washington Empty-Handed

After three days in Washington seeking financial help, the Libyan rebels’ finance minister is heading back to Benghazi with little to show for his effort other than expressions of “overwhelming support and sympathy.”

Such encouragement won’t pay for food, fuel and other necessities which are running short in the rebel-held part of Libya, Ali Tarhouni said in an interview.

“I am desperate,” said Tarhouni, who gave up his job teaching microeconomics at the University of Washington to return to his homeland to raise cash for the opposition. “I can repay you with really good interest and in a few weeks also.”

The U.S. has frozen about $34 billion in Libyan assets, part of the more than $165 billion in frozen Libyan assets worldwide. That money is, for now, beyond the reach of the rebels.

“While it is relatively common to freeze assets, it is rare for frozen assets to be confiscated and then reallocated,” Stuart Levey, who left in February as the Treasury Department’s under secretary for terrorism and financial intelligence.

Tarhouni said he favors a financing method that would keep most Libyan assets frozen until a new, post-Qaddafi government is in place and can ensure the money is used responsibly for the benefit of all Libyans.

As an alternative to asking to tap those assets, he said he pressed U.S. officials for a credit line or loan, perhaps secured by a portion of the frozen assets.

No Options

Tarhouni says he was told neither was an option yet, as he visited officials at the Treasury, in Congress and at the White House in an effort with Mahmoud Jibril, a leader of the Transitional National Council.

Even political recognition of the opposition council, a step that could facilitate access to funds, is not on the table, he said he was told.

As a practical matter, most of the frozen $34 billion is tied up in complicated property interests, including ownership interests in non-publicly traded companies or real estate, Levey said yesterday.

President Barack Obama has the power to free the money under limited conditions set by the International Emergency Economic Powers Act. That rarely used tool, last invoked in 2003 involving Saddam Hussein’s Iraq, requires that the U.S. be either engaged in “armed hostilities” with or “under attack” from the country in question.

That provision may not be met in the case of the limited military involvement in Libya, where the U.S. is part of a NATO-led and United Nations-sanctioned mission to protect civilians.

Tarhouni and Jibril met with Tom Donilon, Obama’s national security adviser, as well Senator John Kerry, the Massachusetts Democrat who is chairman of the Senate Foreign Relations Committee, and Treasury officials. They were told the U.S. wants to help, Tarhouni said.

Legal Wrangles

Tarhouni described how at Treasury he asked if he could submit a list of food and medicine that the U.S. administration could buy and then deduct from the frozen assets. He said he was told U.S. authorities could not legally do that.

Kerry said he will draft legislation that will clear the way for the transfer of $180 million from Libyan assets. While that is better than nothing, that amount won’t last more 10 days and may not arrive fast enough, Tarhouni said.

It not clear how quickly Congress can move on this measure, Tarhouni said. In any event, the council has said it needs at least $3 billion to provide basic needs for Libyans for the next six months.

‘At War’

“The problem with me is time,” Tarhouni said in an interview in Washington. “We are at war. People are dying. It’s not a question of waiting it out a month or two. I need money yesterday, I need it a week ago.”

Ahead of the meetings, the U.S. agreed in April to give $25 million in non-military aid to Libya’s opposition, drawing on existing Defense Department stocks. That money is being used for food, medical supplies, uniforms and other non-lethal supplies.

On May 4, the State Department raised its humanitarian aid to Libya to $53.5 million. The additional $6.5 million, given to the International Organization for Migration, will help fund evacuations of migrants stranded in Misrata.

The council also didn’t get far in its search for political recognition from the U.S. Mark Toner, State Department spokesman, said it’s “not an end in and of itself.” White House spokesman Jay Carney said such a step would be “premature.”

‘Protocol Decision’

“At the end of the day it’s really a protocol decision” and the “two issues of recognition and assets are intertwined,” Tarhouni said.

France, Italy and Qatar are among countries that have already taken that step, making Doha his next destination.

There is no doubting Tarhouni when says he will do almost anything to try and get money. In Benghazi, he issued an order to break into the vault of the central bank’s branch, which disappointingly contained less than $500 million, to help meet payrolls and pay for food, energy and other expenses.

“War required desperate measures,” he said in a television interview with Margaret Brennan on Bloomberg Television’s “InBusiness with Margaret Brennan.”

“Basically, the vault had three keys and we only had two of them. And we had to find a way to access to that. It turned out there wasn’t really much there,” he said.


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