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West throws cash lifeline to Libya rebels

International Contact Group set to siphon Qadhafi funds to TNC

FUNDS placed by Libyan leader Muammar Qadhafi in foreign bank accounts will be channelled to rebels fighting to overthrow his regime, US secretary of state Hillary Clinton said today.

Clinton’s statement came after a meeting of the International Contact Group in Rome. The Libyan government had earlier claimed about $120 billion had been frozen in foreign bank accounts under sanctions imposed in February. It is understood the rebels, based in Benghazi, eastern Libya, will be able to request funds. However, how such requests will be made and, if granted, how the cash will be paid out  has not been made public.

In an interview with Petroleum Economist last month, Ali Tarhouni, the Libyan Transitional National Council’s (TNC) finance minister, begged the international community to release some of Qadhafi’s foreign cash holdings.

“I’m running a war economy and I’m running it on empty,” he said. “We’re asking for limited access to these funds to cover out basic needs. We’re willing to adjust to whatever mechanisms that satisfy the countries that have these frozen assets, or the UN Security Council."

The Libya Contact Group, composed of Nato members, Arab states and international organisations, has been looking at ways to finance the rebels, either through loans or the sale of oil from rebel-held areas.

Clinton said some of the $33 billion of Libyan state assets held in the US would be made available to the rebels. She added that the US also plans to lift the legal hurdles which have prevented the TNC benefiting from oil sales.

In a statement released after the meeting, the Libya Contact Group said it had agreed a separate finance mechanism for donors to help the TNC. Bloomberg reported that Kuwait has already donated $180 million to the fund.

Nato is enforcing a UN mandate to protect civilians caught in the conflict.

Last month, Petroleum Economist travelled to Benghazi. Read the exclusive stories below:

The war for Libya’s oil

Libya in limbo

Libyan rebels will reward their ‘friends’

Libya’s rebels beg West for cash

Libya rebels eye oil restart ‘in weeks’

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