Monday, February 28, 2011

US freezes $30bn of Tripoli assets

By Daniel Dombey in Washington, Joshua Chaffin in Brussels and Guy Dinmore in Rome
FT
Published: February 28 2011 22:19 | Last updated: February 28 2011 22:19

The US has frozen more than $30bn in Libyan government assets as European officials have slapped their own sanctions on Muammer Gaddafi, the country’s embattled leader.

“As of today at least $30bn in government of Libya assets under US jurisdiction have been blocked,” David Cohen, acting US Treasury undersecretary, said on Monday. “This is the largest blocking [action] under any sanctions programme ever.”
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The move by the international community to freeze the assets of the Libyan leader and those close to him has become a key component of the growing pressure on Colonel Gaddafi and his regime as it struggles to hold on to power.

But news of the impact of US sanctions came amid different interpretations over whether the curbs imposed by the UN and the European Union should extend to the Libyan Investment Authority, the country’s sovereign wealth fund.

Mr Cohen said the US understood financial institutions in Europe were also blocking all Libyan government assets, since those assets were ultimately controlled by Col Gaddafi and his family, who have been proscribed by a UN Security Council resolution.

Yet even as the EU unveiled sanctions that it said went beyond those agreed over the weekend by the Security Council – both in terms of the provisions and the number of officials affected – diplomats said they would not apply to the LIA, which has an estimated $60bn-$80bn in assets worldwide.

Some 26 Libyan officials will suffer asset freezes in the EU and visa bans.

The EU sanctions also include an arms embargo and a statute that would prevent European companies from selling teargas, night-vision gear and other potentially “repressive” equipment to the government.

Some European diplomats expressed concern that the oversight could leave a hole in the sanctions net by allowing the regime to tap the LIA and other state-owned businesses for cash to prolong their fight against anti-government forces.

“We have to watch this because it could be a way to circumvent the sanctions we have adopted,” said Ferdinando Nelli Feroci, Italian ambassador to the EU.

Mr Nelli Feroci denied suggestions by some diplomats in Brussels that Italy had acted to shield the LIA, which has investments in UniCredit, the Italian investment bank, and Fiat, the automotive and industrial group, among other holdings.

Tripoli established the LIA in 2006 to ease its dependence on oil revenues. It holds stakes in an array of foreign businesses, including Pearson, owner of the Financial Times.

Some diplomats predicted the LIA and other Libyan government businesses would soon be added to the EU’s sanctions list, but said it would have taken too long to include them at the outset in spite of determined efforts by Hungary, current holder of the EU’s rotating presidency.

The EU’s eagerness to act was also balanced by concern that sanctions the bloc had hastily arranged against the Ivory Coast had brought unintended consequences, including a slowdown of legitimate trade.

The Elysée Palace announced on Monday night that David Cameron, British prime minister, had joined Nicolas Sarkozy, the French president, in a call for a special EU summit on Libya. European diplomats said the French wanted to hold it this week, but a British official said next week was more likely.

The focus on sanctions came as Libya looked set on Tuesday to become the first country ever to be expelled from the UN Human Rights Council. Foreign ministers from the US, Russia, Britain and other states are on Tuesday convening for a session of the council in Geneva, where they are set to condemn the violence that Col Gaddafi has unleashed on his opponents.

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