Libya rebel funding will require legal creativity

May 9, 2011

By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

DUBAI — Western powers may have to overcome serious hurdles to be able to finance Libya’s rebels, but the task is not impossible. Led by the United States, the international community appears increasingly determined to find a way to funnel cash to opposition forces. A fund has been set up to facilitate financing to the rebels who say they need $3 billion to help cover the costs of food, fuel, medical supplies and salaries. But pledges so far — by Qatar and Kuwait — amount to just under $700 million.

One way to get more money to the rebels would be tap the regime’s frozen funds. The United States has frozen over $30 billion worth of assets belonging to Muammar Gaddafi and his cronies, the UK another 12 billion pounds ($19.2 billion). There are legal risks in attempting to secure loans to the rebels, as long as the funds’ ownership is in doubt. But it may be more palatable for European governments seeking to limit their own spending.

And there is a precedent. In 2003, a U.S. executive order allowed for the seized assets of Saddam Hussein to be used to assist the Iraqi people and help fund the country’s reconstruction. Banks holding the assets then transferred billions of dollars into a special account. Governments might also try to get around the rules by treating loans as contingent liabilities, taking on the risk that the assets might not be available.

Another way to fund the rebels would be to help them benefit from oil exports. International oil companies like Italy’s Eni, which have long operated fields close to rebel-held territory, would only need a little political backing to act. Analysts say it would be relatively easy, and may only take a couple of months, to build new pipelines enabling supplies to be re-routed for export from Tobruk, in rebel territory. About 14 percent of Libya’s total output — or 220,000 barrels of oil — was exported last year through the small terminal.

This poses big challenges. Security must improve before international workers can return to the region. Oil companies also remain wary of conducting business with Libya’s rebels, though Qatar has already shown willingness to act as an intermediary. But while none of the options of funding the rebels are easy, in combination they could help hasten the end of the conflict.


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International law is frequently more trouble than it’s worth. Sovereign nations with democratically elected gov’ts are obliged to act in their own best interests. “International law” cannot supercede this responsibility. Countries run by unelected tyrants don’t care about “law” anyway. Reminds me of the gun control debate. Tougher laws never affect those whose behavior needs to be influenced. Aid the rebels before it’s too late.

Posted by mheld45 | Report as abusive

Jack: Exactly … all these western politicians are involved … the resources of western countries are being used … show me one common man … just one … only “one” common man that has benefited from these wars. What was the benefit for the common people in Mica, in Isdon or in Firco from the war on Ruka? What was the benefit for the common people in these western countries?

Posted by HarryPotter123 | Report as abusive

The moral of the story….Do not keep your money entrusted with the banks! They can (and will) take it off you without you being able to do a thing about it!

But the other moral of the story is that the “civilian concern” which apparently started the “No fly zone” was nothing more than a smoke screen created for the real world wide concern about…..who controls the oil!!!

The security and the laws of the land in Libya were intact and the workers were working the oil rigs until the “rebels” started attacking the Libyan government…..the it went topsy turvy.

The Libyan civilians are still dying and suffering…….moreso now than before it all began.

Posted by WNS818 | Report as abusive

” The United States has frozen over $30 billion worth of assets belonging to Muammar Gaddafi and his cronies” — Do you know this money personally belongs to them? As far as i read its only Libyan State Funds. Makes all the difference!!

Posted by cris_PT | Report as abusive

These folks have to assess all aspects of the uprising; I now should say they are closer than before with funds that realistically are needed to function. A cold realization that even in war financial commitments have to be met. And thank Gadafi(but not to loudly) At the
sight of money he may have a seizure):)
Watch your backs, and may God and/or Allah or even both keep you safe until the tyrant is removed.

Posted by MaritimeRider | Report as abusive