Libya rebel funding will require legal creativity
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.