U.S. lifts sanctions on Libya's ex-foreign minister

WASHINGTON Mon Apr 4, 2011 7:11pm EDT

Libya's Foreign Minister Moussa Koussa is seen speaking during a news conference at a hotel housing the foreign press in Tripoli in this March 7, 2011 file photograph. REUTERS/Chris Helgren/Files

Libya's Foreign Minister Moussa Koussa is seen speaking during a news conference at a hotel housing the foreign press in Tripoli in this March 7, 2011 file photograph.

Credit: Reuters/Chris Helgren/Files

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WASHINGTON (Reuters) - The United States lifted financial sanctions against former Libyan foreign minister Moussa Koussa on Monday in the hopes that it will encourage other senior officials in Muammar Gaddafi's regime to defect.

The U.S. Treasury is ending its freeze on Koussa's assets following his decision to sever ties to Gaddafi's government and flee to Britain last week, a senior U.S. Treasury official said.

"Koussa's defection and the subsequent lifting of sanctions against him should encourage others within the Libyan government to make similar decisions to abandon the Gaddafi regime," David Cohen, the Treasury's acting undersecretary for terrorism and financial intelligence, said in a blog posting on the Treasury website.

The Treasury has imposed sanctions on 13 senior Libyan government officials and Cohen said he expects to add more officials to the blacklist in the coming days and work "aggressively" to identify others. The sanctions seek to freeze any assets they hold in international financial institutions and ban U.S. entities from any transactions with them.

So far, the United States has frozen more than $33 billion in Libyan assets in order to bring pressure on Gaddafi's government and prevent his regime from using violence against the dissidents trying to oust him.

The decision to lift sanctions against Koussa, whom Scottish prosecutors want to question in connection with the Pan Am Flight 103 bombing over Lockerbie, appears aimed at enticing members of Gaddafi's inner circle to abandon him by restoring their access to their financial nest eggs.

Treasury officials believe that Gaddafi's ability to hang on to his allies will diminish as his own access to cash dwindles for paying bribes, paying mercenaries and acquiring military hardware.

Cohen said that senior Libyan officials in Gaddafi's regime were targeted in part to "motivate individuals in the Gaddafi regime to make the right decision and disassociate themselves from Gaddafi and his government."

The sanctions are preventive and are not intended to be permanent, Cohen added.

QUESTIONS OVER LOCKERBIE

But the easy treatment of Koussa, who also has served as Libya's intelligence chief and may have inside knowledge of the 1988 attack over Lockerbie, Scotland, potentially puts the interests of spies seeking intelligence about Gaddafi at odds with those of prosecutors.

The U.S. Justice Department and the FBI also want to question Koussa about the Pan Am bombing that killed 270 people, an American law enforcement official has told Reuters.

Susan Cohen, whose daughter Theodora died in the Lockerbie bombing, said she did not object to Koussa getting access to his money if it ultimately helped bring down Gaddafi but worried the U.S. government was rewarding Koussa too soon.

"Much as I hate Moussa Koussa -- Moussa Koussa is an evil henchman -- Gaddafi is the evil boss. He's the one I want to see them get," she told Reuters on Monday. "I don't care if we can really get Gaddafi."

(Additional reporting by Arshad Mohammed, Mark Hosenball and

Alister Bull; Editing by Jan Paschal)

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