U.S. asks U.N. to unfreeze $1.5 billion Libyan assets

UNITED NATIONS Wed Aug 24, 2011 6:37pm EDT

Children celebrate the fall of Tripoli, in Janzour, August 23, 2011. REUTERS/Ismail Zitouny

Children celebrate the fall of Tripoli, in Janzour, August 23, 2011.

Credit: Reuters/Ismail Zitouny

UNITED NATIONS (Reuters) - The United States on Wednesday asked the U.N. Security Council to unfreeze $1.5 billion in Libyan assets, a proposal South African has blocked for weeks because it objects to funding the rebel government.

The U.S. delegation submitted a draft resolution to the 15-nation body asking it to make the money available for civilian and humanitarian purposes "as soon as possible."

No vote was held on the draft on Wednesday, but diplomats said a vote could come on Thursday or Friday.

The U.S. move to ask the Security Council to make a decision on a matter that would normally be handled by the council's Libya sanctions committee came out of frustration with South Africa, which has refused to consent to the idea of handing over large sums directly to Libya's rebel leaders.

White House spokesman Josh Earnest said earlier that the Obama administration wanted to free up funds to provide humanitarian assistance and support to the Transitional National Council (TNC), the rebel government, which controls of most of Libya now thanks to recent gains by rebel fighters.

The U.S. draft resolution says the money, currently frozen by the U.S. government on the basis of U.N. sanctions adopted earlier this year, was not to be used for military purposes.

"None of the funds made available pursuant to this resolution will be provided for the purchase of arms, non-lethal military equipment or any other military-related activity," the draft text said.

Of the $1.5 billion, $500 million would go to international humanitarian organizations directly, a proposal the South African delegation says it does not object to.

Diplomats say the South Africans, however, have problems with the U.S. proposal to hand another $1.0 billion to "third-party vendors supplying fuel and other urgently needed humanitarian goods" and to what the resolution describes as an "international mechanism" for providing social services.

The South African objections, diplomats say, have prevented the sanctions committee from approving the U.S. request to release the funds, first submitted to the committee on August 8.

RESISTANCE

The resolution says fuel from "third-party vendors" would not be used for military purposes and that the council would have "written assurances" to that effect from the rebel TNC.

Several council diplomats told Reuters privately that they were uncomfortable with parts of the U.S. proposal.

They said South Africa was not alone in its reservations about handing funds over to the rebels, although it is the only country formally blocking the U.S. request on the sanctions committee. Russia and others have concerns about unfreezing funds for the TNC, they said.

South African Ambassador Baso Sangqu told reporters his country was concerned that funding the TNC implied recognizing it, something the African Union had not so far done. Pretoria was awaiting the outcome of an AU meeting on the issue on Thursday before deciding whether to lift its objections, he said.

U.N. sanctions committees work on the basis of consensus, which means all 15 Security Council members -- including South Africa -- have a virtual veto.

By presenting a resolution to the council, the United States was preparing to bypass the sanctions committee and the need for consensus on its request. Council resolutions need nine votes in favor and no vetoes from the five permanent council members -- the United States, China, France, Britain and Russia -- to pass.

If the objections to the U.S. request are lifted in the sanctions committee, there will be no need to vote on the resolution submitted by the U.S. delegation. If the objections remain, Washington will demand a vote, envoys say.

The United States alone has frozen some $37 billion in Libyan assets, U.S. officials say.

The Security Council imposed sanctions in response to Libyan leader Muammar Gaddafi's brutal crackdown against pro-democracy demonstrators earlier this year. The protests led to a civil war and U.N. approval for NATO intervention.

The request for the urgent unfreezing of $1.5 billion of sanctioned Libyan assets is separate from the longer-term discussions that will be taking place in Paris, Doha and New York about postwar planning for Libya, including the release of tens of billions of dollars of frozen Libyan funds.

(Additional reporting by Arshad Mohammed and Andrew Quinn in Washington and Alister Bull in Vineyard Haven, Massachusetts; Editing by Peter Cooney and Eric Beech)

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