Libya’s central bank and a subsidiary are expected to have U.N. sanctions against them lifted on Friday in a move to ease a cash crunch since the country’s civil war ended, diplomats said on Wednesday.
They said the Central Bank of Libya and the Libyan Foreign Bank (LFB), an offshore institution wholly owned by the central bank, would be taken off the Security Council’s sanctions list unless there were objections from council members.
When a rebellion broke out in February against leader Muammar Gaddafi, the Security Council froze Libyan assets abroad estimated at $150 billion, but the bulk of that sum remains beyond the reach of the oil-rich country’s new rulers.
Gaddafi’s 42-year rule ended when his forces fled Tripoli in August, and the last of the fighting in Libya ended in October when he was captured and killed by rebels.
Yet by late November only about $18 billion in seized assets had been released by special provisions of the Security Council’s Libya sanctions committee, and diplomats said only about $3 billion of that had been made available to Tripoli.
Last week, senior figures in Libya’s new leadership wrote the committee asking it to delist the central bank and LFB. Sanctions against the two bodies and two Libyan investment authorities had been eased but not fully lifted in September.
The move was “essential for the economic stability of Libya; for confidence in the banking sector; for the smooth execution and settlement of both domestic and international banking transactions; and to underpin the social and microeconomic stability of the new Libya,” said the letter, obtained by Reuters.
Frustration at the delay in releasing the assets has been growing inside Libya, where the interim government says it urgently needs the cash to pay the wages of public sector workers and to start re-building state institutions.
The letter was signed by Central Bank Governor Saddeq Omar Elkaber, Mustafa Abdel Jalil, chairman of the National Transitional Council (NTC), interim Prime Minister Abdurrahim El-Keib and Finance Minister Hassan Ziglam.
The freezing of Libyan assets was part of a package of sanctions intended to put pressure on Gaddafi’s administration to stop attacking civilian protesters.
Diplomats said the sanctions committee chairman, Portuguese Ambassador Jose Filipe Moraes Cabral, had circulated the Libyan letter to the council’s 15 member states.
In a covering letter he said that under a so-called “silence procedure” the central bank and the LFB would be automatically delisted at 5 p.m. New York time (2200 GMT) on Friday unless there were prior objections from any member.
Diplomats said they were unaware of any objections as of Wednesday morning. “I think it won’t be a controversial issue,” one diplomat said.
If there are objections, the matter is expected to be raised at a scheduled council meeting on Libya on Dec. 22, another diplomat said, adding, “Obviously there’s quite big money at stake.”
Libya can generate substantial revenues from oil exports, but these were halted by the conflict and are taking time to restore, leaving a hole in government finances.
Diplomats said the delisting of the two banks did not necessarily mean the frozen assets would be instantly available to Tripoli as foreign institutions holding them might seek formal authorization from their governments.
Diplomats have said the reason more assets have not been unfrozen is uncertainty over who legally owns them and concerns that in some cases the owners could be Gaddafi, his family or associates.
But one diplomat said such concerns were unlikely to arise over the central bank and the LFB. “It’s the same technocrats in charge, the same central bank, just under different political leadership,” he said.