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US lifts economic sanctions on Libya

The United States on Friday lifted most of the economic sanctions it had in place against Libya before the fall of former ruler Moammar Gadhafi.
/ Source: NBC, msnbc.com and news services

The United States on Friday lifted most of the economic sanctions it had in place against Libya before the fall of former ruler Moammar Gadhafi.

"After careful consultation with the new Libyan government, the United States rolled back most U.S. sanctions on the government of Libya to keep our commitment to the Libyan people,'' the White House said in a statement.

The action unfreezes all government and Central Bank of Libya funds within U.S. jurisdiction, with limited exceptions. Assets in the U.S. of the Gadhafi family and former Gadhafi regime members remain frozen.

The move was announced the same day the U.N. Security Council lifted sanctions on Libya's central bank and a subsidiary, clearing the way for their overseas assets to be unfrozen to ease a cash crisis, a council diplomat said.

The Central Bank of Libya and the Libyan Foreign Bank, an offshore institution wholly owned by the central bank, were taken off the council's sanctions list drawn up earlier this year amid civil war in the Arab state.

After a rebellion broke out in February against Gadhafi, the Security Council froze Libyan assets abroad, estimated at $150 billion. Most of that sum has remained beyond the reach of the oil-rich country's new rulers.

Gadhafi's 42-year rule collapsed 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.

A U.N. resolution in September eased sanctions on Libya, removing them from the national oil company but leaving them largely in place on the central bank and LFB because of legal problems over unfreezing their foreign assets.

Last week, senior figures in Libya's new leadership wrote the committee asking it to delist the two banks, which had been sanctioned along with two Libyan investment authorities.

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.