Frankfurt: Europe and the United States were
preparing today to unfreeze billions in frozen Libyan assets
that will be crucial to supporting the country once Muammar
Gaddafi`s regime collapses, but the North African nation`s
recovery will be neither easy nor rapid.
Its valuable oil sector could take a year to restart and
the economy badly needs reforms after being moved for decades
by the whims of Gaddafi, whose personal rule was guided by a
quirky socialist ideology, and by his cronies.
As the battle raged on in the capital, Tripoli, the
country`s rebel leaders eyed the tens of billions of dollars
in Libyan money that governments around the world froze during
the early days of the uprising.
The money is the nation`s fortune and is expected to
provide a capital cushion that other Middle Eastern countries
that have deposed rulers this year, such as Egypt, don`t have.
The European Union said Tuesday it was preparing to
unfreeze the Libyan money once the United Nations gives its
approval.
President Barack Obama indicated on Monday that he was
ready to do the same.
"Even if it takes time to recover all of these assets, a
small amount will help the interim government in the near
term," Said Hirsh, Mideast economist for the London-based
Capital Economics, said in a research note.
He estimated Libya`s frozen assets at around USD 110
billion, about 110 percent of the country`s GDP.
"It is possible that political stability can be quickly
restored and reconstruction efforts can commence."
The UN`s approval remains crucial to both the EU and
US decisions to release the funds. Germany`s foreign
minister Guido Westerwelle called Tuesday for the UN
Security Council to pass "as soon as possible" a new
resolution that would unblock the frozen assets.
The US has USD 37 billion in frozen Libyan money, while
Germany blocked some €7.3 billion.
Britain has frozen about 12 billion pounds (USD 20
billion) and the Netherlands €3 billion. The governments of
Austria, Portugal and Spain have not revealed the size of
assets seized in their countries.
While they wait for the green light from the UN, Germany
and the Netherlands each agreed to lend the Libyan rebels
€100 million ($144 million) to fund immediate rebuilding and
humanitarian needs. The money will then be deducted from the
assets they unfreeze.
But while Libya`s transition government will be in the
enviable position of having billions in cash and no debt, the
economy`s fundamental health is poor and the outlook
uncertain.
Bureau Report
