Top diplomats from around the world, including Secretary of State Hillary Rodham Clinton, are scheduled to discuss ways to meet the financial needs of the rebels at a meeting in Rome on Thursday.
After more than two months of fighting, the economy in the eastern portion of the country has been badly battered. While most of the country’s oil comes from the east, forces loyal to Libyan leader Moammar Gaddafi have disrupted production, denying the rebels a potential lifeline. The effective partitioning of the country interrupted pay for the majority of workers here, who are employed in the public sector and were paid from Tripoli before the fighting began.
Until now, rebels had, for the most part, managed to keep those salaries coming. But, they warned, money is running out.
Ali Tarhouni, the rebels’ interim finance minister, told reporters in the de facto capital of the rebel-held east that the Benghazi government has only enough to carry it through “three weeks, at the most four weeks.”
“I need about $2 to $3 billion, and we are hoping to get most or all of this,” he said, adding that he expects the United States, France, Italy and Qatar to grant loans backed by frozen Libyan assets. Those funds could arrive in seven to 10 days, he said, and would be enough to fund the rebel government for three or four months.
The senior U.S. official, who was not authorized to speak on the record and so talked on the condition of anonymity, said it was unclear how the Libyan rebels had come up with the figure of $2 billion to $3 billion. “I think we have to wait and see what the breakdown is, or how and why they’re asking for that particular figure” before deciding if it’s an accurate reflection of their needs, he said.
The official said that “there’s a whole gamut of options people are looking at” to provide financial assistance without violating U.N. sanctions or their countries’ own laws. It was not yet clear whether one mechanism would be chosen when the United States and other allies in the Libya Contact Group meet Thursday, he said.
The rebels’ proposal that they receive frozen assets belonging to Gaddafi and his government presents legal hurdles for some countries, especially those, like the United States, that haven’t recognized the Transitional National Council, the self-appointed rebel authority, as Libya’s new government. In recognition of those obstacles, some European diplomats have floated the idea of creating a trust fund for the rebels, which would be repaid once a new Libyan government is established and oil revenues are flowing again.