Officials with the transitional council have said they are not seeking the immediate handover of all $34 billion in frozen assets. But Aujali said at least $4 billion was needed.
The TNC signed a contract in May with the lobbying powerhouse Patton Boggs to help it win U.S. diplomatic recognition and gain access to the frozen funds. The contract allowed fees of up to $50,000 a month but also stipulated that Patton Boggs would not seek payment until the council was on sound financial footing.
U.S. and Libyan officials say there are a host of other complications in turning over the frozen assets to the rebels. Libya’s financial holdings are widely dispersed among financial institutions, some of which are subject to the laws of foreign governments.
And bankers will probably move cautiously because of the fear of lawsuits.
“All these institutions want assurances that they’ll be protected,” said a second U.S. government official, who also insisted on anonymity to describe internal discussions. “This is something that is going to take some time.”
The Obama administration is considering issuing a license that would allow American banks in the United States and Britain to turn over billions of dollars in frozen assets. But that may require going through the U.N. sanctions committee, the U.S. official said.
The question of recognizing the Libyan rebels was vigorously debated by administration lawyers, but in the end, all the principals agreed on the policy, with Clinton strongly supporting recognition of the rebels, officials said.
But other experts note a long tradition by U.S. governments of using diplomatic recognition as a policy instrument.
“Lawyers will always come up with elaborate arguments,” said Philip Zelikow, a former counselor to the State Department. “The important questions are: What are the facts on the ground, and what is it that you want to achieve.”
The administration should have granted recognition months ago, Zelikow said. “Back then, it might have been a decisive factor,” he said. “It could have knocked the wind out of Gaddafi’s sails.”