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EU set to expand sanctions against Libya

By NICOLE WINFIELD
The Associated Press
Tuesday, March 8, 2011; 3:32 PM

ROME -- The European Union is set to expand sanctions against Libya to include its sovereign wealth funds and central bank, European officials said Tuesday.

The sanctions are expected to go into effect Friday, officials in Rome and Brussels said.

They go beyond those approved by the U.N. Security Council, which targeted Libyan leader Moammar Gadhafi, his family and associates, to restrict Libyan entities that hold stakes in a host of European companies, including British publisher Pearson and Italy's Unicredit bank.

An EU diplomat in Brussels said the Libyan Investment Authority and the Libyan Central Bank were on the list. Another European official said a total of five Libyan entities were targeted by the expanded sanctions, and that more could be added. The officials spoke on condition of anonymity since the sanctions hadn't been formally approved.

Already, Pearson, which publishes the Financial Times and Penguin books, froze dividend payments to the LIA on March 1. The LIA has a 3.3 percent stake in Pearson.

The LIA has a 2.5 percent stake in Unicredit, on top of the Libyan Central Bank's near 5 percent stake. Libya's central bank chief, Farhat Omar Bengdara, is a vice chairman on Unicredit's board.

The Libyan Arab Foreign Investment Company, meanwhile, has a 7.5 percent stake in Italian soccer club Juventus.

As a result of Libya's significant, intertwined interests in Italy, Rome has had a lot at stake as world governments clamp down on Gadhafi.

An Italian official, who also spoke on condition of anonymity since he was not authorized to speak publicly, said Italy had been active in proposing certain entities be included in the broadened sanctions, denying that Italy had been passive or reluctant to freeze Libyan assets. Last week, Italy's treasury minister warned about instability in Europe if the revolutionary forces in the Arab world were to suddenly yank their sovereign wealth investments in European companies.

The Italian official said the sanctions would prevent the Libyan entities from selling their stakes in European companies or receiving dividends.

Italy imports 10 percent of its gas and 25 percent of its oil from Libya.

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Associated Press reporter Gabriele Steinhauser in Brussels contributed to this report.

© 2011 The Associated Press