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U.S. plans to freeze assets of Libyans involved in attacks on civilians

By Robert O'Harrow Jr. and Brady Dennis
Washington Post Staff Writers
Tuesday, March 8, 2011; 9:54 PM

U.S. officials intend to freeze assets owned by some Libyan military, intelligence and government officials involved in attacks on civilian and rebel forces, officials said Tuesday.

The plan - one prong in a broader effort to apply pressure to Libyan leader Moammar Gaddafi - has taken shape as the Libyan government bombed civilians opposed to the Gaddafi regime. Some of those targeted by the plan are likely to be mid-level army officers, intelligence officials and security forces directly involved in preparing and implementing attacks in recent days. Senior Libyan government officials, Gaddafi's children and others with ties to the Libyan leader also could be subjected to the sanctions in coming weeks and months.

"You can expect to see a very stern response" by the administration, said a senior government official who spoke on the condition of anonymity because the plan is still taking shape.

Some of the Libyan officials facing sanctions probably do not have accounts or other assets abroad. In the past, the stigma of being targeted publicly - and possibly being held accountable for rights violations in international tribunals - has spurred some of those targeted in other countries to abandon their efforts or defect.

The officials to be targeted are being identified through intelligence reports, media accounts and information supplied by nongovernmental organizations, the official said.

The plan is part of an intensifying U.S.-led effort to disrupt Libya's economic and military activity by seizing billions in bank accounts, real estate and other assets controlled by Gaddafi, his family and the Libyan government. Even as U.S. officials weigh individual sanctions in Libya, the government has continued to seek out state-owned assets that Gaddafi might otherwise be able to tap.

Also on Tuesday, the European Union took a major step in the sanction effort when it agreed to move toward freezing billions in assets maintained in European institutions for the Libyan Investment Authority (LIA), the nation's sovereign wealth fund.

The actions came as Treasury Secretary Timothy F. Geithner met with leaders in Germany on Tuesday, in part to press for tougher sanctions.

"The response has been incredibly swift and effective," Adam Szubin, the director of Treasury's Office of Foreign Assets Control, said in an interview Tuesday. "You're seeing governments around the world moving within days to issue a very firm rebuke."

The E.U. also said it would target Libyan financial institutions, including the central bank. Formal approval of the tougher sanctions is expected to come in the next few days, as the E.U. joins the United States in "putting the squeeze on Gaddafi," said an E.U. official who spoke on the condition of anonymity because the decision is not final.

There's no way to know how much Libyan wealth ultimately will fall under the expanding sanctions. The International Monetary Fund estimates that the combined assets of the LIA and the central bank are worth $150 billion.

The value of the cash, investments, real estate and other Libyan assets in the United States frozen under an executive order issued by President Obama has risen to $32 billion so far - the largest amount ever frozen under a U.S. sanctions program.

Billions more will presumably be caught by the E.U.'s net, because Europe is one of Libya's primary trading and investment partners.

Treasury officials described the E.U.'s initiative as a crucial step in preventing Gaddafi from tapping the global financial system for money to support attacks on civilians, while protecting from theft accounts that rightly belong to the Libyan government.

"A very quick and strong sanctions response can be a tangible manifestation of how isolated he is and, ideally, serve as a prod to change his decision-making calculus," Szubin said.

"Action by the E.U. [to freeze Libyan government assets] is tremendously important. I think it would send a real signal to governments and financial institutions around the world."

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