x Abu Dhabi, UAETuesday 25 July 2017

Frozen funds are a starting point to rebuild Libya

Releasing some of Libya's foreign assets to the new government is the right thing to do. But now what about the rest of the money?

On Friday, the United Nations Security Council lifted the sanctions imposed in February against the Qaddafi regime on Libya's central bank and its foreign investment subsidiary. The move should enable the interim government to access billions of dollars in frozen assets and to meet some of the country's most pressing needs.

The move is both overdue and insufficient as the country faces daunting rebuilding challenges.

Of all the countries that have undergone regime change or serious unrest, Libya is the best prepared on paper to rebuild its economy. The country is rich in high-quality oil and gas, with the ninth largest oil reserves in the world. Foreign investors have fallen over themselves for access to the energy sector; foreign governments see a country where assistance can make a substantial difference.

For the time being, those advantages are not being felt by many Libyans. The interim government has done well to negotiate a fractured political environment, but has been unable to deliver in other areas largely because it lacks the assets to do so.

The central bank governor, Saddek Omar Elkaber, said yesterday that only $3 billion (Dh11 billion) had been delivered to the transitional government. The Security Council decision was followed immediately by decisions by the US and the UK to release $30 billion and $10 billion respectively: estimates of total Libyan funds squirrelled away during the Qaddafi years range from $150 billion to $170 billion. This money belongs to Libyans, was kept by a kleptocratic regime for too long, and should be delivered as soon as reasonably possible.

As Mr Elkaber pointed out last month, the interim government faces serious liquidity problems. The federal budget has spiralled since the end of the war. The new government needs to take care of thousands injured, rebuild infrastructure and urgently fund security needs, including disarming militias.

There are still legal and technical complications about to whom the funds will go and accountability after delivery. Some caution is warranted. But foreign countries holding frozen funds have to defer to Libyans to manage their own affairs - and their own money.

Libya's cash crisis may get worse before it gets better, and ordinary people may not have access to their own money if banks lack liquidity. In today's Libya, that is not just an annoyance but a security issue.