Coalition to create fund for Libya rebels

The NATO-backed coalition in Libya has said it will create a fund for rebels fighting the government of Muammar Gaddafi.

The Transitional National Council (TNC), based in Benghazi, has appealed for loans of up to $3bn, saying they need around half of that for food, medicine and other basic supplies.

Italy, host of Thursday's meeting in Rome of the Contact Group on Libya, said the temporary special fund would aim to channel cash to the opposition administration in its eastern Libyan stronghold.

Franco Frattini, Italy's foreign minister, said $250m were already available, while his French counterpart said the fund could be up and running within weeks.

But efforts to unblock Libyan state assets frozen in overseas accounts, or to allow the rebels to get past UN sanctions that prevent their selling oil on international markets, have been held up.

"We'll be discussing a financial mechanism, we'll be discussing other forms of aid," Hillary Clinton, the US secretary of state, said at a joint news conference with Franco Frattini, the Italian foreign minister.

"I will be formally announcing our non-lethal assistance so I think that there is an effort with urgency to meet the requests that the TNC is making," she said.

Clinton said the US government would try and free up some of the $30bn it has frozen in Libyan assets to help the TNC.

She said the administration of Barack Obama wants "to tap some portion of those assets owned by Gaddafi and the Libyan government in the United States, so we can make those funds available to help the Libyan people".

Kuwait said it has pledged $180m and Qatar will put in $400-$500m, its prime minister said on Thursday.

However Britain has said it has no plans to contribute to the new fund because it had already made a "very substantial" contribution to humanitarian assistance.

Countries that recognise the rebel council, France, Italy and Qatar, are the ones with which the TNC will do business.

The fact that it will be France and Italy that will be administing this fund is bound to lead some people to think that this is quite a good way of persuading a cash-strapped eastern Libya in Benghazi to accept a deal which is going to put oil and money into the hands of countries like France, Italy and Qatar. Although it looks like benevolence, there is a hard headed financial imperative that goes underneath it.

Mahmoud Shammam, chief spokesman for the TNC, has said the rebels urgently need $1.5bn to cover immediate running costs. "We need this for medical supplies, for food supplies, to keep the minimum functions of normal life - electricity,
running hospitals etc," he said on Wednesday.

The rebels also want to press their cases for better weapons and equipment, Shammam suggested, saying that they are "hungry for basic arms."

The meeting of Libya Contact Group brought together foreign ministers from countries including France, Britain, the United States, Italy and Qatar as well as representatives of the Arab League and the African Union.

British officials said the Rome meeting would seek to impose new restrictions on arms smuggling and mercenaries operating within Libya, and hoped the contact group would work on action intended to restrict Gaddafi's exports of crude oil and his ability to import refined oil products.