U.S. recognises Libya rebels with eye on funds

ISTANBUL, (Reuters) – The United States today  recognised Libya’s rebel National Transitional Council (TNC) as  a legitimate government, a diplomatic boost which could unlock  billions of dollars in frozen assets.
U.S. Secretary of State Hillary Clinton said Washington  would extend formal recognition to the Benghazi-based TNC until  a fully representational interim government can be established.
“The TNC has offered important assurances today, including  the promise to pursue a process of democratic reform that is  inclusive both geographically and politically,” Clinton said in  prepared remarks.
“Until an interim authority is in place, the United States  will recognize the TNC as the legitimate governing authority for  Libya, and we will deal with it on that basis.”
Clinton’s announcement came as the Libya Contact Group,  meeting in Istanbul, formally recognised the opposition as the  representative of the Libyan people — sealing its diplomatic  status as the successor government to embattled leader Muammar  Gaddafi.
The contact group, made up of more than 30 governments and  international and regional organisations, also authorized U.N.  special envoy Abdul Elah Al-Khatib to present terms for Gaddafi  to leave power in a political package that will include a  ceasefire to halt fighting in the civil war.
Clinton said any deal “must involve Gaddafi’s departure”  from power and a halt to violence.
“Increasingly the people of Libya are looking past Gaddafi.  They know, as we all know, that it is no longer a question of  whether Gaddafi will leave power, but when,” she said.
U.S. officials said the decision to extend formal diplomatic  recognition marked an important step toward unblocking more than  $34 billion in Libyan assets in the United States but cautioned  it could still take time to get cash flowing.
U.S. President Barack Obama signed an executive order on  Feb. 25 freezing the assets of Gaddafi, his family and top  officials, as well as the Libyan government, the country’s  central bank and sovereign wealth funds.
Most of the frozen assets are liquid in the form of cash and  securities.
U.S. officials have pledged to find ways to free up some of  the money for the TNC, which has run dangerously short of cash  to pay for salaries and basic services even as it takes on more  of the responsibilities of government.

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