Dictator Moammar Gadhafi appears to have Libyan rebels on the run, even though an international freeze was placed on the Libyan government’s assets. Earlier this month an executive order in the U.S. forced Wall Street banks to freeze $32 billion worth of cash and securities held in Ghadhafi’s name. But the dictator has hoarded billions of dollars in cash, and he is using it to pay mercenaries to fight Libyan rebels.
Libyan revolution’s last stand?
Libyan rebels were preparing to make their last stand Tuesday as forces loyal to Moammar Gadhafi advanced toward Benghazi, the last line of resistance and the headquarters of the Libyan revolution. In a massive air and land assault on Ajdabiya, a town on the road to Benghazi, pro-Gadhafi troops sent rebels running for their lives. Since an international freeze was placed on Libya’s assets a few weeks ago, Gadhafi’s strategy has been to crush the rebels before the international community can agree on how to support the uprising. The Gadhafi regime appeared to be on the ropes a few weeks ago, but tens of billions of dollars in cash, squirreled away in Tripoli, has allowed the dictator to pay his troops, hire African mercenaries and bribe political supporters.
Wall Street takes billions in Gadhafi assets
Until 2004, the U.S. had kept Libyan assets frozen for several decades. Reticent about entering another war in the Middle East, the U.S. reissued the order to freeze Libyan assets this month, attempting to curb Gadhafi by denying him access to about $32 billion. Some financial experts were shocked that Wall Street banks had taken so much of Gadhafi’s money. American banks with Libyan assets have been directed to place the money into accounts that pay interest at market rates. Securities that expire must be converted to cash. Wall Street isn’t allowed to trade or manage the money and will lose those fees. But because they can keep the assets as liquidity on their books, the banks will face virtually no consequences for dealing with Gadhafi. The United Nations and the European Union have also frozen Libyan assets.
Cash pile keeps Gadhafi in power
Gadhafi has become adept at hiding the billions he has stolen from the Libyan people, according to U.S. intelligence experts. For decades, he has been hoarding cash in the Libyan Central Bank, which he owns. He insists that cash is to be used for government transactions, including oil sales. According to the Justice Department, Libya has conspired with Swiss banks to launder international bank transactions for years. Even though Libyan oil exports have dried up and the world is shunning Gadhafi, he is spending his huge pile of cash to stay in power. It has been reported that Gadhafi is paying up to 4,000 African mercenaries each $1,000 a day alone. But his pile is so big, those familiar with his finances suspect he will be able to buy his security no matter what the outcome of the Libyan revolution.
New York Times: http://www.nytimes.com/2011/03/10/world/africa/10qaddafi.html
The Guardian: http://www.guardian.co.uk/world/2011/mar/15/libya-rebels-last-stand-benghazi
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