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U.S. Seeks to Use Frozen Gadhafi Assets to Aid Rebels By STACY MEICHTRY And JAY SOLOMON [clinton0505] <http://si.wsj.net/public/resources/images/OB-NU066_clinto_F_20110505090636.jpg> Giorgio Cosulich/Getty Images U.S. Secretary of State Hillary Clinton attended a press conference in Rome Thursday. ROME—-The Obama Administration is working with Congress to pass legislation that would allow the U.S. government to tap assets held by Col. Moammar Gadhafi and his regime in the U.S. to help fund forces opposing the Libyan dictator, U.S. Secretary of State Hillary Clinton said on Thursday. Ms. Clinton's comments came as she and other diplomats from more than 20 countries were meeting in Rome to discuss their air campaign in Libya. Top on the agenda is a plan to bolster the finances of Libya's struggling rebels—including the creation of a multi-billion dollar trust fund that would in part be filled by assets of the Gadhafi regime that have been frozen by the United Nations and the European Union. The U.S. has allocated $25 million to help the rebels procure supplies, but because of legal issues it has so far declined to release any of the $34 billion in Libyan assets that were frozen by the Treasury Department this year in the wake of Col. Gadhafi's violent crackdown on protesters, according to U.S. officials. Unlike France or Italy, Washington hasn't recognized the rebel leadership council as Libya's rightful government, complicating its ability to provide funding. If Congress passed legislation allowing those assets to be tapped "we can make those funds available to help the Libyan people," Ms. Clinton said in prepared remarks to her counterparts at the meeting. She added that the U.S. Treasury Department was also seeking to "remove barriers under our domestic law" that restrict the U.S. from "oil-related transactions that benefit the" National Transition Council, the Benghazi-based political body of the opposition forces. Ms. Clinton didn't give details on the transactions she was referring to. "Clearly on our agenda is looking for the most effective ways to deliver financial assistance and other means of supporting and helping the…opposition," the secretary of state had said during an earlier news conference in Rome. The North Atlantic Treaty Organization-led air campaign against Col. Gadhafi's forces has intensified in recent weeks, with allied jets attacking targets close to the Libyan leader. Yet part of the rebels' difficulty in their efforts to bring down Col. Gadhafi's regime stems from their lack of financial muscle. Libya's economy is highly dependent on oil exports, and rebels have struggled to maintain control of ports and other facilities that would enable oil sales. The creation of a trust fund—which could hold up to some $4.5 billion, people familiar with the matter say—is seen as a way for the U.S. and its allies to closely monitor money dispensed to rebels by maintaining oversight of the fund, while involving the National Transitional Council in its management, said a person familiar with the matter. While rebels would be able to draw on the fund, it wasn't clear whether they could buy weapons with the money because of a U.N. arms embargo on Libya. Mrs. Clinton and her counterparts are also expected to hash out a governance structure for the potential fund during their meeting on Thursday, people familiar with the matter said. The rebel leadership, in a letter last month to U.S. Treasury Secretary Timothy Geithner, proposed the creation of a trust fund that could be audited and co-managed by the rebels and foreign governments as a way to give rebels access to frozen Gadhafi assets. In March, the EU froze foreign assets owned by the Gadhafi family and the dictator's close lieutenants. The EU also froze stakes that Libya's central bank and its sovereign-wealth fund, the Libyan Investment Authority, hold in large European companies, including a 7.6% stake in Italian lender UniCredit SpA. In her address to the meeting, Mrs. Clinton also called on her counterparts to turn up diplomatic pressure on Col. Gadhafi by sending envoys to Benghazi. Isolating the Gadhafi regime, Mrs. Clinton said, "includes suspending the operations of Gadhafi's embassies and expelling pro-Gadhafi diplomats, as the United States and other countries have done, and sending envoys to Benghazi and facilitating the creation of [National Transition Council] representative offices in capitals worldwide." The U.S. has sent an envoy to Benghazi, though the Obama Administration hasn't diplomatically recognized the transitional council. Mahmoud Jibril, the rebels' de-facto foreign minister, is expected to be in Washington next week and meet with Treasury officials. [Non-text portions of this message have been removed] ------------------------------------ -------------------------- Want to discuss this topic? 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