Wednesday, June 1, 2011

Italy Pledges Oil, Cash to Rebels in Benghazi

BENGHAZI, Libya—Italy boosted the fortunes of Libyan rebels fighting Col. Moammar Gadhafi, pledging Tuesday to provide them with hundreds of millions of euros in urgently needed fuel supplies and cash and saying that some of the regime's frozen assets could be made available to the rebels within weeks.
Italian Foreign Minister Franco Frattini, speaking during a visit to the rebel stronghold city of Benghazi in eastern Libya, said Rome would, through the Italian oil giant Eni SpA and Italian bank UniCredit SpA, "provide the [rebel] council for the needs of the Libyan people with a huge quantity of fuel and a huge amount of money."
Mr. Frattini said the pledge would represent "hundreds of millions of euros that is necessary for the daily lives of the population."

Reuters
Italian Foreign Minister Franco Frattini (C) arrives for a news conference in Benghazi. Mr. Frattini opened Italy's consulate in the Libyan rebel stronghold and pledged financial support for the rebels.
Eni is the largest foreign investor in resource-rich Libya, which supplies Italy with more than a quarter of its energy needs. Col. Gadhafi's regime has large stakes in UniCredit and other Italian companies. The bulk of Libya's oil production, which stood at almost 1.4 million barrels a day in February, has been stopped.
Later Tuesday, North Atlantic Treaty Organization forces restarted strikes on Tripoli after a two-day pause. Shortly before 10 p.m. local time, several loud explosions could be heard across the capital. NATO had been expected to renew its bombing campaign after South African President Jacob Zuma's Monday meeting with Col. Gadhafi failed to produce a diplomatic breakthrough.
Mr. Frattini said the transfer of funds and fuel to the rebels would be guaranteed by the Italian export-credit agency known as SACE SpA. Most importantly, he said, billions of dollars of Libyan holdings inside Italy would be used as collateral.
Those holdings are part of Libyan assets held mostly in Europe and the U.S.—estimated by the regime to be valued at almost $120 billion—that are currently frozen in accordance with United Nations sanctions imposed on Col. Gadhafi's regime after its crackdown against this year's popular uprising.
"We are talking about billions of euros that is not money of the regime. This is money of the people of Libya," Mr. Frattini said, referring to those Libyan assets held in Italy. "[These] important frozen assets can represent a very valid guarantee for this transfer of money to the Libyan people."
Rebel leaders have pleaded for weeks for the unfreezing of Libyan assets. Several countries including the U.S. and U.K. have cited legal complications, with some saying that unfrozen assets had to be transferred first to the regime before being made available to the rebels.
Mr. Frattini said these obstacles were being worked on now with the U.N. Security Council Sanctions Committee. He added that some of the assets were expected to be unfrozen in time for the next meeting, in early June, of allies in the so-called Libya Contact Group in Abu Dhabi.
In Tripoli, government spokesman Moussa Ibrahim said NATO allies were breaking international law and overstepping the mandate of U.N. resolutions authorizing the use of force by expanding financial and military support for the rebels. He warned that continuing the bombing campaign against the regime would result in a bloody civil war.
The Libyan ministry of health also released the first government estimate of civilian casualties as a result of NATO airstrikes. The report, delivered by Mr. Ibrahim, listed 718 civilians killed between March 19 and May 26, but provided no further information or breakdown on the casualties. NATO has denied killing large numbers of civilians.
Following his press conference, Mr. Frattini opened a new Italian consulate in Benghazi to replace the one that was burned down in 2006 by protesters after an Italian official wore a T-shirt on live TV depicting a cartoonist's depiction of the Prophet Mohammed, which had raised an uproar in the Muslim world when it was published in a Danish newspaper. Several protesters were shot dead by security forces at the time.
Italy, the former colonial power in Libya, was among the first countries to sever relations with Col. Gadhafi's regime and recognize the rebel's National Transitional Council as the only legitimate representative of the Libyan people.
Rome's relationship with Libya is a complex one, fraught with historical baggage and vital strategic and economic considerations. Omar Mukhtar, a resistance fighter executed by Italian occupiers more than 80 years ago, is the symbol of the rebels now fighting Col. Gadhafi.
Before the current crisis, Italian Prime Minister Silvio Berlusconi and his government had a cozy relationship with Col. Gadhafi after the signing of a "friendship treaty" in 2008.
Eni has been in Libya since 1955, and in 2007 it signed a $28 billion deal to extend its Libyan oil contracts to 2042. Sanctions have forced Eni to suspend shipments of the oil it produces there, with the company's chief executive warning at the time that Europe was endangering its energy security and "shooting itself in the foot." The company also shut down the Greenstream pipeline, which supplies 10% of Italy's natural gas.
In several speeches since the start of the crisis, Col. Gadhafi has taken credit for Mr. Berlusconi's apology for the Italian occupation of Libya and has labeled the rebels as "traitors," saying they were a conduit for Italy and other "imperial" powers to reoccupy Libya and seize its oil wealth.
During his visit to Benghazi, Mr. Frattini promised to ratchet up the military, political and economic pressure on Col. Gadhafi's regime and predicted its imminent collapse.
He said the regime has been significantly weakened and has lost internal and international credibility after more than two months of relentless NATO airstrikes.
"What else is necessary to say that it's over? For me, it's over," Mr. Frattini said, later adding: "Next time I hope to meet you in the liberated Tripoli."
Asked about the African Union initiative and South African President Zuma's meeting with Col. Gadhafi on Monday in Tripoli, Ali al-Issawi, a senior official with the rebel council's executive committee, said he believed the African leader failed to convince the Libyan strongman to step down.
"We believe President Zuma had difficulties in dealing with Gadhafi," said Mr. Issawi, who appeared alongside Mr. Frattini.
A statement from President Zuma's office on Tuesday said Col. Gadhafi reiterated his readiness to abide by a cease-fire and start a political dialogue with the Libyan people. It said Col. Gadhafi "emphasized that he was not prepared to leave his country, despite the difficulties." His departure is the central demand of the rebels and their Western allies.
"The problem is not with us," Mr. Issawi said. "The problem is with Gadhafi himself in accepting the legitimate demands of the Libyan people."
—Stacy Meichtry in Rome, Peter Wonacott in Johannesburg and Joe Parkinson in Tripoli contributed to this article.

Sam Dagher at sam.dagher@wsj.com

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