Allies offer Libyan rebels cash lifeline

Thu May 5, 2011 2:57pm GMT

By James Mackenzie and Lin Noueihed

ROME/TRIPOLI (Reuters) - Cash-strapped Libyan rebels won a financial lifeline potentially worth billions of dollars from the United States and other allies on Thursday, as forces loyal to Muammar Gaddafi pounded rebel towns in the west.

U.S. Secretary of State Hillary Clinton said Washington would seek to unlock some of the $30 billion of Libyan state funds frozen in the United States to help the rebel movement.

Italy, host of a meeting in Rome of the "contact group" on Libya, said a temporary special fund would be set up by allied nations to channel cash to the rebel administration in its eastern Libyan stronghold of Benghazi.

Kuwait pledged $180 million to the fund, while Qatar promised $400-500 million, Qatar's prime minister said. France said it was evaluating its contribution to the fund, which should be operational within weeks.

A rebel spokesman in Zintan, southwest of Tripoli, said pro-Gaddafi forces had fired about 50 Russian-made Grad rockets into the rebel-held town so far on Thursday.

The spokesman, Abdulrahman, said the first salvo landed at about 6:45 a.m. (0445 GMT). He said NATO air strikes had destroyed at least two government helicopters near Zintan as they were being transported on trucks.

A Libyan man who fled the town of Nalut, near the border with Tunisia, said it was under bombardment.

Ayub, who left Nalut earlier on Thursday, told Reuters after crossing the border into Tunisia: "They are firing from a mountain about 10 km (6 miles) to the east of Nalut. They are firing Grads." This is the first time there have been reports of Nalut coming under bombardment.   Continued...

<p>A rebel fighter is seen behind a Kingdom of Libya flag near the front line along the western entrance gate of Ajdabiyah April 18, 2011. REUTERS/Amr Abdallah Dalsh</p>
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