* Tarhouni left Libya in 1973 after jail
* Says rebels will respect oil contracts
* Rebels have enough cash, need weapons
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By Angus MacSwan
BENGHAZI, Libya, March 23 (Reuters) - Libya’s rebel national council on Wednesday named a U.S.-based academic and exile opposition figure, Ali Tarhouni, as the senior finance official in a transitional government it is setting up.
He will head the financial and commercial committee, in effect acting as finance minister in a body which the rebels hope will win international recognition in their struggle against Muammar Gaddafi’s 41 year-rule.
Tarhouni, aged 60, left Libya for the United States in 1973 after being jailed by Gaddafi for student political activities. He was stripped of his Libyan citizenship and sentenced to death in absentia in 1978, he said.
He holds a PhD in economics and finance from Michigan State university and has been teaching at the Foster School of Business at the University of Washington in Seattle while remaining active in the exile opposition.
“I left my students to come back. Everybody understand why,” he told reporters at a hotel on Wednesday night.
He arrived back in the rebel capital Benghazi, his hometown, a few days after Gaddafi officials and security forces were thrown out last month. “I couldn’t wait to get back.
He said he was initially reluctant to take up a formal role, then agreed to act as an economic adviser.
Now he joins a cabinet in the process of being formed by Mahmoud Jebril who has been chosen to lead the transitional government.
Tarhouni said he would be in charge of finance and the economy but only oversee oil, the source of Libya’s wealth, from a distance.
“Oil is not an immediate issue,” he said. “Right now we don’t have a crisis here for cash. We have some liquidity that allows us to do basic things.”
Foreign governments had said they would offer credit backed by frozen Libyan sovereign funds, he said. Much of the money was also literally “cash in the vault”, he said.
The Central Bank in Benghazi and other banks had funds, he said. Also the British government had promised the rebel administration it could have access to 1.4 billion dinars printed in Britain originally for the Gaddafi government.
“We need a strategic reserve for when cities are liberated. There’ll be a lot of needs for basic necessities.”
He did not yet have a projected operating budget for the administration.
On the issue of oil contracts between foreign entities and the Gaddafi government, Tarhouni said it would respect any contract that was signed before the uprising.
“The overall goal is to get rid of Gaddafi then build a democratic country. We need to put our house in order first.”
Asked what would happen if a military stalemate developed and Gaddafi remained entrenched in Tripoli, he said he thought the strongman’s position was ultimately untenable. He would be isolated with no oil, no cash, and no international recognition.
The anti-Gaddafi movement did not want a partitioned country, he said.
The dynamic would change if rebel forces could capture the town of Ajdabiyah, 150 km (90 miles) south of Benghazi, and the frontline of the war in the east. Ideally people in the capital Tripoli would rise up. The two largest tribes in the west also had still not played their hand, he added.
The foreign airstrikes that have knocked out Gaddafi’s air defences and stopped his tanks were very welcome, he said, but no one wanted foreign ground troops to intervene. But the rebels needed more guns.
“We welcome any help with armaments. We are actively looking for and seeking armaments.” (Reporting by Angus MacSwan; Editing by Jon Hemming)