July 15, 2011 / 6:56 PM / 9 years ago

RPT-Canada says unable to free up Libyan assets

(Repeats to additional subscribers without changes)

* Minister says hands ties on frozen assets

* Ottawa mulling line of credit to rebels

By Louise Egan

OTTAWA, July 15 (Reuters) - Canada cannot unlock frozen assets to help fund the Libyan rebels even after world powers on Friday recognized the National Transitional Council (TNC) as the country’s legitimate government.

Foreign Minister John Baird said any attempt to free up locked Libyan government money unilaterally could run up against complex legal constraints and conflict with United Nations sanctions, leaving it helpless to act on its own.

“We believe that the overwhelming amount that’s been frozen in Canada is under U.N. Security Council sanctions and so our legal ability with Canadian law is that we can’t release it to either them (the TNC) or a third party until the security council lifts the freeze or makes another decision in that regard,” Baird told reporters via teleconference.

Baird would not say how much money was held in Canadian banks, either inside the country or in subsidiaries abroad, but said it was “substantial.”

Ottawa is looking into opening a line of credit to the TNC until the cash can flow, he said, and it might set up a diplomatic outpost in the rebel-held city of Benghazi.

“I’ve asked my officials on both a policy and a legal basis to look at what our capacities are there,” he said about possible financial aid.

Baird was in Istanbul, Turkey for a meeting of 35 countries and international bodies seeking a political solution to the civil war in Libya. At that meeting, the United States and other world powers recognized the TNC as the legitimate government of Libya, a move Canada took a month earlier, in an important first step towards unlocking billions in dollars in cash to the rebels.

Western nations said they also planned to increase the military pressure on Muammar Gaddafi’s forces to press him to give up power after 41 years at the head of the North African state. [ID:nLDE76E0C7]

“Canada believes that we are at a defining moment in this crisis, when everything becomes possible and a solution may not be too far away,” Baird said. (Editing by Jeffrey Hodgson)

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