BENGHAZI, Libya — In the days after Libya’s rebels rose up against Moammar Gaddafi, they faced a vexing challenge: How do you pay for a revolution?They figured that part of the answer could be found inside the secure vaults of the Benghazi branch of the Central Bank of Libya, where Gaddafi’s government held about $505 million.
So they broke in and took it.
“Let me put it this way: We robbed our own bank,” said Ali Tarhouni, the U.S.-educated finance minister for the rebels, who ordered the March heist.
By drilling a hole in a wall and hiring a locksmith to play with a safe’s combination, rebel leaders turned the Gaddafi government’s own money into the lifeblood of their uprising. Now they are trying to do much the same thing on an international scale, asking foreign governments — including the United States — to use seized Libyan assets to fund a rebellion that in three months has evolved from political protest into a protracted military showdown.
On Tuesday, the United States emphasized its support for the rebels by asking them to open an office in Washington, a gesture just short of formal recognition. But as the rebels struggle to fund their fight, the United States and other Western powers have done little to help them financially.
The Obama administration and Congress have been deadlocked over giving rebel leaders any of the $32 billion in Libyan assets frozen in U.S. accounts. Even using the money to provide humanitarian aid to those affected by the conflict is legally complex.
“This is a tough issue,” said Jeffrey D. Feltman, assistant secretary of state for Near Eastern and North African affairs, speaking to reporters in Benghazi. “These are assets that we’re holding in custodianship for the service of the Libyan people, and we’re looking at how we might address the humanitarian needs.”
The White House has asked the Senate Foreign Relations Committee to draft a bill to take a portion of the frozen assets — $150 million to $180 million — and put it to use in Libya as humanitarian aid. But the legislation faces stiff opposition from Republican Sen. Richard G. Lugar of Indiana, who has serious concerns about the “ramifications of taking the funds of what is still another sovereign nation,” said Lugar spokesman Mark Helmke.
Lugar and other members of Congress are concerned about U.S. involvement in a Libyan civil war and the administration’s lack of consultation with Congress. “If the Obama administration wants to spend more taxpayer money and possible American blood, it has to consult with Congress on the ways and means of this war,” Helmke said.
As the administration and Congress bicker, the rebels say they are running dangerously low on funds. They have asked for pledges of up to $3 billion in loans and aid, and have received substantial promises from Kuwait, Qatar and others. But international assistance has come up far short of what the rebels say they need.
For now, Tarhouni and the rebels are still relying on the remaining funds from the central bank — roughly 150 million Libyan dinars, or $120 million, according to Sharif.
“I’ve been using this money in an almost magical way to run the economy,” Tarhouni said. “We needed to use this money to give it back to the people, to feed the people.”
But aware that the money wonÂ’t last much longer, Tarhouni is hunting for the really big sums that Gaddafi and his government placed in banks, investment firms, hedge funds and other institutions across the globe. Tarhouni estimates the assets could be worth as much as $165 billion.