White House freezes Libyan assets

[February 26, 2011]  WASHINGTON (AP) -- Dramatically sharpening its stance against Moammar Gadhafi's brutal crackdown on anti-government protesters, the Obama administration is freezing all assets in the United States held by the Libyan government, Gadhafi and four of his children and abandoning the U.S. Embassy in Tripoli.

The shift in tactics after a week of caution came immediately after the U.S. ensured that Americans were safely on their way out of the blood-soaked North African country by air and by sea.

"By any measure, Moammar Gadhafi's government has violated international norms and common decency and must be held accountable," President Barack Obama said in a statement Friday night announcing the sanctions, which he said were designed to target Gadhafi's government and protect the assets of Libya's people from being looted by the regime. They struck directly at Gadhafi's family, which is believed to have amassed great wealth during his 42 years in control of the oil-rich North African nation.

The president condemned "the Libyan government's continued violation of human rights, brutalization of its people and outrageous threats."

The administration faced increasing pressure to join more forcefully in an international chorus of condemnation against Gadhafi, who has unleashed a frenzy of killing against a determined rebellion intent on ending his rule. Militiamen loyal to the strongman have been roaming the streets of Tripoli shooting at will, killing hundreds or thousands, even as an increasingly desperate Gadhafi has lost hold of major portions of the country to rebel control.

The White House had held back while U.S. citizens were still in Libya, despite criticism domestically and internationally that its response was insufficiently forceful. That changed quickly Friday after successful evacuations of embassy personnel and other U.S. citizens on a chartered airplane and a ferry to Malta.

White House press secretary Jay Carney announced at an afternoon briefing -- shortly after the flight carrying the last of the U.S. Embassy personnel left Libya -- that sanctions were being drafted. Carney said Gadhafi's "legitimacy has been reduced to zero in the eyes of his people."

Hours later, the White House released an executive order signed by Obama detailing the penalties.

The U.S. put an immediate freeze on all assets of the Libyan government held in American banks and other U.S. institutions.

The sanctions also apply to assets held by Gadhafi, himself, and three sons -- heir apparent Seif al-Islam, Khamis and Muatassim -- and a daughter, Aisha. The order directs the secretaries of state and treasury to identify other individuals who are senior officials of the Libyan government, children of Gadhafi and others involved in the violence.

Stuart Levey, undersecretary for terrorism at the Treasury Department, said officials believe "substantial sums of money" will be frozen under the order. He declined to give an estimate.

Libya ranks among the world's most corrupt countries and has enormous assets to plunder. Confidential State Department cables suggest that U.S. banks manage hundreds of millions in Libyan assets, and the government has built a multibillion-dollar wealth fund from oil sales.

The executive order said that the instability in Libya constituted an "unusual and extraordinary threat" to U.S. national security and foreign policy.

But the White House stopped short of calling explicitly for Gadhafi's ouster, as France President Nicolas Sarkozy has done. The White House also held back, for now, from endorsing imposition of a no-fly zone in Libyan airspace as sought by some foreign diplomats, and a U.S. military response seemed unlikely.

That left the question of what impact the financial penalties could have on a desperate ruler who's declared he'll fight to the last drop of blood. The demonstrators, encouraged by the recent uprisings that brought down the leaders of neighboring Egypt and Tunisia, also insist they will fight on. Carney indicated Friday's actions would not be the last word from the U.S. and insisted the sanctions could work.

"The intent of the sanctions is to make it clear that the regime has to stop its abuses, it has to stop the bloodshed," the press secretary said. "The determination about who should govern Libya has to be made and will be made by the Libyan people."

"We will take these substantial actions and leave other potential actions on the table and evaluate as we go."

The options available to influence Gadhafi are limited, however. The 68-year-old leader has had a rocky relationship with the West, and American officials are worried about his unpredictability as he clings to power.

The U.S. response must necessarily be modulated or risk "some very dramatic political gestures and some very dead Libyans," said Anthony Cordesman, an expert on the Middle East at the Center for Strategic and International Studies.

Carney said other sanctions would be coordinated with international allies and the United Nations, whose chief, Ban Ki-moon, was invited to Washington for Monday talks with Obama. Obama was briefing world leaders on U.S. plans.

The suspension of operations at the American Embassy does not mean an end to diplomatic relations with Libya. The U.S. wants to retain the ability to communicate directly with Libyan officials to appeal for restraint and an end to the violence, State Department officials said.

The U.S. maintained a stiff embargo against Libya for years, calling it a terrorist sponsor. Washington eased restrictions over the past several years in recognition of Gadhafi's decision to renounce his nuclear weapons program and his cooperation in anti-terror operations. Carney said the U.S. would suspend the limited military cooperation it had with the country.

In Geneva, U.S. diplomats joined a unanimous condemnation of Libya at the U.N. Human Rights Council, which launched an investigation into possible crimes against humanity by Gadhafi's regime and recommended Libya's suspension from the body.

[Associated Press; By ERICA WERNER]

Associated Press writers Matthew Lee, Bradley Klapper, Ben Feller and Darlene Superville contributed to this report.

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