, ROME, May 5 – An international meeting on Libya agreed on Thursday to set up a new fund to aid Libyan rebels, with US Secretary of State Hillary Clinton promising Washington would tap frozen assets of Moammar Gaddafi\’s regime.
But officials taking part in the International Contact Group talks said the financial aid could be held up by legal issues in Europe and the United States.
The new mechanism "will permit funds to be channelled effectively and transparently" to the rebels, Italian Foreign Minister Franco Frattini said.
But he added: "One very serious problem needs to be tackled as a matter of priority — the possibility for the (rebel Transitional National Council) to request the unfreezing of Libyan assets for humanitarian purposes."
He said Italy and France had urged the European Union "to seek a solution," adding: "That money belongs to the Libyan people."
Clinton said the United States had "decided to pursue legislation that would enable the US to tap some portion of those assets."
The EU and US have reportedly frozen a total of around $60 billion (40 billion euros) in Libyan overseas bank accounts and investments.
Libyan rebels have said they need up to three billion dollars in credit immediately in order to prevent the economy in their eastern Libya stronghold from collapsing and have mentioned France, Italy and the US as possible donors.
"The United States is also working to facilitate oil sales by the opposition. Our Treasury Department recently took steps to remove barriers under our domestic law for oil-related transactions" that would aid the rebels, Clinton said.
She also promised 53 million dollars in aid for the opposition and said the international community must further isolate Kadhafi\’s regime by refusing to accept the Libyan leader\’s envoys and expelling all diplomats loyal to him.
Clinton was on her first foreign trip since US commandos killed Al-Qaeda chief Osama bin Laden, sparking fears of retaliation by militants.
There was tight security at the meeting, which brought together representatives of 22 countries and six international organisations including NATO chief Anders Fogh Rasmussen and EU foreign policy chief Catherine Ashton.
The head of Libya\’s rebel council, Mahmud Jibril, was also there and a rebel spokesman said that Denmark, the Netherlands and Spain had agreed to recognise their authority — following the example of France, Italy and Qatar.
"We talked about the importance of a political solution" in Libya, Frattini said after talks with Clinton and before the start of the wider meeting, adding that the contact group would aim "to launch a political process."
Writing in the Corriere della Sera daily, Frattini and Qatari Prime Minister Hamad bin Jassem bin Jabr Al-Thani said that any ceasefire must include Gaddafi\’s departure from power "in order to be credible."
The International Contact Group meeting, which includes all the countries participating in the NATO-led campaign targeting Gaddafi\’s regime, is taking place amid stalemate in a conflict that has already killed 10,000 people according to rebels.
The humanitarian situation meanwhile is worsening, particularly in the rebel-held hotspots of the Western Mountain region and the besieged city of Misrata.
The finance issue is an important part of the opposition\’s staying power.
A rebel official said earlier that eastern Libya\’s economy would collapse without "two to three billion dollars".
But TNC spokesman Mahmud Shamam gave a lower figure for the required emergency budget — around 1.5 billion dollars.
Speaking ahead of the talks, French Foreign Minister Alain Juppe said he hoped the conflict would not last "more than a few weeks, at the most months."
But the TNC\’s Shamam said it was "a question of weeks, not months."
"Gaddafi has a lot of money and mercenaries but he controls the same areas as in the first weeks of the conflict. His days are numbered," he said.