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Libya requests UN sanctions exemption for sovereign wealth fund

Request seeks an exemption for its blacklisted sovereign wealth fund to halt billion-dollar losses caused by ineffective management of frozen assets

Published: Updated:

Libya is asking the UN Security Council to approve a sanctions exemption for its blacklisted sovereign wealth fund to halt billion-dollar losses caused by ineffective management of frozen assets, according to a letter released on Wednesday.

The letter from Libya’s ambassador to the United Nations, Ibrahim Dabbashi, said the losses incurred at the Libyan Investment Authority (LIA) are the result of U.N. sanctions imposed in 2011 to prevent the government of former leader Muammar Gaddafi from spiriting away the country’s wealth.

“The LIA estimates that in 2014 alone, instead of increasing the value of its assets base, it had real losses of $721 million,” Dabbashi said.

“Furthermore, it lost an additional $1.6 billion to $2.3 billion in what would have been returns on investment if its assets had been properly invested in conservative investments with competitive interest rates,” he told the 15-nation council.

Dabbashi told Reuters that the LIA has roughly $67 billion in total assets.

In the letter, Dabbashi made clear his government does not want to use the assets, but to make sure their value does not continue to decline due to poor management. The current sanctions regime makes the assets virtually untouchable.

Diplomats said council members were reluctant to change the sanctions regime until the oil-rich OPEC member has a stable government.

A unity government emerged from a UN-mediated deal signed in December aimed at ending the country’s political impasse, resolving its armed conflict and tackling a growing threat from ISIS extremists.

Western powers have recognized it as Libya’s legitimate government, but it faces opposition from hardliners.

LIA was blacklisted in March 2011 because it was controlled by the Gaddafi family.

Dabbashi asked the council to adopt a resolution that would allow the LIA to transfer funds between frozen accounts and permit reinvestment and the opening and closing of accounts so that the value of assets can be protected and returns maximized.

The point of such a resolution amending the sanctions regime would be to “explicitly allow the LIA to engage in fund management within the frozen accounts to prevent the further dissipation of LIA assets.”

The Security Council is expected to extend the mandate of the Libya sanctions regime on Thursday.

A draft resolution on renewing UN Libya sanctions does not include a provision for the requested amendment, though it does say the council will consider changes to the asset freeze “when appropriate” once the unity government formally requests it.