UN lifts sanctions on Libya's key banks

The UN Security Council has lifted sanctions on Libya's central bank and the country's foreign investments banks, diplomats say.

They say the move is aimed at easing a current cash crisis in Libya.

The US followed the suit shortly afterwards, lifting "most" sanctions against Tripoli.

The Libyan banks' assets abroad were frozen earlier this year as part of sanctions against former Libyan leader Col Muammer Gaddafi.

'No objections'

On Friday, the UN Security Council decided to lift the sanctions on the Central Bank of Libya and its investments subsidiary - the Libyan Foreign Bank.

Last Friday, the council agreed to unfreeze the assets - unless there were objections - by 1700 local time (2200 GMT) on 16 December. As that deadline passed, no objections had been received, the diplomats in New York said.

The UK Foreign Secretary, William Hague, said that the move "marks another significant moment in Libya's transition".

"It means that Libya's government will now have full access to the significant funds needed to help rebuild the country, to underpin stability and to ensure that Libyans can make the transactions that are essential to everyday life," Mr Hague said in a statement.

He added that London would now free some £6.5bn held in Britain.

Following the UN decision, the White House said in a statement that "the United States rolled back most US sanctions on the government of Libya to keep our commitment to the Libyan people".

The US Treasury said that it would "allow for the release of more than $30 billion in blocked central bank and LAFB (The Libyan Arab Foreign Bank) assets.

"The Libyan government now has the ability and responsibility to manage these funds," the Treasury said.

The interim government in Tripoli has recently stepped up calls for the release of some $150bn (£96bn) held abroad to pay employee salaries and keep the country's basis services running.

Some sanctions were eased after the fall Col Gaddafi's regime, but the process of releasing the bulk of the money has been very slow for legal and technical reasons, the BBC's Barbara Plett in New York reports.

Diplomats say that is because of uncertainty in the countries holding the assets as to who legally owns the funds, and whether the Libyan leadership is united enough to be trusted with the cash, our correspondent adds.