By Louis Charbonneau
UNITED NATIONS (Reuters) - The United States and South Africa struck a deal on Thursday to allow the release of $1.5 billion in frozen Libya funds for humanitarian aid and other civilian needs, U.N. diplomats said on Thursday.
They said the agreement would allow the release of the funds without a Security Council vote on a draft resolution that Washington submitted on Wednesday after South Africa blocked a U.S. request to disburse the money in the U.N. Libya sanctions committee.
The South African delegation said it did not support funds going directly to the Libyan rebel government, the Transitional National Council (TNC), which the African Union has not recognized. Pretoria insisted that there be no mention of the TNC in the official request for the release of the funds.
U.S. Deputy U.N. Ambassador Rosemary DiCarlo told reporters the South Africans "are lifting their hold now."
"The council has reached consensus on the package of $1.5 billion in assets that we want unfrozen," she said, adding that the United States was "very pleased with the outcome."
A spokeswoman for the South African U.N. mission, however, said her delegation had told the United States that Pretoria would withdraw its objection to the release of the money "as long as there is no reference whatsoever to ... the TNC."
"Because if it's TNC, then it means that we are agreeing as the 15 collective council members to say yes to the TNC and we have not all recognized it," she told reporters.
U.S. Secretary of State Hillary Clinton said as funds are released, the United States would expect the Transitional National Council to fulfill the commitments it has made to build a tolerant, unified democratic state that protects the human rights of its citizens.
"It is critical that the TNC engage swiftly with communities and leaders across Libya to ensure order, provide critical basic services to the people and pave the way for a full democratic transition," Clinton said in a statement. "There can be no place in the new Libya for revenge attacks and reprisals."
NO TACIT RECOGNITION
Diplomats said the TNC would be involved in deciding how to use the money, even though the request no longer refers to the TNC specifically but to the "relevant Libyan authorities."
"The funds will go to the relevant authorities in Libya, and the relevant authorities happen to be the TNC," DiCarlo said.
South African Ambassador Baso Sangqu made clear that he was satisfied: "The question of recognition, of any tacit recognition through this request, has been dropped."
Another diplomat told reporters that the U.S. delegation had agreed to reword its August 8 request to the sanctions committee, enabling the South African delegation to back the release of the funds. U.N. sanctions committees make decisions by consensus, which means each council member has a veto.
The unfreezing of the funds became official shortly after the Security Council meeting, diplomats said.
The original request to release the $1.5 billion had explicitly called for the TNC to play a role in deciding how some of the money would be used, which was what South Africa insisted be removed from the request.
The U.S. request had said the money, currently frozen by the U.S. government on the basis of U.N. sanctions adopted this year, was not to be used for military purposes.
The $1.5 billion is expected to be split into three $500 million tranches to pay for humanitarian relief by U.N. agencies, for civilian power and for health, education and food, the U.S. State Department said.
Of the first tranche, $120 million would reimburse U.N. agencies such as the World Food Program and the U.N. High Commissioner for Refugees already in Libya. The remaining $380 million would be held in reserve for such U.N. agencies.
The second $500 million would pay for civilian power such as electricity and for desalination. The final $500 million would go into a temporary funding mechanism set up by the rebels and would be dedicated to health, education and food.
Russia and China, which for months have been reluctant to allow the council to do anything that would help the rebels, did not formally object to the idea of releasing the funds to the rebels this week.
(Additional reporting by Patrick Worsnip at the United Nations and Arshad Mohammed in Washington; Editing by Xavier Briand and Bill Trott)