The Dutch government is releasing €100 million (Dh528.5m) in frozen Libyan wealth to the World Health Organization (WHO) to buy medicine for the Libyan people.
The Netherlands is believed to be the first country to free up funds from Muammar Qaddafi in response to a direct appeal from the WHO.
"Sanctions should squeeze the regime and the population should not be the victim of this," said Uri Rosenthal, the Dutch foreign minister. "That is precisely what is happening now: frozen money from Qaddafi will be used to save Libyan lives."
The release of the funds comes as governments around the world struggle to find ways to provide Libyan rebels with frozen funds needed to crush Col Qaddafi's regime. Many of the funds remain out of reach because of global sanctions.
The WHO has warned that a shortage of medicine is putting Libyan lives at risk and has urged the release of blocked funds to help to buy supplies.
About €3.1 billion in assets was frozen by the Dutch government in March.
A Dutch ministry spokesman was quoted by Reuters as saying the decision to release €100m was taken after the UN sanctions committee gave its approval. It was too early to say whether more funds would be released, the spokesman said, according to the newswire.
Despite a number of governments granting diplomatic recognition to Libya's rebels in recent weeks, attempts to provide them with frozen assets have proved challenging.
The opposition National Transitional Council (NTC) has said it urgently needs money to pay salaries and buy supplies. Mahmoud Shamman, an NTC official in Istanbul, said last month the opposition needed US$3bn (Dh11.01bn). "We need funds, funds, funds," he said.
Health spending is one of the priorities for rebels. The WHO said last month many hospitals had been damaged during the conflict in Libya and together with a mass exodus of migrant nurses and a shortage of medicines had "led to the collapse of the primary healthcare network".
A Dutch ministry spokesman said the medicines purchased and distributed by the WHO would be used to treat diabetes patients and people with heart problems, or to buy urgent surgical supplies.
In response to global sanctions, the UAE Central Bank in June said it had ordered the country's banks to freeze the assets of 19 Libyan individuals and institutions.
US state and treasury officials have been trying to find ways to provide rebels with $34bn in frozen Libyan assets held in US-controlled bank accounts.
US officials remain worried that lifting the freeze to give the rebels access to the funds could also allow the Qaddafi government to get its hands on some of the money it invested around the world.
