Libya asset freeze grows as Europe tightens grip

International pressure is mounting against Libya as more countries freeze the assets of its officials with ties to the government.

A Libyan oil worker at a refinery inside the Brega oil complex in Libya.

International pressure is mounting against Libya as more countries freeze the assets of officials with ties to the government, but an oil embargo against the country appears unlikely.

Spain became the latest country to freeze the assets of individuals linked to the Libyan government, while Italy's central bank ordered financial institutions to report suspicious transfers.

They joined the US, the UK, Germany and Austria to announce asset freezes in the light of UN Security Council sanctions against Libya.

As the UAE decides how to react, two of its biggest banks said they would comply with any asset freezes, but added they were still awaiting guidance from the Central Bank.

Michael Tomalin, the chief executive of National Bank of Abu Dhabi, said the bank was waiting to hear from the Central Bank on how to proceed. "Our exposure to Libya is extremely modest," Mr Tomalin said. "We just have a representative office there and very low cross-border exposure. You cannot imagine any circumstances where we'd be materially affected."

A spokeswoman for First Gulf Bank (FGB) said: "We don't have any exposure to sanctions against the Libyan government and we are complying with UAE Central Bank … once the UAE Government has a mandate, FGB will comply with it."

Neither the Central Bank nor the Ministry of Foreign Trade, which is determining the policy response, were available for comment.

The Bank of Italy is ordering financial institutions to report any suspicious movements in the accounts of individuals linked to the Libyan government, Reuters reported yesterday.

Italian companies in which Libya's sovereign wealth fund has invested, such as Unicredit or Juventus Football Club, are also waiting for guidance from the country's central bank.

Pearson, the UK publisher that owns the Financial Times, on Tuesday froze the Libyan Investment Authority's stake in accordance with the UK treasury's guidance.

Meanwhile, Germany called for an oil embargo against Libya as Brent crude for April settlement rose to a high of US$116.37 a barrel, 95 cents higher than the opening price, on the ICE Futures Europe exchange in London. Guido Westerwelle, the German foreign minister, repeated calls for the EU to implement a 60-day halt on payment to the regime of Muammar Qaddafi for oil shipments.

"We do not want to hurt the Libyan people with these sanctions," Mr Westerwelle said yesterday.

"Rather, we want to see to it that the family of dictator Qaddafi does not receive any new money that they can then deploy in their civil war against the Libyan people, and that no mercenaries can be enlisted with new money."

A ban on oil from Libya would make it the only state besides Iran to be subject to such a policy.

Adding it to the EU sanctions package, expected to be finalised by tomorrow, would be "difficult" because it would require unanimous support, said Anahita Thoms, a lawyer advising clients on sanctions at the UK firm Freshfields Bruckhaus Deringer.

An employee within the Italian foreign ministry, who declined to be named, said Italy would be unlikely to agree to a ban because of its dependence on Libyan oil, which makes up more than a fifth of its oil imports.

Spain, which depends on Libya for 13 per cent of its oil imports, does not plan to halt payments, said Alfonso Gonzalez Aparicio, the deputy director for international energy affairs at the Spanish trade ministry.

Libyan crude, which has low levels of the sulphur that can be costly to separate from oil, is prized by European refiners.

"If you're going to buy crude oil from somewhere else, you'd simply have to rejig your refineries to help you take more sulphur out," said Christopher Segar, the regional manager for the International Energy Agency (IEA), which represents the interests of 28 oil-importing nations.

"It's more expensive. They wouldn't like to do it unless they had to."

The IEA said yesterday it believed Libyan oil output had been reduced by between 800,000 and 1 million barrels per day. Saudi Arabia has already raised its output to compensate.