Western governments choked off funding to the Gaddafi regime yesterday, freezing assets of the Libyan leader and his inner circle after the United Nations and European Union imposed sanctions.

The EU is considering an asset freeze on Libyan firms linked to the regime in addition to measures already slapped on the Libyan leader and his allies, diplomats told AFP yesterday.

“We are looking into it” at the European level, said a European diplomat who asked not to be named. Countries such as Britain, France, Germany and Italy, where many companies include Libyan stakeholders, are favourable to such a freeze, he added.

“The Italians notably fear Libyans may sell off their stakes for a bargain to gain access to fresh funds,” the source added.

As the government in London revealed it had foiled a plan by Gaddafi to move one billion euros worth of brand new Libyan banknotes out of Britain, others blocked any attempt to withdraw cash from abroad.

An asset freeze against Gaddafi, five members of his family and 20 other close associates was one of a number of sanctions announced on Monday by the European Union which had in turn followed a UN resolution at the weekend.

Gaddafi and his inner circle are believed to have deposited tens of billions of dollars in foreign bank accounts, off the back of the country’s oil wealth.

However the Libyan leader has challenged those claiming he has stashed money abroad to produce evidence of such funds and threatened to “put two fingers in their eye,” the BBC reported.

The US government was among the first to act on the UN resolution, announcing it had frozen at least $30 billion in Libyan assets and that further sanctions could be on the way.

“It is the largest blocking under any sanctions programme ever,” US sanctions czar David Cohen told reporters.

In Berlin, the German government said it was freezing a bank account held by an unnamed son of Gaddafi containing two million euros.

“Germany is working hand in hand with the European Union and is on the side of all those pressing for democracy and the rule of law,” Economy Minister Rainer Bruederle said. Announcing its own decision to freeze Gaddafi’s assets, Austria’s central bank said that Libyan deposits in Austrian banks amount to around €1.2 billion.

Austria forged close ties with Tripoli under the leadership of chancellor Bruno Kreisky in the 1970s. He invited Gaddafi to Vienna in 1982 at a time when the Libyan leader was widely seen as an international outcast.

A spokesman at the finance ministry in Italy, Libya’s former colonial ruler, said that experts in financial security, led by treasury chief Vittorio Grilli, were set to meet yesterday to address the situation in Libya.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.