Read more of Slate's coverage of the Libyan protests.
President Obama ordered the Treasury to block $30 billion worth of Libyan assets on Friday, the "largest amount of foreign assets ever seized in an American sanctions action." What will happen to all that money?
Nothing much. While some news stories refer to the president's move as a seizure, it's more accurate to call it a freezing or blocking, since the government hasn't actually taken control of any assets. Rather, the executive order prohibits U.S. institutions from transferring money out of any account owned by Qaddafi, his family and associates, or the Libyan government. Qaddafi will maintain title to his assets, and the accounts will continue to accrue interest until the order is repealed. As for stocks or other investments that are capable of declining in value, banks have a choice. They can simply leave his holdings as they are, even if the investments turn sour. Alternatively, they can apply to the Office of Foreign Assets Control—the agency responsible for enforcing trade sanctions—for a specific license to manage or liquidate the accounts.
The Treasury is normally inclined to grant such licenses, because allowing the investments to shrivel is inconsistent with the purpose of the policy. Asset blocks aren't just meant to punish international criminals; they also protect money for successor governments. The Treasury is trying to prevent Qaddafi from absconding with Libya's wealth. Many past presidents have used asset blocks to prevent this sort of plundering. Shortly after Saddam Hussein invaded Kuwait in 1990, Iraqi officials began stealing money from bank accounts owned by Kuwaiti nationals. The Treasury Department blocked those accounts to preserve Kuwaiti capital. It did the same thing with Bosnian accounts after the Serbian invasion.
Qaddafi can probably kiss his money goodbye. The president, the Treasury secretary, and Congress each have the authority to repeal the block (the latter by a joint resolution), but they are extremely unlikely to do so during Qaddafi's lifetime. The Libyan leader probably has no recourse in the court system, either, because the law that permits the president to freeze foreign assets doesn't provide for judicial review and the United States doesn't recognize the authority of any international court to mediate such a dispute.
Once Qaddafi is dead or out of power and the United States has recognized a successor government, the president will lift the block on assets owned by the Libyan government itself. The future of Qaddafi's personal assets is less clear. Except in wartime, the president doesn't have the authority (PDF) to seize blocked money unilaterally and give it to someone else. He might persuade the courts to do so, however, if he can prove the assets were obtained through corruption or money laundering. In that case, a judge might transfer title to the government, which could redirect it to Libya's new leadership.
The president could also choose to leave the block in place and hold Qaddafi's money as collateral for future lawsuits against the regime. If those cases don't exhaust the assets, the money would simply continue to draw interest. The Treasury is perfectly willing to leave blocks in place for years or even decades. President Kennedy froze the U.S.-based assets of the Cuban government and Cuban citizens in 1963. That block remains in effect today, even though many of the original account holders are now dead. The Office of Foreign Assets Control has consistently refused applications from elderly Cuban citizens seeking access to paltry sums frozen in U.S. bank accounts for more than 40 years, because releasing it would be contrary to U.S. foreign policy. The total value of the frozen Cuban assets is in dispute. The Cuban government claims that, after doling out hundreds of millions of dollars in lawsuits against the Castro regime, the United States has only about $76 million remaining, $58 million of which belongs to individual citizens. The U.S. government claims there's more than $223 million (PDF) left, but it doesn't break the funds down between the government and ordinary Cubans.
Got a question about today's news? Ask the Explainer.
Explainer thanks Hal Eren of the Eren Law Firm and Erich Ferrari of Ferrari Legal, P.C.
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