What the discovery of a record haul in Libyan assets portends for the U.S.

There’s something distinctly fishy about the Treasury Department’s lightning-fast and allegedly “surprise” discovery of over $30 billion in Libyan government assets stored in U.S. banks. The Obama administration has lauded this as a major and unexpected victory in its effort to dislodge the Gadhafi regime. That may be so, but the implications of such a large deposit by Libya have deeper and far more disturbing implications. Could Libya have been in the process of purchasing a major stake in America’s critical infrastructure?
 
First, it is strange that Libya — a government that has traditionally been wary of storing its assets in a place where they could be confiscated by the U.S. government — would keep almost half its estimated $70 billion sovereign wealth fund (Libyan Investment Authority, or LIA) in U.S. banks. After all, Libyan assets had been frozen before, most notably in 1986. In fact, most Arab nations, even those friendly to the U.S., had been reluctant to keep their assets within U.S. jurisdiction after the U.S. froze Iranian government assets in 1979. Admittedly, relations with Libya have warmed in recent years, since it was removed from the U.S. list of official state sponsors of terrorism in 2005. Still, the old wounds run deep, and Gadhafi is, if nothing else, a shrewd operator. Clearly, if he were taking such a big risk he must have had assurances from on high.
 
The second strange aspect is the speed with which the Treasury Department identified and froze the assets. According to The Washington Post, Treasury officials expected to find somewhere in the neighborhood of $100 million in Libyan assets, and were surprised when they pulled in a record haul for U.S. assets freezes. It’s strange, not just because of the disparity between what was expected and what was eventually found — but because of information recently disclosed in the WikiLeaks cables. The cables revealed that Libyan officials revealed in a discussion with the U.S. ambassador in January that LIA had roughly “$32 billion in liquidity, mostly in bank deposits that will give us good long-term returns.” A 2009 annual report suggested that the company held roughly 78 percent of its investments in “short-term financial instruments abroad.”
 
So rather than feel particularly elated about finding $30 billion of Libyan government funds conveniently parked in a U.S. bank, the news makes one wonder. Is America up for sale? Or worse yet, has it already been sold, and to whom?

Armstrong Williams is on Sirius/XM Power 169, 7-8 p.m. and 4-5 a.m., Monday through Friday. Become a fan on Facebook at www.facebook.com/arightside, and follow him on Twitter at www.twitter.com/arightside.