Libya's rebel national council has complained for weeks of dwindling funds, and has been desperately seeking to secure loans and financial backing from its Western supporters to help shore up its finances. Tuesday's agreement with Italy marks a major step forward for the opposition in addressing those needs.
Italian Foreign Minister Franco Frattini, visiting the rebel stronghold of Benghazi in eastern Libya, said Italy would provide "for the needs of the Libyan people with a huge quantity of fuel and huge amount of money."
He did not provide an exact figure but said the assistance would amount to "hundreds of millions of euros (dollars) that are necessary for the daily life of the population."
Frattini said that billions of euros of Libyan assets frozen in Italy because of international sanctions against Gadhafi's regime can back the promised funds.
Italy's Eni oil firm and Italian bank Unicredit will help the government in providing the assistance. Before Libya's violent upheaval largely shut down or drastically reduced oil and gas production, Eni was the biggest gas exporter from Libya, as well as its largest oil producer.
UniCredit has frozen shares held by Libyan shareholders to comply with a decision by the European Union. The Libyan Investment Authority has a 2.5 percent stake in UniCredit, on top of the Libyan Central Bank's nearly 5 percent share.
"We are talking about billions of euros that are not money of the regime, these are money of the people of Libya," Frattini said. "And these important frozen assets can represent a very valid guarantee for this transfer of money to the Libyan people."
The rebel leadership, which has been scrambling to drum up financial support to help it overthrow Gadhafi's government since the Libyan uprising began in mid-February, welcomed the Italian pledge.
"The Libyan nation is not a poor nation, it has its resources. But during this difficult period of time, the financial needs are extreme, and the Italian government has come in to give us the necessary financial support for our development," said Ali al-Essawy, a senior rebel official.
"With this continued support on a daily basis, the national transitional council and the Libyan revolution grows in strength, so does the Gadhafi regime weaken, and to this end, we believe the end of the Gadhafi regime will soon be here," he added.
Italy, the former colonial power in Libya, was the third country, after France and Qatar, to give diplomatic recognition to the rebel council. Rome has also dispatched military advisers to help train the rebel military and sent doctors to help organize hospitals and medical efforts.
Frattini vowed Italy would continue such support and repeated his demand that Gadhafi step down.
"Gadhafi's regime is over. He has to leave power, he has to leave the country," he said.
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