Canada is moving to unfreeze $2.2 billion worth of Libyan assets, Foreign Affairs Minister John Baird said Tuesday.

The government wanted to unfreeze the assets earlier but its hands were tied by United Nations sanctions imposed on Libya and its deposed leader Moammar Gadhafi. Baird said an exemption has now been granted by the Security Council and Canada can unlock the funds. The money will be used for humanitarian needs, he told reporters during a brief update on Parliament Hill.

"These funds will help the Libyan people in the short and the medium-term," said Baird. "Whether it's helping to pay for police officers, or teachers, restoring electricity or water or helping to ensure hospitals have what they need to operate, this money will help the new government of Libya get back on its feet."

Canada recognizes the National Transitional Council, the rebel group that led the uprising against Gadhafi, as the legitimate representative of the Libyan people, but under the UN sanctions it couldn't access any of the estimated $168 billion in Libyan assets around the world.

Canada is among several countries that had asked the UN to lift the sanctions they had imposed earlier. The federal government imposed the asset freeze and a ban on financial transactions with the government of Libya, its institutions and agencies, including the Libyan central bank in March, soon after the uprising against Gadhafi began.

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Foreign Affairs Minister John Baird announced Tuesday that Canada will unfreeze $2.2 billion in Libyan assets that the National Transitional Council can use for humanitarian needs. Baird received a gift from the NTC when he visited Libya in June. (Hassan Ammar)

Canada had also imposed other sanctions, separate from the UN, and they were lifted earlier this month. Those sanctions had prevented Canadian companies from doing business with Libyan companies that are not owned by the state. Lifting the sanctions also meant the new embassy staff in Ottawa could access their Canadian bank accounts. The move unfroze about $100 million worth of assets.

The NTC's representative in Ottawa, Abubaker Karmos, welcomed the news Tuesday and said it's an extension of the leading role Canada took early on in the conflict. "It’s nice to see Canada taking a leading role again and going back to Libya by reopening the Canadian Embassy in Tripoli," he said on CBC News Network. "This will show that Tripoli is a much safer city now and the NTC are in control, and it's nice to see Canada going back there to be on the ground."

Karmos said money for humanitarian purposes is in great need and the funds will be used for food, medical supplies and to pay people's wages.

"The country has gone through a terrible time for the last six months," he said.

Canada resuming embassy operations in Libya

Baird said Tuesday that Canada expects the NTC to fulfil its commitments to human rights, the rule of law, freedom and democracy and that Canada can support those efforts. He acknowledged that security is still a challenge but said that life is slowly returning to normal in the country's capital.

CBC News reported Monday in advance of Baird's briefing that Canadian diplomats have been back on the ground in Tripoli, working to set up Canada's embassy there again. The mission was closed and staff were evacuated seven months ago.

Baird announced Tuesday that Canada's ambassador to Libya, Sandra McCardell, went back to the country and assessed conditions in Tripoli along with a team of staff.

"Having fully assessed the situation on the ground, Canada is prepared to re-establish its diplomatic presence and its ongoing embassy in a temporary location in Tripoli," he said. The permanent embassy building needs refurbishing following the fighting in Tripoli, Baird said.

The team is also preparing for a larger staff of diplomats to arrive in Libya who will liaise with the NTC officials and help resume trade relations between Libya and Canada.

In March, Canada joined a UN-sanctioned NATO air mission to protect civilians in Libya. That mission, based in Trapani, Italy, has been extended once and was due to end Sept. 27, but Prime Minister Stephen Harper says Canada will continue its commitment until "the job is finished."

The government has repeatedly said Canada wouldn't send ground troops into the country, but CBC News has learned there are members of the Canadian Forces on the ground in Libya.

The U.S. has four soldiers on the ground in Libya right now, according to American media reports, including two explosives experts there to disable any traps left at the U.S. Embassy.