U.S. recognizes Libyan rebel group

The U.S. and some 30 other countries officially recognized Libya's opposition National Transitional Council as the nation's "legitimate governing authority" Friday, opening the way for billions of dollars in frozen Libyan assets to be released to the country's rebels.

Diplomats described the move, which came in the concluding statement of a meeting of what's known as the Libya Contact Group in Istanbul, as a boost for opposition forces that have been fighting to topple Col. Moammar Gadhafi, as well as a clear message to the Libyan strongman to step aside. The group comprises nations that support a democratic transition in Libya.

The U.S. and many of its North Atlantic Treaty Organization allies had previously treated the Benghazi-based council, known as the TNC, as their legitimate "interlocutor" in Libya. The difference in status holds significant legal implications, diplomats said.

"We still have to work through various legal issues, but we expect this step on recognition will enable the TNC to access additional sources of funding," Secretary of State Hillary Clinton told reporters. A senior U.S. official said that working out the simplest legal way for the U.S. to disperse the funds could take time. The official declined to say how much.

Col. Gadhafi said Friday he would continue to fight despite the decision.

In rebel-held areas of Libya, fighters and officials called the U.S. decision a decisive defeat for Col. Gadhafi. "It's the final blow to make him realize he has no way out of this," said Masoud Abdallah, a 46-year-old judge in Zintan, a town in Libya's western mountains.

More than $30 billion of Libyan assets are frozen in the U.S. One option reviewed by U.S. officials would involve issuing "directive licenses" to banks in the U.S that would authorize the release of funds. That could fall afoul of provisions in two United Nations Security Council resolutions on Libya, according to people familiar with the matter.