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STEVE INSKEEP, Host:

As the Libyan rebels try to get the U.S. to free up some money, our Planet Money team got to wondering how the rebels are paying for the war right now. Turns out, they robbed one of Moammar Gadhafi's banks.

NPR: the rebel finance minister.

ROBERT SMITH: When the Libyan rebels went to look for someone to run their war economy, they went to an unlikely source. Ali Tarhouni lived halfway around the globe, in Seattle. He was happily teaching economics at the University of Washington.

ALI TARHOUNI: Just three or four months ago, the hardest decision that I took is, you know, what do I have for lunch?

SMITH: Now he's living in Benghazi, trying to raise money for a revolution.

TARHOUNI: It's very tough. You have to make decision on the fly. And I keep telling people that because I'm so pressed of time, I'm glad that I don't have the chance to look back at what I'm doing, because maybe it's frightening, some of these decisions that I took.

SMITH: Like pulling off what might be the biggest bank heist in Libyan history. But you have to cut Tarhouni some slack, here. He's never run an economy before. He left Libya nearly 40 years ago. In fact, Tarhouni's main qualification for the job of finance minister is that Moammar Gadhafi hates him. The dictator sentenced him to death for being a student activist back in the 1970s.

TARHOUNI: From day one, Gadhafi couldn't really tolerate any form of dissent. And they put my name among 40 or 50 on a hit list in the 1980s.

SMITH: He says 20 of his fellow activists were assassinated.

TARHOUNI: Some of my comrades were hung for the only crime, that they were a member of a student union.

SMITH: Tarhouni escaped, but he never gave up the cause. This spring, after he heard the revolution had started, he flew from Seattle to Cairo. Drove 15 hours to Benghazi, the rebel capital. And the rebels put him to work. They thought hey, you're an economics professor, you figure out how to keep the money flowing. So Tarhouni looked around, there was some commerce on the street.

TARHOUNI: You know, you see vendors everywhere now. It's - even though it's, as I said, a state of war, it looks good to me at least when I pass by.

SMITH: Now, you're finance minister. Do you look at all this thriving commerce and say, I should tax some of that, I should get some money into the treasury?

TARHOUNI: Trust me, I entertain that almost every second. But I don't think it's the right time to do it.

SMITH: So it's too soon for taxes. There's a little bit of oil to sell. But getting it out is difficult. Then Tarhouni sees the answer. Where's the easiest place to get money?

TARHOUNI: There's a central bank, the branch of the central bank in Benghazi, and there's three keys for it. There's - we have two and one is in Tripoli. And I never thought...

(SOUNDBITE OF LAUGHTER)

TARHOUNI: ...that I'll be doing this, but I issued an order basically to, you know, rob the central bank and...

SMITH: How did you get in?

TARHOUNI: Basically dug a hole.

(SOUNDBITE OF LAUGHTER)

TARHOUNI: Yeah. And they were thinking about dynamiting the thing. But we were afraid whatever currency that we had there would burn. But anyway, so we - the money that I found is about four, five hundred million dinars.

SMITH: That's about $200 million, which isn't a bad haul. But to run a new government, it's pocket change. And remember, this is paper money. Wads and wads of cash. That can pay for salaries within the country but you can't really use suitcases filled with paper on the international market to buy supplies. So Tarhouni has his eyes on breaking into an even bigger bank - all of Gadhafi's frozen assets around the world. He even came up with a clever plan to get at them. He's saying to countries, if you can't just give me Gadhafi's money, lend me the money until we win. The assets can stay frozen and simply be collateral for a loan.

TARHOUNI: It's actually a very safe transaction for most of these, for all of these countries, because they're not, there's no risk here. They have the assets.

SMITH: Well, there actually is a risk. What if Gadhafi wins? Any country that lent the rebels money will never get it back. Tarhouni will go from being finance minister to a hunted bank robber. Tarhouni can't even discuss this possibility.

TARHOUNI: That's not going to happen. Take my word for that.

SMITH: Now he just has to convince the world.

Robert Smith NPR News, New York.

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