THE CANADIAN PRESS -- OTTAWA - Canada is considering setting up a diplomatic outpost in the rebel-held territory of eastern Libya, as the country's defiant dictator vowed Friday to never surrender.
Foreign Affairs Minister John Baird disclosed the plan as Canada joined more than 30 nations in declaring that the regime of Moammar Gadhafi is no longer legitimate and recognizing the country's main opposition group as its legitimate representatives.
"We are certainly reviewing our capacity to do that," Baird said.
Baird visited rebels from the National Transitional Council in Benghazi last month, with an eye toward establishing a stronger diplomatic footprint there. A half-dozen other countries — including the United States — have diplomatic missions in the area.
"Obviously we want ongoing relations with the NTC — that's incredibly important. But obviously, as minister, my first responsibility is the security of our staff on the ground," Baird said Friday from Istanbul after the fourth meeting of the international Contact Group of Libya.
The group said it will deal with the transitional council as "the legitimate governing authority in Libya" until an interim authority is in place.
The declaration is significant because it could free up billions in cash — Gadhafi-regime assets that have been frozen across the globe — for the council to run its portion of eastern Libya. The rebels need hundreds of millions of dollars a month to pay public-service salaries for everything from garbage collection to the running of schools and hospitals.
Despite unconfirmed reports that he might be negotiating an exit from Libya after four decades of totalitarian rule, Gadhafi shot back at his international opponents in a defiant burst of bravado Friday.
"I don't care which countries recognize the rebels' transitional council," he said in an address broadcast to thousands of supporters in Zlitan, 140 kilometres southeast of Tripoli. "Tell NATO and other countries to pick up the white flag and ask our forgiveness.
"You guys say that Gadhafi is over, then why are all these people demonstrating outside? The Libyan people will persevere. They will never give up."
Supporters reportedly fired guns into the air and set off fireworks.
Canada won't be contributing to any of the money destined for the rebels just yet because Baird said it doesn't have the legal authority to release Gadhafi's frozen assets in Canada.
Because Canada took measures in conjunction with the United Nations, he said the Security Council would have to take further action.
"Other countries may have other measures where it gives them individual ability to do so, but Canada does not," Baird said. "I am very struck by the needs of the NTC on the ground."
He said he brought medical supplies, which are in high demand, when he visited Benghazi. But the rebels also need money to pay other bills that keep eastern Libya functioning.
"If you're a police officer in Benghazi, you need to put food on the table for your family."
Last month, Canada declared the council to be the "legitimate representatives" of the Libyan people, a designation Baird says is essentially the same as the contact group's decision.
After months of hard diplomatic calculation, the U.S. joined the group in extending formal recognition to Libya's rebels.
That will allow the U.S. to be able to fund the rebels with some of the $30 billion in Gadhafi's assets that are frozen in American banks.
"The United States views the Gadhafi regime as no longer having any legitimate authority in Libya," said U.S. Secretary of State Hillary Clinton.
"And so I am announcing today that, until an interim authority is in place, the United States will recognize the NTC as the legitimate governing authority for Libya, and we will deal with it on that basis."
The 32-nation contact group includes NATO countries, the European Union and the Arab League.