Russia has recognized Libya's National Transitional Council (NTC) as the legitimate acting leadership of the country, just hours before an international conference on Libya was to begin in Paris.
The statement from the Foreign Ministry is a key endorsement for the NTC, which began to set up offices in Tripoli after rebel fighters last week stormed the capital and seized Colonel Muammar Qaddafi's headquarters.
For months, Moscow refused to recognize the legitimacy of the NTC and has been critical of the NATO military campaign that helped rebel fighters overthrow Qaddafi's regime.
With the NTC now in charge of administering Libya, Russian firms face the prospect of losing lucrative oil and military contracts and recognition is seen as a move by Moscow to protect its economic interests in the North African country.
The September 1 meeting in the French capital brings together 60 world leaders and senior envoys in the so-called Contact Group on Libya for talks on the future of Libya.
The meeting is expected to focus on unfreezing billions of dollars in Libyan funds held abroad in accordance with a UN Security Council resolution.
Speaking ahead of the meeting, EU foreign-affairs chief Catherine Ashton said, "I think the conference this evening is an opportunity for the international community to now reflect on the long-term job we have to help support the Libyan people in their ambition for a democratic country."
Ashton also announced that the EU had decided to lift sanctions against 28 Libyan economic entities, including ports, banks, and oil and gas firms.
She said the aim of this move was "to provide resources to the interim government and the Libyan people and help to make the economy function again."
President Nicolas Sarkozy of France and Prime Minister David Cameron of Britain are hosting the event, at which senior NTC members are to attend. U.S. Secretary of State Hillary Clinton also plans to attend.
China's top official newspaper, "People's Daily," warned Western powers to let the United Nations lead postwar reconstruction in Libya.
China is sending a minister to the meeting in Paris.
Desperately Needed Funds
Also today, French Foreign Minister Alain Juppe said that Paris had gotten approval to release 1.5 billion euros ($2.1 billion) in frozen Libyan assets currently held in French banks.
Recognition from Moscow and the unfreezing of funds in French banks represent major diplomatic victories for the NTC.
France revealed on August 31 that it had asked the UN Sanctions Committee to unfreeze the funds.
The move by Paris would make money available to the NTC as it works to establish new government in Tripoli and start reconstruction following the overthrow of Qaddafi's regime.
Juppe said the money was needed to help the NTC improve humanitarian conditions in Libya and to restore water, electricity, and fuel supplies.
At the former rebel headquarters in Benghazi, British envoy John Jenkins told reporters that Britain's Royal Air Force flew in crates of freshly printed Libyan banknotes worth $227 million to help Libya's new administration pay public workers and to help banks replenish cash machines.
"This is as much as we can get on this flight, which is a huge military flight as you can see," Jenkins said. "And I'm really pleased as this is coming now on Eid al-Fitr, because this is a fantastic Eid present for the Libyan people, from the Libyan people, because this money belongs to the Libyan people."
The cash is part of a consignment of new notes worth about $1.5 billion that was ordered from a British printing company by Qaddafi. The shipments had been blocked in March in one of the first moves aimed at pressuring Qaddafi to stop using violence to crackdown on opposition protesters.
Qaddafi Vows To Fight On
In related news, anti-Qaddafi forces have reportedly extended by one week their September 3 deadline for pro-Qaddafi troops and tribes in Sirte to surrender or face an all-out military assault.
While Qaddafi's whereabouts remain unconfirmed, a commander of anti-Qaddafi forces said on September 1 that Qaddafi is now thought to be hunkering down and preparing for battle in the desert town of Bani Walid, about 150 kilometers southeast of Tripoli.
Abdel Majid Mlegta, coordinator of the Tripoli military operations room for anti-Qaddafi fighters, said Qaddafi's son Saif al-Islam and his intelligence chief Abdullah al-Senoussi also are thought to be in Bani Walid with Qaddafi. Mlegta said the three were setting up a command center in order to continuing fighting.
A NATO spokesman said today that alliance air strikes hit several rocket launchers near Sirte on Wednesday, as well as an ammunition storage facility and a military command post near Bani Walid.
In a new statement, Qaddafi vowed that his backers would not give up and said those against him were divided.
Brief headlines outlining the message were first carried by Al Arabiya television.
It said it was citing a message to be broadcast by the Syrian-owned Arrai channel, which later issued similar headlines. Arrai said a voice message would follow.
Meanwhile, two of Qaddafi's sons have been issuing conflicting statements about the situation for loyalists who have been surrounded by opposition fighters at Qaddafi's hometown of Sirte.
Saif al-Islam vowed in an audio message broadcast on the Syrian-owned Al-Rai satellite TV channel that Qaddafi loyalists would not surrender at Sirte without a fight.
"As for the preparations in Sirte, we tell [the rebels] you are welcome to come to the city of Sirte and you will see. You think entering it is easy. It is the No. 1 location" for Qaddafi loyalists, Saif al-Islam said.
"Sirte has more than 20,000 armed men and they have weapons and they are ready and excited. We are entering [the fight] to achieve victories and to advance."
The anti-Qaddafi fighters have vowed an all-out assault against loyalists on Sirte and some surrounding villages on September 3 if Qaddafi backers don't surrender by then.
However, another of Qaddafi's sons, Saadi, said he had contacted the NTC to try to stop the bloodshed.
Saadi told Al-Arabiyah TV he had the authorization of his father to negotiate for a peaceful resolution in Sirte.
In an interview with Reuters, the chief of anti-Qaddafi forces in Tripoli, Abdel Hakim Belhadj, said Saadi wanted to join NTC forces if his safety was assured.
U.S. news network CNN earlier reported that Saadi denied he planned to surrender.
compiled from agency reports