EU may offer incentives for reform

Citing a draft it said it had obtained, the newspaper said the move was part of a plan being prepared for an EU summit in Brussels on Friday and included additional development aid, loosening immigration restrictions and lowering trade barriers.

At the summit on North Africa, leaders will discuss the EU's humanitarian and political response to events in the region, particularly Libya where fighting has broken out between government forces and rebels trying to seize control from Muammar Gaddafi.

"Those that go faster and faster with reforms will be able to count on greater support from the EU," the newspaper quoted the 16-page blueprint as saying.

While it did not specify how the EU would measure democratic progress, the draft said "support may be re-allocated or refocused for those who stall or retrench on agreed reform plans", according to the FT.

Officials were expected to expand the list of Libyan financial entities under sanctions, including its sovereign wealth fund, the Libyan Investment Authority and the Libyan Central Bank, the newspaper said.

The EU has already imposed a range of sanctions on individual Libyans, including Gaddafi and his immediate family, as well as an arms embargo, travel bans and a ban on exports of equipment such as riot gear and teargas which could be used by Libyan security forces against protesters.

On Sunday it sent a mission to Tripoli to report back on humanitarian and evacuation needs.