Libyan Rebels Win Backing of U.S., EU as Qaddafi Says `My People Love Me'

Libyan rebels braced for possible renewed clashes with forces loyal to leader Muammar Qaddafi, who is attempting to regain control of major cities after the U.S. and European nations began planning for a no-fly zone.

Armed rebels in Zawiyah, 28 miles (45 kilometers) west of Tripoli, the capital, were stationed at the entrances to the city after repelling an attack by pro-Qaddafi fighters overnight, Ibrahim al-Hajj, a 58-year-old resident, said by telephone. Many were armed with machine guns and rocket- propelled grenades taken from weapons depots, said Belgassem al- Zawee, a 50-year-old protester in the city.

“Thank God, they are ready,” al-Zawee said by telephone from the city today. Forces loyal to Qaddafi retook control of Libya’s western border with Tunisia yesterday before attacking and failing to recapture Zawiyah and Misratah, a city 115 miles east of the capital, according to the Associated Press.

Saudi Arabia’s benchmark stock index plunged the most since November 2008 on concern political unrest in the Middle East may spread to the kingdom. Oman deployed armored vehicles in the center of the city of Sohar after protests late yesterday while Yemeni demonstrators again took to the streets of Sana‘a, the capital, today to demand the ouster of President Ali Abdullah Saleh.

Iranian Clashes

Iranian protesters clashed with security forces in Tehran, Al Arabiya television reported. Iran’s Foreign Ministry said issues relating to the country’s opposition are “internal affairs,” without commenting on the opposition statements that authorities have detained the main opposition leaders, Mir Hossein Mousavi and Mehdi Karrubi.

In Libya, some army brigades had joined rebel forces in Zawiyah, according to al-Hajj. “The Libyan army is the army of the people, not the army of the dictator,’” he said. “We hope that the brigades that are still hesitating would side with the people and spare the bloodshed.”

“Libya is essentially split into two, an eastern and a western part,” Mohammed Dangor, South Africa’s ambassador to Libya, who left Tripoli on Feb. 27, told reporters in Cape Town today. “The eastern part centers around Benghazi, the western part centers around Tripoli. This is moving toward civil war, that’s the danger.”

Support for Rebels

U.K. Prime Minister David Cameron promised not to abandon Libyan opposition groups in the face of attacks by Qaddafi’s forces, stopping short of saying Britain will provide arms for the rebels. Cameron said the Libyan people must not be left to their fate, as were Kurdish rebels after the Gulf War in 1991 when they rose up against Saddam Hussein’s Iraqi regime with the expectation of U.S. support that never materialized.

“We mustn’t let that happen in Libya,” Cameron told reporters in London today.

The European Union yesterday imposed an arms embargo and other sanctions, and the U.S. said it has frozen $30 billion in Libyan assets. The U.S. said refugee-aid teams were sent to the country’s borders with Egypt and Tunisia while American naval and air units are being repositioned in the Mediterranean for possible military or humanitarian operations.

All Options

“We are taking no options off the table so long as the Libya government continues to turn its guns on its own people,” Secretary of State Hillary Clinton told the House Foreign Affairs Committee today. Clinton met yesterday with ministers from the EU and Russia in Geneva, and announced that the U.S. had allocated $10 million for immediate humanitarian aid for refugees.

Sybella Wilkes, a spokeswoman for the United Nations High Commission for Refugees, said the situation facing refugees on the Tunisian border had “reached a crisis point.”

“The area has reached absolute saturation,” Wilkes said today by telephone. “It is absolutely packed with people. The sanitary conditions are very poor.” UNHCR representatives in the border area estimate that between 10,000 and 15,000 people are waiting to cross from the Libyan side, she said.

Saudi Arabia’s Tadawul All Share Index dropped 6.8 percent, the biggest slump since November 2008, to close at 5,538.72 at 3:30 p.m. in Riyadh. The measure fell for a 12th day, its longest losing streak since 1998, and has entered a bear market after dropping 20 percent from the high in 2010.

Oil Markets

Oil rose as authorities in Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, reportedly arrested opposition leaders to derail protests scheduled today. Fighting in Libya may have shut as much as 850,000 barrels a day of output, according to the International Energy Agency.

Fitch Ratings said it downgraded Libya’s long-term foreign and local currency issuer default ratings to BB, or below investment grade, from BBB. The ratings remain on rating watch negative, Fitch said, which means further downgrades may occur.

Oil dropped yesterday after Saudi Arabia, the world’s biggest producer, said it will compensate for lost Libyan supplies. Libya, Iran and Saudi Arabia are all members of OPEC, which supplies about 40 percent of the world’s oil.

Oil for April delivery rallied 1.6 percent to $98.47 a barrel as of 11:38 a.m. on the New York Mercantile Exchange. Yesterday, the contract slid to $96.97, the lowest settlement since Feb. 22. Prices jumped 5.2 percent in February and have risen 25 percent in the past year.

Asset Freeze

The UN Security Council voted 15-0 on Feb. 26 to freeze the foreign assets of Qaddafi and four aides and to bar them from traveling. The resolution also imposes an arms embargo on Libya and calls for an immediate end to violence that it says “may amount to crimes against humanity.”

Imposition of a no-fly zone, to keep Qaddafi’s forces from conducting air strikes or flying in mercenaries, was part of discussions between Clinton and European ministers in Geneva yesterday, a State Department official said under rules that don’t allow the use of names.

A no-fly zone over Libya “would be a military operation” involving more than simply “telling people not to fly airplanes,” the top U.S. commander in the Middle East said today.

“You would have to remove the air defense capability in order to establish the no-fly zone,” said Marine Corps General James Mattis, whose command area doesn’t include Libya but does include other parts of the region in turmoil. He was asked for his opinion by the Senate Armed Services Committee during testimony today.

A United Nations mandate would be required for any Western military operation in Libya, French Foreign Minister Alain Juppe said during a parliamentary debate today.

‘My People Love Me’

Qaddafi laughed at a suggestion he should quit and denied using force against his people, ABC said in a news release. Speaking to correspondents from ABC, BBC and the London-based Sunday Times, he called the Libyan rebels in control of Benghazi terrorists loyal to al-Qaeda and asserted ‘my people love me.’’

Qaddafi sounds “just frankly, delusional,” U.S. Ambassador to the UN Susan Rice told reporters at the White House yesterday, after Obama met with UN Secretary-General Ban Ki-moon about Libya.

The UN estimates that more than 1,000 people have died in the Libyan uprising and almost 100,000 have fled amid the heaviest fighting in six weeks of regional unrest, which has ousted Tunisian leader Zine El Abidine Ben Ali and Egyptian President Hosni Mubarak.

Oman, Yemen, Bahrain

In Oman, two demonstrators were killed Feb. 27 and several were wounded in clashes with security forces in the city of Sohar. In Tunisia, where the regional turmoil began two months ago, protests have flared up again, forcing interim Prime Minister Mohamed Ghannouchi to resign after at least three people were killed.

Tens of thousands of protesters gathered in Yemen’s capital, Sana‘a, for a “Day of Rage,” voicing anger over the deaths of demonstrators in the port city of Aden.

In Bahrain, where the minority Sunni monarchy is being challenged by predominately Shiite protesters, the government denied rumors that neighboring Saudi Arabia had sent tanks to reinforce Bahrain’s armed forces.

“Tanks identified on Monday evening were Bahraini tanks returning from Kuwait National Day celebrations, where military from several Allied countries participated in an event commemorating Kuwait’s liberation in 1991,” the country’s Information Affairs Authority said in an e-mailed statement today.

To contact the reporter on this story: Mariam Fam in Cairo at mfam1@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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