Qaddafi Pushes East Toward Rebel Base as U.S. Mulls Action

Muammar Qaddafi’s forces carried out air strikes against rebels in the town of Ajdabiya, as the U.S. and its allies grapple with measures that would halt the Libyan leader’s eastward advance.

Ajdabiya, about 100 miles (160 kilometers) from the rebel base in Benghazi, came under bombardment today as insurgents prepare to defend it, a resident said. Rebel troops fled Brega under heavy attack throughout yesterday, though there was renewed fighting around the town as rebels said they re-entered, the Associated Press reported. State television showed footage of what it said was Brega “after it was purged of armed terrorist gangs.”

Momentum in the monthlong conflict has shifted toward Qaddafi, who has recaptured the oil port of Ras Lanuf, the nearby town of Bin Jawad and the western city of Zawiyah. His forces have used armor and planes to drive back the insurgents, who are calling for Western support to end Qaddafi’s four-decade rule. Saif al-Islam Qaddafi, in a speech on state television today, said his father’s forces will prevail, as the diplomats at the United Nations debated whether to authorize a NATO-run no-fly zone to help the rebels.

“We are coming,” he said, addressing the rebels in the east. “By God, victory is coming.”

Oil, Shares Decline

Crude, which rose to a 2 1/2-year high on the fighting in Libya, holder of Africa’s largest oil reserves, pared gains on traders’ anticipation the earthquake in Japan will reduce demand. Persian Gulf shares fell, sending Dubai’s index down the most in almost two weeks. The decline reflected concerns that share gains this month are overdone amid renewed unrest in Bahrain, which called in security forces from Saudi Arabia and other Sunni-run Gulf nations to help protect the Sunni monarchy from protests by the island’s Shiite majority.

U.S. Secretary of State Hillary Clinton arrived in Paris where she is due to meet Libyan opposition leaders and hold talks with European allies and other members of the G8 group of the main industrial nations. The U.S. and allies are still reviewing possible actions, including imposition of a no-fly zone, White House press sectary Jay Carney said today in Washington.

“We are not letting up on our pressure” on Qaddafi, he said. “We are moving with a great deal of haste” in organizing an international response.

The Sooner, the Better

The U.K. has backed a no-fly zone to ground Qaddafi’s planes. “The sooner it is done the better because the effect it will have will be so much the greater,” U.K. Prime Minister David Cameron told lawmakers in the House of Commons today.

“We will be letting down ourselves and the Libyan people if we do nothing,” he said.

The Arab League also backed a no-fly zone, and NATO, which would likely be responsible for enforcing it, said would want United Nations authorization for such action.

With Arab support, “the U.S. and Britain are now capable of going to the Security Council,” said Dirk J. Vandewalle, professor of government at Dartmouth College. The U.S. is constrained by “a fear of engaging in a third war in a Muslim country,” he said.

The Security Council discussed Libya today. France’s ambassador to the UN, Gerard Araud, told reporters before the meeting that he hoped the Arab League’s stance “is a game- changer for the other members of the council and that these consultations will allow us later this week to work on a resolution.”

No-Fly Resolution

Lebanon’s UN ambassador, Nawaf Salam, briefed the council on the Arab League’s position and told reporters that he will present a draft resolution authorizing a no-fly zone in the coming days. France and Britain have prepared such a text.

A no-fly zone over Libya can’t be quickly authorized by the council unless the air forces and strategy for enforcing it are clearly defined, Vitaly Churkin, Russia’s ambassador to the world body, told reporters today after a three-hour closed-door council meeting in New York. Russian support is critical because it is a permanent member of the council with veto power. China’s ambassador, who may also veto the proposal, made no public statement.

“You need to be sure any decision the council takes is not going to exacerbate the military-political situation in Libya,” Churkin said.

‘We Are Coming’

Libya’s rebel forces regained control of Brega by night and are sending professional troops who defected from the Libyan army to reinforce the inexperienced fighters at the front line, said Mustafa Gheriani, a spokesman for the insurgents, by phone from Benghazi. He said the government troops will suffer from overextended supply lines, while the rebels are seeking alternative sources of weapons, including from outside Libya.

Mustafa Abdul-Jalil, the head of the opposition’s interim governing council, told the Associated Press in an interview that “we will have a catastrophe in Libya” if a no-fly zone isn’t imposed.

In a sign that Qaddafi’s forces are preparing to push further east, a military camp in Ajdabiya, about 50 miles (80 kilometers) east of Brega, was targeted by an air strike today, though there were no casualties, said Mohamed El Megaryef, a resident of the town, by phone today.

Misrata ‘Expecting Attack’

Misrata, the largest city in western Libya still held by the rebels, is “almost surrounded from all directions,” said Reda Almountasser, a resident, by phone today from the city. He said government forces fired shells around Misrata yesterday, causing injuries though no deaths, and there were clashes near an air academy about 5 kilometers from the city center.

“We are expecting an attack tonight as there are troop movements,” Almountasser said.

Qaddafi’s forces also shelled Zwara near the Tunisian border, according to AP, and al-Jazeera reported government tanks entered the rebel-held town late in the day.

Oil, which rose more than 20 percent in three weeks of fighting in Libya, settled little changed today. Crude oil futures for April delivery rose 3 cents to settle at $101.19 a barrel on the New York Mercantile Exchange.

Qaddafi met with ambassadors from China, India and Russia yesterday and discussed plans to invite their companies to the North African nation, the state-run Libyan Broadcasting Corp. said on its website. Western companies with interests in Libya include Italy’s Eni SpA (ENI) and France’s Total SA. (FP)

Deadliest Conflict

The civil war in Libya is the deadliest conflict to emerge from popular protests across the Middle East calling for more democracy and higher living standards, inspired by the overthrow of longtime leaders in Tunisia and Egypt.

There have been anti-government demonstrations in Bahrain, Yemen, Saudi Arabia, Iraq, Iran, Algeria, Jordan and Oman.

A force of Persian Gulf forces, including from Saudi Arabia, today arrived in Bahrain, where protests have escalated in recent days, to help maintain security, said Jamal Fakhro, a senior Bahraini lawmaker.

Bahrain’s mostly Shiite Muslim opposition groups have led the anti-government demonstrations, saying they face discrimination by the kingdom’s hereditary Sunni rulers. Protesters seeking to block access to the country’s financial center fought with police yesterday, leaving more than 100 people injured, and a group of legislators today called for the imposition of martial law.

Bahrain, Yemen

Bahrain’s 10-year dollar bond dropped for the second day, and the cost of insuring the sovereign debt of Bahrain rose 25 basis points to 313, according to CMA prices for credit-default swaps. Saudi Arabia’s Tadawul All Share Index (SASEIDX), which has surged 17 percent since ending a 13-day losing streak March 2, dropped 1.3 percent today.

In Yemen, as many as 100 people were injured after security forces opened fire at protesters in the capital, Sana’a, yesterday, according to opposition website Sahwa.

Bahrain’s benchmark stock index fell 1.6 percent, yields on its dollar bonds climbed 19 basis points to 6.5 percent, and the cost of insuring its debt jumped 25 basis points to 313. The main Saudi share index fell 1.3 percent.

To contact the reporters on this story: Ola Galal in Benghazi at ogalal@bloomberg.net; Massoud A. Derhally in Beirut at mderhally@bloomberg.net; Alaa Shahine in Dubai at asalha@bloomberg.net

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

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