Price on Gaddafi's head as fighting goes on

TRIPOLI (Reuters) - Libya's new masters offered a million-dollar bounty for the fugitive Muammar Gaddafi on Wednesday, after he urged his men to carry on a battle that kept the capital in a state of fear.

A day after rebel forces overran his Tripoli headquarters and trashed the symbols of his 42-year dictatorship, rocket and machinegun fire from pockets of loyalists kept the irregular fighters at bay as they tried to hunt out Gaddafi and his sons.

Western leaders who backed the revolt with NATO air power remained wary of declaring outright victory while the 69-year-old Gaddafi is at large. He issued a rambling but defiant audio message overnight to remaining bastions of his supporters, some of whom may be tempted to mount an Iraq-style insurgency.

But the international powers and the rebel government-in-waiting in the eastern city of Benghazi lost no time in making arrangements for a handover of Libya's substantial foreign assets. Funds will be required to bring relief to war-battered towns and to develop oil reserves that can make Libya rich.

France was working with Britain and other allies to draft a new United Nations resolution intended to ease sanctions and asset freezes imposed on Libya when Gaddafi was in charge. Rebels also spoke of restarting oil export facilities soon.

In Benghazi, the chairman of the National Council gave a sense of urgency to finding Gaddafi, who the rebels believe may still be in or around Tripoli, having left his Bab al-Aziziya compound in the capital before it fell on Tuesday.

Mustafa Abdel Jalil, who was himself one of Gaddafi's ministers before defecting in February, said the incoming administration would amnesty any remaining member of Gaddafi's entourage who killed or captured him.

A local businessman, he added, was offering two million dinars -- or about $1.3 million -- to anyone who caught him.

"To any of his inner circle who kill Gaddafi or capture him, society will give amnesty or pardon for any crime he has committed," Abdel Jalil told a news conference in Benghazi.

Abdel Salam Jalloud, a close ally of Gaddafi who switched sides in the past week, told Al Jazeera that the veteran leader had had a plan to drop out of sight before launching a guerrilla campaign once NATO air forces had been called off.

"I believe he is in Tripoli," Jalloud said. "The rebels must open the roads, after they open the roads, he may dress in women's clothes and leave Tripoli to Algeria's borders or Chad.

"He is sick with power," he added. "He thinks he can disappear in Libya and when NATO leaves, he believes he can gather his supporters and carry out attacks ... He is delusional. He thinks he can return to power."

GADDAFI BASTIONS

The rebels, conscious of divisions among the disparate anti-Gaddafi movements which pose a threat to hopes of a stable democracy, have stressed the wish to work with former Gaddafi loyalists and to avoid the purges of the ousted ruling elite which marked Iraq's descent into sectarian anarchy after 2003.

To promote unity, however, removing Gaddafi and his immediate family from any remaining influence is a priority.

One rebel commander in Tripoli said Gaddafi might be in an area in the south of the city where clashes were going on. Rebels in the center of the capital said they had come under rocket and mortar fire from Gaddafi supporters to the south.

Gaddafi's home town of Sirte, on the Mediterranean coast between Tripoli and Benghazi, was still not in the hands of the new leadership. Nor was the southern desert city of Sabha, where the rebels reported fighting. A rebel military spokesman estimated that "95 percent of Libya is under rebel control."

Colonel Abdallah Abu Afra told Al Jazeera: "He who governs Libya is he who controls Bab al-Aziziya and that is the reality of the matter. For us, Gaddafi is over."

GADDAFI ADDRESS

In a poor-quality audio broadcast on a satellite channel, Gaddafi said the withdrawal from his headquarters in the heart of the capital was a tactical move after it had been hit by 64 NATO air strikes and he vowed "martyrdom" or victory .

Urging Libyans to cleanse the streets of traitorous "rats," he said he had secretly toured Tripoli: "I have been out a bit in Tripoli discreetly, without being seen by people, and ... I did not feel that Tripoli was in danger," he said.

Residents remained fearful, with empty streets, shuttered shops and piles of garbage testifying that life is still far from normal in the city of 2 million. Rebels manned checkpoints along the main thoroughfare into the city from the west. Food, water and medical supplies were running short in places.

On the streets of Tripoli, people were defacing or erasing Gaddafi portraits and other symbols in a city where they were once ubiquitous. They painted over street names and renamed them for rebel fighters who had become "martyrs."

One standoff was resolved when guards allowed some three dozen foreign journalists to leave a government-run hotel in Tripoli. They had been prevented from leaving for several days.

The continued shooting suggested the six-month popular insurgency against Gaddafi, a maverick Arab nationalist who defied the West and kept an iron hand on his oil-exporting, country for four decades, has not completely triumphed yet.

A spokesman for Gaddafi said the Libyan leader was ready to resist the rebels for months, or even years.

"We will turn Libya into a volcano of lava and fire under the feet of the invaders and their treacherous agents," Moussa Ibrahim said, speaking by telephone to pro-Gaddafi channels.

Rebel leaders would not enjoy peace if they carried out their plans to move to Tripoli from Benghazi, he said.

DIPLOMACY

But Gaddafi was already history in the eyes of the rebels and their political leaders planned high-level talks in Qatar on Wednesday with envoys of the United States, Britain, France, Turkey and the United Arab Emirates on the way ahead.

Another meeting was scheduled for Thursday in Istanbul.

China urged a "stable transition of power" in Libya and said on Wednesday it was in contact with the rebel council, the clearest sign yet that Beijing has effectively shifted recognition to forces poised to defeat Gaddafi.

China "respects the choice of the Libyan people," Foreign Ministry spokesman Ma Zhaoxu said in a statement.

A senior representative for reconstruction in the rebel movement said a new government would honor all the oil contracts granted during the Gaddafi era, including those of Chinese companies. "The contracts in the oil fields are absolutely sacrosanct," Ahmed Jehani told Reuters Insider TV.

"All lawful contracts will be honored whether they are in the oil and gas complex or in the contracting... We have contracts that were negotiated ... They were auctioned openly ... There's no question of revoking any contract."

A spokesman for rebel-run oil firm AGOCO had warned on Monday Chinese and Russian firms could lose out on oil contracts for failing to back the rebellion.

Russian President Dmitry Medvedev urged Gaddafi and his foes to stop fighting and talk. "We want the Libyans to come to an agreement among themselves," he said, suggesting that Moscow could recognize the rebel government if it unites the country.

China and Russia, usually opposed to foreign intervention in sovereign states, did not veto a U.N. Security Council resolution in March that authorized NATO to use air power to protect Libyan civilians. But they criticized the scale of the air campaign and called for a negotiated solution.

The fall of Gaddafi, with the arresting images on Arab satellite TV of rebels stomping through his sanctum and laying waste to the props of his power, could invigorate other revolts in the Arab world, such as in Syria where President Bashar al-Assad has launched bloody military crackdowns on protesters.

(Reporting by Peter Graff, Ulf Laessing, Missy Ryan, Zohra Bensemra and Leon Malherbe in Tripoli, Robert Birsel in Benghazi, Hamid Ould Ahmed in Algiers, Souhail Karam in Rabat, Richard Valdmanis, Christian Lowe and Giles Elgood in Tunis, Sami Aboudi, Dina Zayed and Tom Pfeiffer in Cairo, Catherine Hornby in Rome, Denis Dyomkin in Sosnovy Bor and Chris Buckley in Beijing; Writing by Giles Elgood and Alastair Macdonald)

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Price on Gaddafi's head as fighting goes on

TRIPOLI (Reuters) - Libya's new masters offered a million-dollar bounty for the fugitive Muammar Gaddafi, after he urged his men to fight on in battles across parts of the capital.

A day after rebel forces overran his Tripoli headquarters and trashed symbols of his 42-year rule, scattered pockets of loyalist diehards kept the irregular fighters at bay as they hunted Gaddafi and his sons. Rebels also reported fighting deep in the desert and a standoff round Gaddafi's tribal home town.

In Tripoli, rockets and shooting kept two million civilians indoors and gunfire rang out in the center just before midnight on Wednesday. Most were anxious but hopeful the war would soon end, and with it worsening shortages of food, water and medical supplies -- both for hundreds of wounded and for the sick.

"Gaddafi's forces and his accomplices will not stop resisting until Gaddafi is caught or killed," said Mustafa Abdel Jalil, head of the rebels' National Council, who offered amnesty to any of his entourage who killed the fallen strongman and announced a reward worth over $1 million for his capture.

"The end will only come when he's captured, dead or alive," Abdel Jalil said in the eastern rebel stronghold of Benghazi.

Until then, he said, Gaddafi would not give up easily and could still unleash a "catastrophic event." In a poor-quality audio tape broadcast by satellite overnight, Gaddafi, 69, urged Libya's tribes to "exterminate traitors, infidels and rats."

There was no clear indication of where Gaddafi is, though his opponents surmised he was still in or around Tripoli after what Gaddafi himself described as a "tactical" withdrawal from his Bab al-Aziziya compound before it was captured on Tuesday.

But Western leaders and the rebel government-in-waiting lost no time readying a handover of Libya's substantial foreign assets. Funds will be required to bring relief to war-battered towns and to develop oil reserves that can make Libya rich.

Washington was to submit a U.N. resolution to release an immediate $1.5 billion for humanitarian aid. More will follow. While Libya is rich in oil, four decades of rule by personality cult has left it with few institutions of normal governance.

"DELUSIONAL"

Abdel Salam Jalloud, a close ally who switched sides last week, said Gaddafi planned to drop out of sight and then launch a guerrilla war:

"He is sick with power," he said. "He believes he can gather his supporters and carry out attacks ... He is delusional. He thinks he can return to power."

But there were signs other Gaddafi supporters are giving up on him, following a stream of defections during the six months of the uprising. At Tripoli's Rixos hotel where loyalist gunmen had been preventing nearly 40 foreigners, mostly journalists, from leaving, gunmen relented on Wednesday and let them go.

After by far the bloodiest of the Arab Spring revolts that are transforming the Middle East and North Africa, there were clear indications, too, of new threats of disorder. Four Italian journalists had been kidnapped near Zawiya, between Tripoli and the Tunisian border.

Western officials also fear weapons, including anti-aircraft missiles and nuclear material capable of making a "dirty bomb," could be taken from Gaddafi's stocks and reach hostile groups.

Imposing order and preventing rivalries breaking out across tribal, ethnic and ideological lines among the disparate rebel factions are major concerns of both the new leaders and of their Western backers, who are working to avoid the anarchy and bloodshed that followed the overthrow of Iraq's Saddam Hussein.

Meeting rebel government chief Mahmoud Jibril in Paris, French President Nicolas Sarkozy was the first Western leader to bask in the gratitude of Gaddafi's opponents, who noted how Sarkozy took a lead in pushing for NATO military intervention.

Paris, Sarkozy said, will host a "Friends of Libya" summit next Thursday, September 1. It would include Russia and China, both critics of the Western bombing campaign which have been concerned at now losing out on business deals with the rebels.

France, Britain and the United States were working on a new United Nations resolution to ease sanctions and asset freezes imposed on Libya when Gaddafi was in charge. Rebels also spoke of bringing back workers to restart oil export facilities soon.

GUNFIRE AND SHORTAGES

Fighters who swept in to Tripoli at the weekend, uniting several fronts and a variety of opposition groups, were trying to establish order in the city, but faced pockets of resistance and there were signs of looting. Snipers kept up fire from high buildings, including around Gaddafi's compound. Rebels blasted back with anti-aircraft guns mounted on pickup trucks.

"There are still many snipers in eastern Tripoli," said one rebel fighter. "We'll finish them off but it'll take time."

Government buildings were being stripped of anything of value. At the Bab al-Aziziyah complex, fighters were still going through buildings and coming out with sniper rifles and ammunition, which they distributed among their ranks.

Medical supplies, never especially plentiful, were reaching critical levels in many places where some of the hundreds of casualties from the recent fighting were being treated. Shooting in the street also kept doctors away from work.

"There is a real catastrophe here," said a rebel spokesman. Appeals were made in the streets and mosques for urgent help. There is also a dangerous shortage of blood at hospitals."

The rebels, many of whom were once supporters of Gaddafi, stressed the wish to work with former loyalists and officials and to avoid the purges of the ousted ruling elite which marked Iraq's descent into sectarian anarchy after 2003.

Gaddafi's tribal home town of Sirte, on the coast between Tripoli and Benghazi, was still not in the hands of the new leadership who have despatched forces there. Nor was the southern city of Sabha, where the rebels reported fighting.

But Gaddafi was already history in the eyes of the rebels and their political leaders held high-level talks in Qatar on Wednesday with envoys of the United States, Britain, France, Turkey and the United Arab Emirates on the way ahead.

Another meeting was scheduled for Thursday in Istanbul.

The fall of Gaddafi, with the arresting images on Arab satellite TV of rebels stomping through his sanctum and laying waste to the props of his power, could invigorate other revolts in the Arab world, such as in Syria where President Bashar al-Assad has launched bloody military crackdowns on protesters.

(Reporting by Peter Graff, Ulf Laessing, Missy Ryan, Zohra Bensemra and Leon Malherbe in Tripoli, Robert Birsel in Benghazi, Hamid Ould Ahmed in Algiers, Souhail Karam in Rabat, Richard Valdmanis, Christian Lowe and Giles Elgood in Tunis, Sami Aboudi, Dina Zayed and Tom Pfeiffer in Cairo, writing by Alastair Macdonald, editing by Peter Millership)

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