Bani Walid holds out for Gaddafi, set terms - source

TRIPOLI Fri Sep 2, 2011 6:25pm BST

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TRIPOLI (Reuters) - Cut off from the outside world and fearful of attack by former rebels bent on revenge, people in the town of Bani Walid may well be playing host to Muammar Gaddafi but might also be ready to negotiate with Libya's new rulers.

A Libyan from the desert town who is well known to Reuters journalists said Friday that he had been in sporadic contact this week with people in Bani Walid, where commanders for the interim government have focussed their hunt for Gaddafi.

"I know that two months ago most of the family, the younger children, were staying in Bani Walid," said the source, who spoke on condition he was not identified for fear of endangering himself or those close to him.

He said he could not be sure but tended to agree with officials from the National Transitional Council who have said they believe Gaddafi is with his most politically prominent son, Saif al-Islam, and are planning a fightback from a refuge in Bani Walid, about 150 km (100 miles) southeast of Tripoli.

"I don't know if Saif or the father are there," the man said. "It is very likely."

Bani Walid, along with Sirte on the Mediterranean coast and Sabha deep in the Sahara desert, are the main remaining pockets not in the control of NTC forces, which drove Gaddafi from his Tripoli headquarters early last week. Gaddafi's wife and three of his children fled into southern Algeria Monday.

The source said that tribal leaders in Bani Walid held a meeting Thursday at which they agreed they would allow NTC forces into the area only if they were made up of fighters with family ties to the town. They planned to tell the NTC this.

The involvement of many Bani Walid men on the Gaddafi side during the siege of the coastal city of Misrata this year has created bad blood, and local people in the desert are now fearful of reprisals by the victorious Misrata rebels.

The source said people in Bani Walid had told him they were without electricity and water. He also said a NATO air strike hit the town in the past few days. "The raid killed an entire family," he added. "It's a family that I know personally."

He did not estimate how many pro-Gaddafi fighters were in the area. But he described most of them as armed volunteers who were ready battle any forces which tried to enter the town without agreeing to the condition about their origins.

Some army officers loyal to Gaddafi remained in Bani Walid, he said, but there was no longer any formal military hierarchy which local residents could ascertain.

(Editing by Alastair Macdonald and David Stamp)

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