* Libya running out of time, U.N.’s Leon warns
* Envoy plans to present new draft agreement in early June
* EU should not “dwell on” destroying traffickers’ boats
By Adrian Croft
BRUSSELS, May 28 (Reuters) - Libya is on the verge of economic collapse as rival factions haggle over a political settlement, the United Nations special envoy said on Thursday.
Bernardino Leon, who has been trying for months to broker an agreement on a national unity government for Libya, said the United Nations was preparing a new draft of a possible political agreement which it hoped to give to the feuding parties in the first week of June.
Two governments - one in the east, the other in Tripoli - are fighting for control of the North African state four years after leader Muammar Gaddafi was ousted.
Leon said that in the last round of talks in Morocco, the rival groups had agreed on 80 percent of an accord and negotiators were working on the remaining 20 percent, which was the most difficult part.
Libyans understood that the only solution was a political agreement but it was difficult to say if it was possible within the next three or four weeks, he told a news conference in Brussels.
He warned that Libya was running out of time.
“Libya is on the verge of economic and financial collapse. It is facing huge security threats because of the civil war but also...because of the Daesh threat,” he said, referring to Islamic State militants who have gained a foothold in the oil-rich country.
“Libya’s economic collapse is a real possibility. Recently, I met with the governor of the central bank. The situation is very difficult in terms of Libyan finances,” Leon said.
Libya is high on the European Union’s agenda because thousands of refugees from strife in the Middle East and Africa are using it as a jumping off point for dangerous Mediterranean voyages to try to reach Europe.
European countries are working on a proposed U.N. Security Council resolution authorising a planned EU mission to destroy migrant traffickers’ boats off the Libyan coast.
Russia, which wields a Security Council veto, has said that destroying the boats would be too extreme and U.N. Secretary-General Ban Ki-moon has also said such action could deprive people of their livelihoods.
“I think we should not dwell on this element of destruction. It is about being effective in fighting these mafias,” Leon said.