Tide turned? Qaddafi low on cash, fuel, wins

Libyan rebels gather at the front line on the eastern ridge of the Nafusah Mountains in Western Libya, on the outskirt of Gualish, on July 10, 2011, as forces loyal to Libyan leader Muammar Qaddafi launched a counter attack against rebel advance positions nearby. Getty Images

WASHINGTON - Libyan leader Muammar Qaddafi is facing dramatic shortages of fuel for his soldiers and citizens in Tripoli, and he is running out of cash to pay his forces and what is left of his government, according to the latest U.S. intelligence reports. In France, the foreign minister reported that Qaddafi is prepared to leave power.

Rebel forces that captured towns from Nalut to Kikla in Libya's western Nafusa mountains cut a vital crude oil pipeline that feeds one of the government's major refineries in the town of al-Zawiya, U.S. officials told The Associated Press. They cited U.S. intelligence estimates that fuel shortages could occur within as little time as one month.

The cash shortage follows Turkey's move last week to seize hundreds of millions of dollars held in the Arab Turkish Bank, the U.S. officials said. They spoke on condition of anonymity to discuss matters of intelligence.

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While the Libyan strongman could not access actual cash, he had been issuing letters of credit to pay his debtors, including fuel importers, the U.S. officials said.

Intelligence analysts are pointing to the collection of indicators, including territory seized and looming fuel and money shortages, as the first shift from stalemate to momentum for the rebels since the conflict began in mid-March, the U.S. officials said.

Word of the building pressure against Qaddafi came as France's foreign minister reported that Qaddafi was prepared to leave power, citing Libyan emissaries who have approached the French government. It was not immediately clear how credible the offer was. Qaddafi has refused to leave or give up power since U.S. and NATO forces launched a bombing campaign in support of rebels who rose up against the government's bloody crackdown against anti-government protests.

Frenchn Foreign Minister Alain Juppe said that while the contacts do not constitute formal negotiations, "we receive emissaries who are saying, 'Qaddafi is prepared to leave. Let's discuss it.'" He did not identify the envoys.

The U.S. State Department said that Washington, too, is getting visitors.

"We have a lot of folks claiming to be representatives of Qaddafi one way or the other reaching out to lots of other folks in the West," State Department spokeswoman Victoria Nuland said. "But the messages are contradictory," she said, adding that there has yet to be a clear-cut message "that Qaddafi is prepared to understand that it's time for him to go."

French officials and their allies have insisted that Qaddafi's giving up power is key to ending the hostilities.

U.S. officials briefed on intelligence reports could not confirm that Qaddafi was considering leaving, but they cited rising pressure against his government.

The U.S. officials said morale among Qaddafi's soldiers was poor, according to troops who were captured or defected. Commanders are not pleased with the quality of forces they have and are not making major gains on the battlefield, the officials said.

The rebels, too, are facing supply problems. They are so busy trying to hold territory and survive that they have done little work governing the territory they hold, the officials said.

In Tripoli, Libyan officials warned that the rebel-controlled eastern half of the country could be cut off from water supplies without a truce to allow for maintenance work on a power plant pumping water up from the desert.

About 70 percent of the country relies on water drawn from underground aquifers deep in the southern desert, and the plant powering it in the east is falling apart, said the Libyan agricultural minister.

However, in the rebel-held city of Benghazi, the manager there of the Great Man-made River project, Abdel Razek al-Zlitni, said there are no water supply problems in eastern Libya.

"The No. 1 zone, which supplies the eastern side of Libya with water, is fine and is working perfectly," he said of the reservoir there.

Al-Zlitni said, however, that there is no communication with the besieged area in western Libya so it is unclear whether they are having water problems.

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