Anti-Gaddafi allies offer rebels cash lifeline

ROME/TRIPOLI (Reuters) - Libyan rebels won a financial lifeline potentially worth billions of dollars from a group of Western and Arab countries on Thursday, as NATO planes struck forces loyal to Muammar Gaddafi in the west.

Ministers from an anti-Gaddafi coalition called the Libya contact group, including the United States, France, Britain and Italy, as well as Qatar, Kuwait and Jordan, agreed in Rome to set up a fund to help the rebels, who are desperately short of cash.

U.S. Secretary of State Hillary Clinton said Washington would seek to unlock some of the $30 billion (18 billion pounds) of Libyan state funds frozen in the United States to help the rebel movement.

A senior U.S. official said Washington hoped to free up a "substantial sum" to meet humanitarian needs but it would only be a small fraction of the $30 billion frozen by Washington.

Italy, host of the Rome meeting, said a temporary special fund would be set up to channel cash to the rebel administration in its stronghold of Benghazi in eastern Libya.

Kuwait pledged $180 million, while Qatar promised $400-to-$500 million. France said it was evaluating its contribution to the fund, which should be operational within weeks.

In Zintan, southwest of Tripoli, a rebel spokesman said NATO planes struck Gaddafi's forces near weapons depots west of the rebel-held town.

"Around eight-to-10 missiles landed there. A witness who was near the area confirmed that," the spokesman, Abdulrahman, told Reuters by telephone. He said the area was 30 km (18 miles) from Zintan.

Earlier, Abdulrahman said pro-Gaddafi forces had fired about 50 Russian-made Grad rockets into Zintan on Thursday.

Near the border with Tunisia, a rebel fighter told Reuters there was intense fighting between rebels and pro-Gaddafi forces in the area of the village of Ghezaya.

The village lies between the Dehiba-Wazin border crossing, which is in rebel hands, and the town of Nalut where residents said Gaddafi loyalists had been shelling rebel positions. Rebels on the border say they are preparing for an attempt by Gaddafi's forces to retake the crossing.

"There has been intense fighting since this morning at Ghezaya between us and Gaddafi's forces," the rebel, called Wissm, told Reuters by telephone. "There are several dead and injured on both sides."

FIGHTING REACHES STALEMATE

As the fighting has generally descended into a stalemate, the rebel Transitional National Council (TNC) says it needs up to $3 billion to keep going in the coming months.

Efforts to unblock Libyan state assets frozen in overseas accounts or to allow the rebels to get past U.N. sanctions that prevent their selling oil on international markets have been held up so far.

Britain said it had no plans to contribute to the fund set up for the rebels because it already had made a "very substantial" contribution to humanitarian assistance.

British Foreign Secretary William Hague said in Rome: "What came through from this meeting was the united determination now to intensify the military pressure, the diplomatic pressure and the economic pressure on the Gaddafi regime."

Asked what Tripoli thought of renewed calls by Clinton for Gaddafi to step down, Libyan government spokesman Mussa Ibrahim said it was not up to the United States or any other foreign country to decide who should lead the Libyan people.

Thursday's meeting brought together foreign ministers from more than 20 countries including France, Britain, the United States, Italy and Qatar as well as representatives of the Arab League and the African Union.

Rebel spokesman Mahmoud Shammam told reporters the rebels had only enough funds to pay for their immediate needs in food, public salaries and medicine until the end of May. They needed $2-to-$3 billion dollars in urgent funding, he said.

Josette Sheeran, head of the U.N. World Food Programme said on Thursday Libya's food supplies could run out in six to eight weeks.

"If we do not address the larger gaps in the food system in Libya -- particularly eastern Libya -- we'll have to envision a fairly massive humanitarian operation," she said in an interview.

DAZED AND EMOTIONAL

An aid ship defied shelling by Gaddafi's forces to rescue more than 1,000 people from Misrata but was forced to leave behind hundreds desperate to flee the fighting.

The International Organisation for Migration said the boat later arrived safely in Benghazi.

Dazed and emotional migrant workers evacuated on the boat described cowering in fear from relentless shellfire and a desperate scramble to board the vessel as it pulled away.

"I did not know if I would ever get out, I thought I was going to die," said Prince Amalkwah, a 24-year-old Nigerian electrician.

Misrata's port is a lifeline for the city, where food and medical supplies are low and snipers shoot from rooftops. In all about 13,000 people have been rescued by 13 ships.

At a meeting in Tripoli on Thursday, about 2,000 tribesmen representing 850 tribes, demanded a halt to NATO air strikes and for an end to the fighting.

The insurgents trying to topple Gaddafi after 41 years in power had hoped for a swift victory, akin to the overthrow of the leaders of Egypt and Tunisia by popular uprisings.

His better-equipped forces halted the rebels' westward advance from Benghazi and the front line is now largely static.

Mahmoud Jabril, head of the rebels' interim government, dismissed concerns of a stalemate.

"After all this bloodshed, there is no room for reconciliation with the current regime. It does not matter if it takes one day, one month or one year," he said in Rome.

Britain said it had expelled two more Libyan diplomats from London because their activities were contrary to the interests of Britain.

The attack on the British mission followed a NATO air raid on Tripoli last Saturday which the Libyan government said had killed Gaddafi's youngest son and three of his grandchildren. Gaddafi has not been seen in public since then.

(Additional reporting by Arshad Mohammed and Sivia Aloisi; Stephanie Nebehay in Geneva, Tarek Amara and Abdelaziz Boumzar in Dehiba, Hamid Ould Ahmed in Algiers; Matt Robinson in Tunis; Joe Logan in Dubai; Mariam Karouny in Beirut; Jospeph Nasr in Berlin; Writing by Andrew Dobbie; Editing by )