* Govt official says talks under way over peace
* Rebel council rules out Gaddafi staying in Libya
* Five rebels killed in fresh fighting
* Saif al-Islam Gaddafi: we will win the war
By Lamine Chikhi
TRIPOLI, July 4 The Libyan government said on
Monday it was in talks with opposition figures but there seemed
little chance of a swift end to the conflict as both sides stuck
to entrenched positions on the fate of Muammar Gaddafi.
The leader's son Saif al-Islam, in combative form, told a
French newspaper there was no question of negotiating an end to
his father's 42-year rule, while the rebels, stepping back from
a hint of a concession, renewed their demand that he go now.
A spokesman for Gaddafi's administration said high-ranking
government officials had been in foreign-mediated talks in
Italy, Egypt and Norway with opposition figures to try to find a
peace deal, and that talks were still going on.
Any talk of a possible accommodation with Gaddafi could
drive a wedge into the ranks of the disparate rebel movement
which sprang up in February in the wake of uprisings in
neighbouring Tunisia and Egypt.
Many of Gaddafi's opponents are flatly opposed to any form
of concession to the veteran leader and are mistrustful of
former Gaddafi associates who have defected to join the rebels.
The government spokesman named one of the opposition figures
in the talks as Abdel Fattah Younes al-Abidi, Gaddafi's former
security minister who defected in February. It was not clear
whether the talks took place with the knowledge or endorsement
of the leadership of the rebel National Transitional Council.
The council, which a growing number of countries say is the
Libyan people's sole legitimate representative, has said there
are no talks between it and Gaddafi's administration.
"In the last few weeks and in several world capitals,
high-ranking Libyan government officials have met with members
of the Libyan opposition to negotiate peaceful ways out of the
Libyan crisis," the government spokesman said in an e-mailed
"Other direct negotiations still take place as of now."
Saif al-Islam, one of the most prominent of the leader's
sons, dismissed suggestions that there could be a peace
settlement that removed his father -- a demand not only of the
rebels but of the Western powers bombing Libya since March.
"My father is not part of the negotiations," Saif al-Islam
told Le Monde newspaper. "You think one can find a solution that
does not involve him? No, it's impossible."
By backing the rebels, NATO had picked the losing side, he
added: "God is with us. We will fight and we will win.
"We have our army. We have more munitions, more weapons.
Morale is high. The others are becoming weaker and weaker."
A glimmer of concession on Gaddafi's future from the
National Transitional Council on Sunday was swiftly withdrawn on
Monday when the NTC, based in the eastern city of Benghazi,
contradicted remarks made by its leader Mustafa Abdel Jalil.
He told Reuters on Sunday: "As a peaceful solution, we
offered that he can resign and order his soldiers to withdraw
from their barracks and positions, and then he can decide either
to stay in Libya or abroad.
"If he desires to stay in Libya, we will determine the place
and it will be under international supervision. And there will
be international supervision of all his movements."
However, on Monday the council issued a statement by Abdel
Jalil saying: "I would like to confirm that there is absolutely
no current or future possibility for Gaddafi to remain in Libya
... There is no escape clause for Gaddafi -- he must be removed
from power and face justice."
NATO says its air strikes are steadily eroding Gaddafi's
grip on power. A Reuters reporter in the centre of Tripoli on
Monday afternoon said he heard aircraft overhead, followed by
the sound of three explosions.
But the fighting on the ground is making slow progress. The
rag-tag force of rebel fighters is bogged down on three fronts
and unable to break through to the capital.
In Misrata, a rebel-held city 200 km (130 miles) east of
Tripoli, there was renewed fighting on the southern outskirts. A
Reuters journalist at a hospital in the city saw the bodies of
five fighters who had been killed on Monday.
"The (pro-Gaddafi) brigades carried out an attack today in
the area of Abdul Raouf, south of Misrata, using heavy artillery
and Grad rockets," said a rebel spokesman called Abdelsalam.
"The revolutionaries managed to repel the attack and blocked
the advance of the brigades," he told Reuters.
NATO is not doing enough to help rebels who were under
attack in the front closest to Tripoli, the eastern edge of the
Western Mountains, a rebel spokesman in the region said.
"We informed NATO of several clear enemy targets but they
ignored our call," he said.
In the city of Nalut, rebels were attacked by pro-Gaddafi
brigades on Sunday night and Monday morning, a rebel spokesman
named Mohammed told Reuters.
Libyan state television said NATO bombarded a residential
area in the town of Takut and a water storage facility in the
town of Badr, both of which are in the Western Mountains.
A Libyan government spokesman said Libya had arrested 11
rebels transporting about 100 light machine guns from Tunisia.
The weapons had been supplied by Qatar, he said.
Western powers say international sanctions are narrowing the
options for Gaddafi by blocking oil exports, leaving Libya
without its principal source of revenue. His foreign currency
reserves will eventually run out, they say.
In a sign cash is growing tighter, Libya's central bank
announced on its website that from now on commercial banks would
need its prior approval for all operations involving foreign
Libya was the focus of talks in the Russian Black Sea resort
of Sochi, where President Dmitry Medvedev met both the secretary
general of NATO and South Africa's President Jacob Zuma.
After the meetings, Moscow and the Western alliance said
they disagreed on NATO air strikes, but emphasised shared hopes
for a peaceful solution. Zuma presented an
African Union peace, a NATO official said.
(Additional reporting by Hamid Ould Ahmed in Algiers, David
Brunnstrom and Denis Dyomkin in Sochi, Russia, Mussab
Al-Khairalla in London, Hamuda Hassan in Misrata, Maria
Golovnina in Benghazi, Joseph Nasr in Berlin and Maria-Victoria
Buffery in Paris; Writing by Christian Lowe and David Dolan;
Editing by Alison Williams)