The Libyan army shelled a rebel-held city and closed in on the opposition bastion of Benghazi on Wednesday as diplomatic steps to stop Muammar Gaddafi crushing a rebellion ran aground.
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In Geneva, former French foreign minister Bernard Kouchner berated the international community for its delay in imposing a no-fly zone, saying it was already too late to save lives.
"A no-fly zone is a minimum. It's certainly already too late," Kouchner said of Gadadfi's crackdown on the increasingly vulnerable-looking uprising, which was inspired by pro-democracy rebellions that toppled the Egyptian and Tunisian presidents.
"Even if we were able to decide today, it's so late," he told World Radio Switzerland. "We've known since three weeks that the poor civil society, the poor people, are dying. And we are doing nothing."
In Benghazi, seat of the insurgents' provisional national council, the mood was a mixture of defiance and nervousness, with some citizens predicting a bloodbath and others confident the rebels would still snatch victory against the government offensive.
Italy, a potential base for such a no-fly zone proposed by Britain and France, ruled out military intervention in the oil-exporting north African country.
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"We cannot have war, the international community should not, does not want and cannot do it," Foreign Minister Franco Frattini said in Rome.
The Libyan army told residents of Benghazi to lay down their arms, and one of Gaddafi's sons, Saif al-Islam, told Euronews TV that Libya's second largest city would fall whether or not world powers imposed a no-fly zone.
"Everything will be over in 48 hours," he said.
Aid organisation Medecins Sans Frontieres said the violence had forced it to withdraw its staff from Benghazi and begin moving teams to Alexandria in Egypt.
Residents in Misrata, the country's third largest city 200 km (130 miles) east of Tripoli, Gaddafi's stronghold, said his forces attacked the rebel-held city with tanks and artillery.
The shelling killed at least five people and wounded 11, a doctor at Misrata hospital told Reuters by telephone.
"Very heavy bombardments are taking place now from three sides. They are using heavy weapons including tanks and artillery ... They have yet to enter the town," said one resident, called Mohammed, by telephone.
Foreign powers have condemned Gaddafi's crackdown but show little appetite for action to support the revolt. A Gaddafi victory and the suppression of protests in Bahrain could turn the tide in the region against pro-democracy movements.
Supporters of a no-fly zone to halt Libyan government air strikes on rebels circulated a draft resolution at the U.N. Security Council on Tuesday that would authorise one, but other states said questions remained.
The draft was distributed at a closed-door meeting by Britain and Lebanon after the Arab League called on the council on Saturday to set up a no-fly zone.
German Ambassador Peter Wittig told reporters after the meeting his country still had queries, and noted that while the Arab League had called for a no-fly zone it also opposed any foreign military intervention.
NATO has set three conditions for it to enforce a no-fly zone over Libya: regional support, proof its help is needed and a Security Council resolution.
An Arab League call for a no-fly zone satisfies the first condition, but with access to most of Libya barred by Gaddafi's security forces, hard evidence that NATO intervention is needed to avert atrocities or a humanitarian disaster is scarce.
Growing numbers of Libyans are now crossing into Egypt fleeing Gaddafi's advance, the U.N. refugee agency said.
GADDAFI TAUNTS THE WEST
In a televised speech, Gaddafi taunted Western countries that have backed the imposition of a no-fly zone to come and get him.
"Strike Libya?" he asked. "We'll be the one who strikes you! We struck you in Algeria, in Vietnam. You want to strike us? Come and give it a try."
In an interview with the Italian daily Il Giornale published on Tuesday, Gaddafi said that if western forces attacked Libya, he would ally with al Qaeda "and declare holy war."
In Benghazi, where the revolt began in mid-February, residents said they had found leaflets lying in the city streets suggesting that if they gave up the fight against Gaddafi now, they would not be harmed or punished.
The leaflest accused rebels of being driven by al Qaeda and high on drugs, an allegation routinely levelled by the government against an uprising that was inspired by pro-democracy rebellions that toppled the Egyptian and Tunisian presidents.
Salah Ben-Saud, a retired undersecretary at the Agriculture Ministry, said in Benghazi that life in the town was normal and "pro-Gaddafi people have not really shown their face."
"There were rumours that he (Gaddafi) would try to take back Benghazi and that made people a bit nervous, but he didn't and people here don't think he would succeed anyway if he tried."
Thousands gathered in a square in Benghazi on Tuesday evening denouncing Gaddafi as a tyrant and throwing shoes and other objects at his image projected upside down on a wall.
The rebels' position looked highly vulnerable after government troops took control of the junction at Ajdabiyah, opening the way to Benghazi.