By Mohammed Abbas
BREGA, Libya (Reuters) - Muammar Gaddafi's Libyan army faced an increasingly organized and confident rebel force on Thursday which is appealing for international support and looking to take its military successes west toward Tripoli.
As the struggle between Gaddafi loyalists and rebels who have taken swathes of Libya intensified, Arab League Secretary-General Amr Moussa said a peace plan for Libya from Venezuela's President Hugo Chavez was under consideration.
"We have been informed of President Chavez's plan but it is still under consideration," Moussa told Reuters by telephone on Thursday. "We consulted several leaders yesterday," he said, without providing a deadline to decide on the plan.
When asked if Gaddafi had accepted the plan, Moussa said: "I don't know, how am I supposed to know that?" When asked if he had agreed to the Chavez plan, Moussa said: "No."
Oil fell on news of a mediation plan. Brent crude fell more than $3 to an intra-day low of $113.09 per barrel as investors eyed a possible deal brokered by OPEC-member Venezuela. Chavez is a close friend of Gaddafi.
Revolt has ripped through the world's 12th-largest exporter and knocked out nearly 50 percent of its 1.6 million barrels per day output. Oil is the bedrock of the country's economy, and on Wednesday fighting centered around a Libyan oil terminal.
Al Jazeera news network had earlier reported that Gaddafi and Moussa had agreed to Chavez's plan, which would involve a commission from Latin America, Europe and the Middle East trying to reach a negotiated outcome between the Libyan leader and rebel forces.
On the military front, rebels have repulsed a land and air offensive by Gaddafi's forces on the eastern oil terminal of Brega as he warned foreign powers of "another Vietnam" if they intervened in the uprising against his 41-year rule.
Rebels in their eastern bastion of Benghazi called for U.N.-backed air strikes to halt attacks by African mercenaries they said Gaddafi was using against his own people.
Analysts cautioned against drawing firm conclusions from fast moving events in a situation of erratic communications.
"We should keep in mind that both the government and the rebels are trying to spin an image of momentum," said Shashank Joshi, an analyst at Britain's Royal United Services Institute.
The uprising, the bloodiest yet against long-serving rulers in the Middle East and North Africa, is causing a humanitarian crisis, especially on the Tunisian border where tens of thousands of foreign workers are trying to flee to safety.
Government troops, backed by air power, launched an attack on Wednesday and briefly captured Brega, an oil export terminal 800 km (500 miles) east of Tripoli.
Opposition forces took back the town they have held for about a week, rebel officers said. They were ready to move west toward the capital, they said, if Gaddafi refused to quit.
Basking in the adulation of loyalists in Tripoli, Gaddafi launched into a tirade against the "armed gangsters" he said were behind the unrest, part of a conspiracy to colonize Libya and seize its oil.
"We will enter a bloody war and thousands and thousands of Libyans will die if the United States enters or NATO enters," Gaddafi told Tripoli supporters at a gathering televised live.
"We are ready to hand out weapons to a million, or 2 million or 3 million, and another Vietnam will begin."
A Tripoli resident and Gaddafi opponent, who did not want to be identified, told Reuters: "Gaddafi will hang on for a while. It's not going to be easy for an unarmed crowd to face highly armed forces eager to shoot their own people."
The assault on Brega appeared to be the most significant military operation by Gaddafi since the uprising erupted in mid-February and set off a confrontation that Washington says could descend into a long civil war unless Gaddafi steps down.
Witnesses said the attack was backed by heavy weapons and air strikes. One said Gaddafi's forces were 2-3 km from the city center and had 300-350 rebels pinned down at an oil industry airport on the city outskirts.
A Twitter message on Thursday, which could not be corroborated, spoke of reinforcements for Gaddafi forces.
"Cars reported to be full of mercenaries with the intention of joining the battalion outside Ras Lanuf to head to Brega to regain," read the message from ShababLibya (Libyan Youth Movement). "It seems 70 cars have arrived near the town of Ras Lanuf to support a battalion to attack the city of Brega and regain airport."
DUTCH SOLDIERS HELD
The Dutch Defense Ministry said on Thursday Libyan authorities had arrested three Dutch soldiers on Sunday when they tried to evacuate a Dutch citizen from the city of Sirte, east of Tripoli.
"A helicopter from a ship off Libya's coast was used. It was a consular evacuation. During the operation the helicopter was grounded by an armed unit," Defense Ministry spokesman Otte Beeksma said, adding the Netherlands was in talks with Libyan authorities about the release of the soldiers.
In Benghazi, the rebel National Libyan Council called for air strikes. Spokesman Hafiz Ghoga said: "We call for specific attacks on strongholds of these mercenaries. The presence of any foreign forces on Libyan soil is strongly opposed. There is a big difference between this and strategic air strikes."
In a possible response to Western hints that the opposition needs to unify to facilitate rebel links with outside powers, Ghoga said a former justice minister, Mustafa Abdel Jalil, would be chairman of the council which will have 30 members and be based in Benghazi before moving later to Tripoli.
Libya's deputy ambassador to the United Nations, one of the first Libyan diplomats to denounce Gaddafi and defect, said the United Nations may back a resolution for a no-fly zone if the National Libyan Council requested it officially.
The U.S. government is cautious about imposing a no-fly zone over Libya, stressing the diplomatic and military risks involved, but has moved warships into the Mediterranean.
Any sort of foreign military involvement in Arab countries is a sensitive topic for Western nations uncomfortably aware that Iraq suffered years of bloodletting and al Qaeda violence after a 2003 U.S.-led invasion toppled Saddam Hussein.
The Arab League said it was against direct outside military intervention, but could enforce a no-fly zone in cooperation with the African Union. Realistically though, only the United States could carry out such an operation.
"I think we are a long way from making that decision," Secretary of State Hillary Clinton said.
Spain became the latest European country to offer help to refugees, saying it would send a plane loaded with humanitarian aid to the Tunisian-Libyan border on Thursday. The plane will be used to ferry Egyptian migrants from Djerba to Cairo.
(Additional reporting by Yvonne Bell and Chris Helgren in Tripoli, Tom Pfeiffer, Alexander Dziadosz in Benghazi, Yannis Behrakis and Douglas Hamilton; Christian Lowe and Hamid Ould Ahmed in Algiers, Souhail Karam and Marie-Louise Gumuchian in Rabat; Sarah Mikhail in Cairo: Writing by Peter Millership; Editing by Giles Elgood)