Gaddafi 'running out of fuel, cash'

Gaddafi is said to be 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 US intelligence reports.

Rebel forces that captured towns from Nalut to Kikla in Libya's western Nafusa mountains could cut a vital crude oil pipeline that feeds one of the government's major refineries in the town of al Zawiya, US officials said.

As the US intelligence estimates suggest fuel shortages could occur within as little time as one month for the regime, the French foreign minister reported that Colonel Gaddafi is prepared to leave power.

The cash shortage in Libya follows Turkey's move last week to seize hundreds of millions of dollars held in the Arab Turkish Bank, the US officials said.

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

Word of the building pressure against Col Gaddafi came as France's foreign minister reported that the dictator could leave power, citing Libyan emissaries who have approached the French government.

It was not immediately clear how credible the offer was and Col Gaddafi has refused to leave or give up power since US and Nato forces launched a bombing campaign in support of rebels who rose up against a bloody crackdown against anti-government protests.

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

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

Meanwhile, US officials said morale among regime soldiers was poor, according to troops who were captured or defected.

But the anti-regime rebels are also facing supply problems and holding territory - and have done little work governing the territory that they hold, the officials said.