(Reuters) - Having failed to bomb Muammar Gaddafi out of office, Western powers have no choice but to stick to their military campaign while also hoping that the Libyan leader will end their dilemma by bowing out himself.
Contrary to initial hopes in Western capitals, Gaddafi has clung to power despite sanctions and more than four months of NATO bombing in support of rebel forces now in further disarray following the assassination of their military chief.
Efforts to negotiate a way out of the crisis are failing to show much progress, leaving the West little choice but to grit its teeth and keep backing the ragtag army of rebels despite growing criticism of the failure to dislodge Gaddafi quickly.
NATO's current mandate for military action expires on September 27, but a failure to push ahead with the campaign would mean a massive loss of face for the alliance, even if there are signs of cold feet in some capitals.
Western diplomats are still meeting rebel leaders and people close to Gaddafi to seek a deal to remove him, sources say, but the talks are tapering off due to the Muslim holy month of Ramadan and European summer holidays.
"We are waiting for a signal on the part of Gaddafi," a French diplomatic source said.
"What we want is for him to leave power, that has not changed since the start. His mobility and what the Libyans do with him is up to them. We are working on a daily basis on this, and if he demands conditions to step down we will listen to him. August may seem a slow month but things could still happen."
France has tacked a Group of Eight session on the Middle East and North Africa onto a Sept 9-10 meeting of G7 finance ministers in Marseille, ahead of the next meet-up of Libya coalition partners later next month.
The French government also wants to host a broader "friends of Libya" gathering to add momentum for a political solution.
Yet his pledge not to back down until Gaddafi is out of power has left President Nicolas Sarkozy, and the coalition partners he pulled into Libya, in a hole as concern mounts over the credibility of the rebels' National Transitional Council.
"We do realize now that we are looking at more of a long-term situation," the French source said. "There are two fronts: a diplomatic one and a military one. On the diplomatic front, things have slowed down somewhat but on the military one we have added resources. There will be advances and setbacks."
The rebels, short of cash, fuel, training and ammunition, control parts of eastern Libya but are still struggling five months into the conflict to make headway around Tripoli where Gaddafi's much more powerful army is well entrenched.
"The situation is not worse or different to how it was three weeks ago but unfortunately we do need a military advance," the source said. "That could prompt a decision by Gaddafi's camp to drop weapons, change their approach and open up to dialogue."
CONFLICTING ACCOUNTS
France and Britain have sent funds to the rebels and dropped their insistence that Gaddafi leave Libya as well as standing down, indicating their growing anxiety to end the stalemate. France has also parachuted in weapons.
Their latest headache is growing evidence of a lack of unity and leadership among the rebels.
Conflicting accounts of who was behind last week's killing of rebel military commander Abdel Fattah Younes suggest deep rifts that have shaken the West's confidence in the movement that a string of countries including France, Britain and the United States now back as Libya's legitimate government.
"The ambiguity surrounding Abdel Fatah's death is not helpful. Information is crucial. The NTC needs to be very transparent to stop rumors circulating about this event." said Noman Benotman, an analyst with the British Quilliam think-tank.
French writer and intellectual Bernard-Henri Levy, a supporter of the rebels from the start, said talk of divisions and lawlessness within their ranks was nonsense, as were reports Younes was shot by militiamen allied to the rebels.
"There are no more divisions within the rebel camp than with any rebellion in history. It's actually quite a united resistance," he told Reuters. "An inquiry will show in the days ahead that Younes was executed by Gaddafi's people."
Other observers disagree, and warn that the apparent lack of cohesion in the rebel movement made prospects gloomy for both the military and diplomatic pushes against Gaddafi.
"There's not much reason for the situation to change," said strategic consultant and retired French colonel Jean-Louis Dufour. "Things are tough for the rebel army, and as far as talks go there is nothing to negotiate as Gaddafi doesn't want to go to prison."
Sarkozy, keen to prove himself as an international firefighter, was the first foreign leader to send fighter jets to Libya and is not seen backing down, even if he is queasy at the prospect of a flagging operation hanging over his quest for reelection next April.
Parliament supports him, with lawmakers of all stripes voting overwhelmingly last month in favor of extending the military action, which has cost France nearly 200 million euros so far. Opposition left-wingers have called for a new debate in the weeks ahead but are not seen blocking a further extension.
Defense Minister Gerard Longuet said at the weekend France would not ease up on Gaddafi, and army chief of staff Admiral Edouard Guillaud said last week he has ample resources.
Polls suggest only a slim majority of the French public supports the action, and while media criticism has been muted, some commentators are now speaking out against the campaign.
"Opinion is increasingly hostile but politicians are keeping quiet, the Socialist Party is supportive, the newspapers keep a low profile," political essayist Jean-Francois Kahn grumbled in the daily Liberation, calling the operation a fiasco.
"Nobody dares to say the emperor has no clothes on."
Britain has also said it will increase military pressure on Gaddafi, but faces growing criticism of what is seen by some as an ill-conceived military adventure with no clear end in sight.
Levy said there would be no let-up during August of talks between rebel leaders and "those Tripoli officials who do not have blood on their hands". He said the only obstacle to reaching a solution was resistance from Gaddafi's camp. (Additional reporting by Yann Le Guernigou in Paris, David Brunnstrom in Brussels and Bill Maclean in London; editing by Giles Elgood)
