"Cousin to Cousin", Libyan Siege Tests Tribal Divides

* Pro-Gaddafi tribal volunteers holding out in Bani Walid

* Negotiations test ability to transcend tribal divisions for peace

* Warfalla tribe were kingmakers in Gaddafi's fractious Libya

By Maria Golovnina

NORTH OF BANI WALID, Libya, Sept 5 (Reuters) - Squatting in the shade of a crumbling hut on the outskirts of Bani Walid, a besieged town still loyal to Muammar Gaddafi, Hassan Warfalla said his tribe would not be persuaded easily to lay down their arms and surrender.

He has come to embrace the popular revolution that has brought down the curtain on 42 years of maverick one-man rule by Gaddafi. But many in his tribe that dominates Bani Walid have not done so, Warfalla cautioned.

"I was in Bani Walid yesterday. There are no Gaddafi brigades there, only Warfalla volunteers who are fighting on Gaddafi's side," said Warfalla, 42, a power company employee.

"Many Gaddafi leaders were from the Warfalla. They will not surrender Bani Walid until there are guarantees that they will not be arrested or tried. Many of them committed crimes and killed a lot of people."

Along with Gaddafi's home town of Sirte on the Mediterranean coast and Sabha deep in the Sahara desert, Bani Walid is one of the last remaining pockets of pro-Gaddafi resistance to rebels who drove the veteran strongman out of Tripoli last month.

With rebel forces massing at its gates and NATO planes roaring overhead, the face-off now holds important clues as to whether Libya's National Transitional Council (NTC) will be capable of putting tribal divisions aside to negotiate a peaceful handover -- or risk sliding back into bloodshed.

Nestled in rocky hills about 150 km (90 miles) south of Tripoli, Bani Walid is an ancestral home to the Warfalla, Libya's biggest and most important tribe. They number about a million out of the country's six million population.

HOLD-OUT

For now, the besieged desert town is siding stubbornly with Gaddafi. Peace talks at its northern gate are not going well.

On Sunday, tribal elders, their robes strikingly white against the bleak yellow of the desert, gathered at a rebel checkpoint to discuss reconciliation. The way the talks were conducted, on rugs spread out on the ground at the heavily fortified government checkpoint, offered interesting glimpses into the complicated world of Libya's tribal politics.

Rebels put their rifles on the ground and listened intently. Their faces were grim. The key stumbling block, the elders explained, was the presence of Gaddafi loyalists who were putting pressure on the locals to fight.

Otherwise, ordinary people just want peace, they said.

Fatigued after six months of war, both sides appeared keen to reach agreement.

After hours of bitter negotiations, the elders drove back down into the valley to take the message from the anti-Gaddafi camp to their pro-Gaddafi masters. Some shook their heads with frustration. Hours later, talks broke down.

Despite the lack of progress, the fighters were upbeat. The interim government is keen to demonstrate its resolve to end the impasse peacefully.

"People in Bani Walid have dignity. People inside the city are with us," Abusif Ghnyah, a negotiation organiser for the NTC from the Walfalla tribe, told reporters at the checkpoint outside Bani Walid, as NATO planes roared overhead.

"We don't want to spill a single drop of blood."

The NTC has hand-picked Warfalla men from Misrata and Tripoli to facilitate negotiations on the future of Bani Walid. Yet, finding a lasting solution will be a tall order.

"They are now talking cousin to cousin," said a Warfalla observer who asked for his name not to be used. "But as you can see it is still not going well."

KINGMAKERS

With a long history of fluctuating allegiances, the Warfalla have long been the kingmakers of Libya's complex tribal politics. Its powerful role in society speaks volumes about the kind of difficulties Libya's new rulers now face in uniting the country and forming an all-inclusive democratic government.

Gaddafi ruled Libya as a personal fiefdom for 42 years and he encouraged tribal divisions in order to ensure maximum control over the North African state's fractious population.

The present political structure has no blueprint for resolving such conflicts, with no public institutions or government bodies that can facilitate national reconciliation. Some fear that simmering tribal tensions could boil over into a full scale conflict, creating a scenario not unlike the sectarian split in Iraq after the fall of Saddam Hussein.

Besides obvious tribal divisions, Libyan society is dominated by old grievances dating back generations.

To Bani Walid's northeast lies Misrata, Libya's third biggest city now controlled by the NTC after months of fighting.

Having seen some of the bloodiest battles in the six-month war, Misrata tribesmen have long had bitter relations with their Bani Walid brethren. They complain they refused to rise, as Misrata did, against Gaddafi.

Almost no debate in Misrata on the future of Bani Walid goes without someone mentioning Ramadan al-Sueihy. Fighting the Italians, he was betrayed and killed by the tribesmen of Bani Walid a century ago. Yet people still remember him.

"If there is a fight for Bani Walid and Misrata fighters get dragged into it, there will be retribution," said Sedik, a Misrata resident.

For now, Bani Walid is in limbo. Abdallah ben Qtansh, an anti-Gaddafi fighter, said additional NTC forces were closing in on Bani Walid from tribes in Tripoli, Misrata and Zlitan for the final fight for control over the town.

Yet, people inside the isolated city appeared to be in no rush to take down Gaddafi's green flags. Two public portraits of Gaddafi in central Bani Walid were still being guarded by a round-the-clock loyalist guard, according to Hassan Warfalla.

Living conditions were increasingly desperate. Locals said Bani Walid residents have had no water, power, fresh food or medicine for about 10 days.

They said a number of senior Gaddafi loyalists were still in town, including Mohamed Abuzeid Warfalla, an ex-brigade commander for south Misrata accused of committing crimes against civilians during the siege of that city earlier in the war.

Rebel leaders believe Gaddafi and his close family members passed through Bani Walid as they escaped deeper into the Sahara desert following Tripoli's fall two weeks ago. Rebels near Bani Walid said Gaddafi's son Saif al-Islam was in Bani Walid until Saturday but had now left discreetly in a car, headed south.

(Editing by Mark Heinrich)