* Libya on brink of civil war three years after Gaddafi
* Government could lose Benghazi after fall of Tripoli
* Oil producer could break up into fiefdoms run by militias
* Parliament and government rule limited to far east
By Ulf Laessing
CAIRO, Sept 9 (Reuters) - Pro-government Libyan forces, already reeling from
the fall of the capital, are fighting to prevent Islamist militants from
seizing the eastern city of Benghazi and splitting the North African country
into three warring parts.
Three weeks after losing Tripoli to a different militia, the army now faces
an offensive in Libya's second-largest city from the Islamists of Ansar
al-Sharia, which has overrun special forces bases and is attacking Benghazi
airport.
Losing the port city would not only leave the government looking impotent
and irrelevant. It would also increase the risk of the country crumbling
into de facto autonomous regions: the militants demand Islamist rule, while
other armed groups want greater powers for the eastern region they call by
its ancient name of Cyrenaica.
Rebel factions that united in 2011 in an uprising to smash the 42-year-rule
of autocrat Muammar Gaddafi have turned their guns on one another, plunging
Libya into chaos as they fight for power, oil, and cash from the $47 billion
state budget.
Instead of the stable democracy Western powers had hoped to help create by
backing the rebel uprising, Libya might be heading towards civil war,
inviting comparisons with strife-torn countries such as Somalia, Yemen or
South Sudan.
The fall of Benghazi would allow the Islamists to attack pro-government
bases to the east, potentially threatening Bayda -- the seat of the
constitutional assembly -- and Tobruk, where the government and elected
parliament are holed up after losing Tripoli to a militia from Misrata
called Operation Dawn.
Radical Islamists already control the coastal town of Derna, located halfway
between Benghazi and Tobruk.
The central government is now only running a rump state of less than a third
of the country, said Mattia Toaldo, policy fellow at the European Council on
Foreign Relations. "Between Dawn and Ansar al-Sharia, they control a large
portion that extends from Benghazi to the border with Tunisia," he said.
DIVIDED COUNTRY
The conflict risks drawing in regional powers such as Egypt and the United
Arab Emirates worried about Libya turning into a safe haven for radical
Islamists. The two countries bombed Misrata positions in Tripoli last month,
U.S. officials have said, though it did not stop the fall of the capital.
Libya's competing parts already treat each other like different entities -
the new rulers in Tripoli have set up a rival parliament and government,
while seizing at least four ministries and state television.
There are almost no flights any more connecting western airports under
Misrata control and eastern ones held by the government.
For their survival, the uprooted parliament and the army forces in Benghazi
have allied themselves with retired general Khalifa Haftar, whom the
government had previously accused of trying to stage a coup.
With the army and police existing mainly on paper, parliament needs Haftar,
who commands air bases in the east, to confront Ansar al-Sharia and the
Misrata-led armed factions. But his firepower has not stopped an Islamist
advance in Benghazi.
Analysts say even more worrying for the government are signs of tentative
ties between its two main enemies, as Ansar al-Sharia has offered to
cooperate with Operation Dawn. The Misrata-led force has not responded to
the offer, but some of its supporters are backing the Islamists on social
media.
Members of Ansar al-Sharia, blamed by Washington for an assault on the U.S.
consulate in Benghazi during which the U.S. ambassador was killed in
September 2012, have appeared in Tripoli since the Misrata victory, pictures
on Facebook show.
MEDIATION BID
Both the Misrata forces and some Islamist fighters in Benghazi frame
themselves as revolutionary forces fighting what they call elements of the
Gaddafi regime.
They point out that Haftar was a top Gaddafi general before falling out with
the former strongman. And some fighters from a militia allied to him from
the western region of Zintan used to be part of Gaddafi's security forces.
"We need to get rid of the Gaddafi forces still in control," said a
commentator justifying the Tripoli assault, on a television station
controlled by Misrata.
For their part, Haftar and the Zintanis see their battle as an attempt to
prevent Libya falling into the hands of Islamists.
The United Nations is trying to bring the new Tripoli rulers and elected
lawmakers to the negotiating table.
But Dirk Vandewalle, author of "A Modern History of Libya", said any
coalition between the Misrata and Islamist forces would probably be
tactical, aimed at getting rid of the government, as they did when united
during the Gaddafi uprising.
"Virtually all cooperation we are now witnessing between certain groups of
militias is essentially tactical and temporary," he said.
That would increase the likelihood of Libya breaking up into fiefdoms run by
competing factions -- a Misrata-led one in the west, an Islamist-dominated
east and a powerless rump government in the far-east.
Encouraged by the Tripoli takeover, other armed groups might emerge or split
from the main armed groups, which would make it difficult to identify
national leaders for any foreign-led mediation.
"I am not optimistic about any mediation efforts," said a Western ambassador
to Libya. (Editing by Mark Trevelyan)