Cairo, Mar 16: Forces loyal to Muammar Gaddafi today stepped up their offensive against the rebels as they advanced towards the opposition headquarters of Benghazi in Libya's east, with the strongman asking people to take up arms against a possible invasion by the western powers debating a no-fly zone over the country.
Rebels in Ajdabiyah -- the last town before Benghazi -- faced heavy bombardment from pro-Gaddafi forces, but they denied claims that the area had been recaptured by government troops.
Pro-Gaddafi forces were also reported to be shelling Misrata, the only western city held by the rebels.
Addressing a select gathering of his supporters last night, Gaddafi called the rebels "rats" and denounced Western nations. "They want Libyan oil," he was quoted as saying by Al-Jazeera.
"France now raises its head and says that it will strike Libya," Gaddafi told the gathering at his fortified Bab al-Azizia compound in central Tripoli.
"Strike Libya?" he asked. "We'll be the one who strikes you! We struck you in Algeria, in Vietnam. You want to strike us? Come and give it a try."
Libyans would fight to the death to defend their country, he said, while asking the people to take up arms against a possible invasion by western powers.
His remarks came as the UN Security Council was set to discuss a draft resolution on imposing a no-fly zone over Libya in a bid to ground Gaddafi's aircraft and prevent them for attacking Benghazi.
The text of the draft resolution, co-authored by Britain and France, was circulated at the UN Security Council by Lebanon yesterday, but other countries in the body were still not completely on board.
On Saturday last, the Arab League called for a no-fly zone to be imposed over Libya but questions had been raised about the implementation of this measure, including where will the assets for this step come from.
Clamping down further on the Gaddafi regime, the Obama administration imposed sanctions on Libyan Foreign Minister Moussa Koussa as well as 16 state-owned companies in the country's banking, oil, aviation and investment sectors.
The "designation of Moussa Koussa builds on the strong steps taken by the US to apply targeted, financial pressure on the Gaddafi regime," acting Under Secretary for Terrorism and Financial Intelligence David S Cohen said in Washington.
"The identification of state-owned companies furthers Libya's isolation from the US financial system," Cohen said.
On the issue of a no-fly zone, the White House said that implementing the measure would involve military action.
President Barack Obama believes that implementing the no-fly zone would be, in any situation, a serious action, White House Press Secretary Jay Carney said. "It is a military action."
68-year-old Gaddafi yesterday attacked Britain as well for calling for a no-fly zone. "What right do you have? Do we share borders? Are you our tutor?" he asked.
Criticising the Arab League for backing a no-fly zone, he said the group was "finished" and added that the Gulf Cooperation Council had too lost its legitimacy.
Gaddafi claimed that only 150 people had died in the conflict which began on February 14, notwithstanding the UN estimate that more than 1,000 had been killed in the uprising against the Libyan leader's 41-year rule.
Libyan state TV, meanwhile, aired calls for the opposition to stop fighting. "Those who are asking you to put down your arms want peace for you, so please help them and stop shedding blood," it said.
It had earlier reported that the key town of Ajdabiya "is totally controlled (by Libyan forces) and is being cleansed of armed gangs," a claim rejected by the rebels who said the city was still under their control.
Ajdabiyah is 160 km from Benghazi and also controls the road to the Egyptian border.
Gaddafi's forces yesterday targeted Ajdabiyah with air strikes, artillery attacks and quick ground assaults.
"Surrender or flee" was the tough message to the rebels by the Libyan leader as his forces began the final push to wrest back Benghazi and another key town of Tobruk.
Gaddafi has kept back his more formidable fighting formations, including the 3,000-strong Revolutionary Guards and heavily-armed Khamish brigade, as a reserve to fight back any western attempt to intervene in the North African country.
Loosely organised anti-Gaddafi fighters with little military training have been pushed back more than 160km in the week-long counter-offensive by a professional army.
"We have lost Brega (city) completely. We could not face Gaddafi's forces," a rebel, now in Ajdabiya who identified himself only as Nasser, was quoted as saying by Al-Jazeera.
Battle lines around Ajdabiya, which has a population of 100,000, and Brega have moved back and forth several times in the last three days of heavy fighting.
Jalal al-Gallal of the opposition National Libyan Transitional Council said that there would be a "massacre" if the international community did not intervene.
"He (Gaddafi) will kill civilians, he will kill dreams, he will destroy us," he told the BBC.
French Foreign Minister Alain Juppe used his blog to condemn the slow response of the international community to the situation in Libya. "Only the threat of force can stop Gaddafi. It is by bombarding, with the few dozen planes and helicopters he really has, his opponents' positions that the Libyan dictator has turned the balance." PTI