Libya's Muammar Gaddafi shows no sign of giving any ground as rebels win wider recognition abroad, so, with no breakthrough likely in the war, a stalemate looks set to extend well into the Muslim holy month of Ramadan. If anything, diplomatic efforts to end the five-month conflict may have been further complicated by rifts emerging between the rebels and their Western allies over whether or not Gaddafi could stay in the country even if he stood down. Not short of political acumen after 41 years in power, the Libyan leader may sense an opportunity to play on the divisions both within and between the rebels and the fragile NATO coalition, which has bombed Libya for four months but is also seeking a negotiated end to the messy, see-sawing conflict. “Gaddafi won't go. The (rebels) won't acquiesce to him staying, but they can't force him to go,” said Geoff Porter, who heads North Africa Risk Consulting. “You end up with irreconcilable positions,” Porter added. On Thursday, the rebel movement that lays claim to roughly half the country and is gaining growing diplomatic support in the West attacked and claimed to capture a government-held town near the Tunisian border. Rebels have sought for months to reach Tripoli and seize other strategic areas but they remain fractured geographically and are hobbled by inadequate training and arms, so have been unable to deal a decisive blow to loyalist forces. The battlefield uncertainty has prompted Western leaders of the NATO campaign in Libya to intensify diplomatic pressure. Britain and Portugal have joined some 30 other nations, including the United States, in recognizing the Benghazi-based rebel government. Highlighting the financial benefits of such diplomatic moves, London also immediately unblocked over 90 million pounds in frozen cash that could help rebels tip the military scales and prepare for a post-Gaddafi Libya. But diplomacy also exposed an apparent rift with rebels that even the prospect of a cash influx may not be able to fix. While the UK and France said they were now open to Gaddafi remaining in Libya if he stepped down, rebel leader Mustafa Abdel Jalil said the offer, made a month ago, no longer stood. “It's an organized chaos,” UK-based opposition journalist and analyst Ashour Shamis said of the seemingly fluid positions in Benghazi and Western capitals on any political solution. The signals from Tripoli, meanwhile, are mixed. On one hand, there are suggestions that the government would like to continue meetings with the United States. On the other, there is no hint of the conflict being settled at Gaddafi's expense. Lashing out in typically fiery rhetoric, Gaddafi on Wednesday again vowed to win or die a martyr. “Listen to the arrogance and stupidity and ignorance of these people,” government spokesman Moussa Ibrahim said of Western discussions about Gaddafi's future. “They have no right to ask any official to leave their country.” Gaddafi will certainly be mindful of the warrant the International Criminal Court has issued for his arrest as he hopes to avoid the fate of other regional leaders like Egypt's Hosni Mubarak, due to face trial next month. United Nations envoy Abdel Elah Al-Khatib came and left Libya this week, apparently having failed to sell his idea of a vision for a ceasefire and a transitional government that excludes Gaddafi. “Both sides remain far apart,” the UN conceded. NATO is pushing on, for now at least, with the daily airstrikes that have certainly weakened Gaddafi's fighting power, while moves to squeeze his government economically and diplomatically have been stepped up. A recent UN mission concluded that fuel shortages were growing more serious and that electricity and cash were at risk as well. While foreign journalists in the capital Tripoli have little opportunity for independent reporting, that ever-tightening noose does not appear to have pushed Gaddafi to the brink of collapse, as the West once hoped. “What has happened over the last four months is that the British and their partners have come to realize that removing governments is not as easy a business as it seems,” said George Joffe, a fellow at the Center for International Studies at Cambridge University. “They know now they can't do it in Libya, and they've got to find another way out.” The Muslim holy month of Ramadan in August may lead to a lull in fighting. As time wears on, the West's military supplies, funding and patience will wear thin. NATO's largest member, the United States, has already limited its involvement, meaning that Gaddafi's opposition may be unable to muster the needed military might. Yet Stephen Flanagan, at the Center for Strategic and International Studies in Washington, said most European governments appeared to want operations over by early October. Gaddafi, in the meantime appears set to wait out the rebel's assaults as he seeks to convince his supporters that opponents are nothing more than armed gangs and militants. “They're all stuck,” Joffe said. “All they can do is slug it out until one side is exhausted or is taken out by an internal coup.” __