Rivalry between Libyan cities sharpens over rebel's death By Marie-Louise Gumuchian MISRATA, Libya (Reuters) - For Misrata shopkeeper Akram Abdesalam Sider, there is only one way Libya's leaders should deal with the former Muammar Gaddafi stronghold of Bani Walid - attack it. The rivalry between the two towns is long standing and they backed opposing sides in last year's war. But the divide has grown deeper since the death last week of Misrata rebel fighter Omran Shaban after two months in detention in Bani Walid. He was released in critical condition and flown to Paris but died soon after. Shabban was the man who caught Gaddafi hiding in a drain pipe in the former dictator's hometown of Sirte last October. Gaddafi was lynched by a crowd in a grisly climax to the uprising that ended his long rule. Misrata has been tense ever since. "If we leave Bani Walid as it is, they will become more powerful, they will kidnap more people, torture them," Sider, 25, said standing at the counter of his grocery shop, a picture of his friend Shaban hanging behind him. There are forces gathering outside of Bani Walid, they should attack it. Hailing Shaban as a "brave hero," the national congress has ordered the defense and interior ministries to find those who abducted him. Leaders in Bani Walid have until Friday to hand them over and negotiations with elders are currently under way. But in a move to put pressure on Bani Walid, militias operating alongside the Defense Ministry have deployed around parts of the town, stoking the possibility of new fighting. The tensions underline the challenge Libya's new rulers face in reconciling groups with long-running grievances and embracing those who chose not to back the revolt - whether out of fear, or because they supported Gaddafi, or because they benefitted in some way from his rule. With the police and courts weak and guns readily available, Libyans have settled their own scores since the revolution and clashes have broken out between former rebels and clans that backed Gaddafi or stayed on the sidelines. While Misrata spent weeks under siege by Gaddafi's forces during last year's fighting, Bani Walid, perched on a hilltop some 140 kms (90 miles) away, was one of the last towns to surrender to the rebellion. A town of around 70,000 people, it remains isolated from the rest of Libya and former rebels say are lingering pockets of support for the old regime. It is not between Misrata and Bani Walid, this is a Libyan problem. There are some people there who are against the new government, they still support Gaddafi," Ramadan Ali Zarmoh of the Misrata military council said. It is up to the leaders, the congress to decide what happens next. Maybe a solution can still be negotiated. Thousands attended funeral prayers for Shabban last week in a football stadium after his body was flown home. In Misrata city centre, a giant black flag flies at half mast. Residents have put his picture up on walls and car windows. Many believe his treatment was a revenge attack after he shot to fame when he was seen in pictures grabbing Gaddafi. Outside Shaban's family home, tents have been set up for the hundreds of visitors who have come to pay their respects. Sitting in one of the tents, his father Giuma Abdallah Mohammed Shaban says the family received many calls when he was in detention, some offering his release on certain conditions. We would get calls, messages. One message said: 'If you want Omran back, tell us where Gaddafi is buried'," he said, referring to the dictator's burial in a secret location. Shaban was kidnapped by armed men on July 12 close to Bani Walid while returning to Misrata after he had been on government business in western Libya to calm clashes there. His relatives said he had been shot and tortured while in their hands. After some 60 days in detention, the 21-year old was freed after mediation efforts by congress leader Mohammed Magarief. "He was almost dying when he went to France," his father said. Doctors said he had been unconscious for a few days. Asked how he thought justice could be done, the 53-year old said: "I trust the government will do something, negotiate. Myself, I would let them go. Our Prophet says you have to be kind to others. Others in Misrata are not as forgiving, fed up of what they say is Bani Walid's continued defiance of the new authorities and a string of kidnappings. In January, Bani Walid, where Gaddafi's now captured son Saif al-Islam staged a last stand before fleeing into the Sahara, grabbed headlines when fighters threw Tripoli's men out of the city, installing its own local council. In July, Misrata fighters threatened to attack the town after two journalists from their town were detained. They were eventually released after mediation by the authorities. Misratans say there are more prisoners there. "Every single revolutionary here is angry, they want to advance on Bani Walid, they are fed up," one rebel fighter said. Libya was declared liberated last year. Not all of it is, there are still armed gangs causing trouble. The renewed tensions between Misrata and Bani Walid come at a difficult time for Libyan leaders, trying to impose order on armed groups after the killing of the U.S. ambassador in an assault on the U.S. consulate in Benghazi on September 11. In a country where a new law banning the glorification of Gaddafi was passed by the now dissolved transitional council and then scrapped by the supreme court, they must strike the right balance and not risk alienating part of the country. Few forget that last year's uprising began in eastern Libya, a region favored under the monarchy and sidelined by Gaddafi after his 1969 coup, leaving resentment to fester. While rivals tell stories of Gaddafi's speeches still playing on car stereos there, many Bani Walid residents say they are being unfairly painted with the "pro-Gaddafi" brush, pointing that they too suffer from attacks from local groups. "The mood is quiet now but some are afraid of the attack by Misrata," one resident there said. Another resident said negotiations were ongoing but fuel supplies had been cut off. Since early this week, hundreds of men have deployed tens of kms outside Bani Walid, awaiting the deadline. The forces, who militia fighters said were from Misrata and other towns, are operating together in a coalition known as Libya Shield, affiliated to the Defense Ministry. Clashes broke out on Tuesday between former rebel fighters and a local group in which three people were wounded in the nearby area of Mardun. One Bani Walid resident was killed. "Those inside Bani Walid who are pro-Gaddafi should be caught and handed over to a court," Khaled Ahmed Atwil, a member of Misrata's Kanoon brigade, which sent fighters to the area. People are controlling their anger right now. I would prefer a political solution, dialogue, but if they refuse, at the end of the day something needs to be done. Additional reporting by Ali Shuaib; Editing by Angus MacSwan