Muammar Gaddafi's artillery heavily bombarded Ajdabiyah and his forces forced their way inside on Sunday in their most determined assault on the strategic eastern town for at least a week.
Rebels cowered in alleyways from sustained artillery, rocket and small-arms fire and appeared to be losing control of the town, which is gateway to their stronghold of Benghazi 150 km (90 miles) up the Mediterranean coast to the north.
The failure of the rebels to build defenses at Ajdabiya to at least hold the loyalists at the outskirts of the city where NATO aircraft might have the time to identify them and then strike them is a major obstacle to providing air support without forward air controllers on the ground to identify targets.
As an aside, the loyalists aren't practicing "guerrilla war" tactics at this city, as many articles state. It isn't even irregular warfare. The loyalists are simply infiltrating porous rebel lines.
The rebels will soon find themselves faced with a choice of agreeing to a ceasefire or losing NATO support:
A high-level African Union delegation led by South African President Jacob Zuma was due in Tripoli on Sunday to try to kindle peace talks between the two sides.
South African officials said the delegation, which also included the leaders of Mauritania, Congo, Mali and Uganda, would meet rebel leaders in Benghazi after talking to Gaddafi.
Western officials have acknowledged that their air power will not be enough to help the rag-tag rebels overthrow Gaddafi by force and they are now emphasizing a political solution.
But a rebel spokesman rejected a negotiated outcome in the conflict, the bloodiest in a series of pro-democracy revolts across the Arab world that have already dethroned the leaders of Tunisia and Egypt.
The rebels may not like it, but moves for a political settlement are growing and NATO doesn't see a way out of the limited military strategy that won't--barring a magic bullet--win the war for NATO and the rebels.
Right now, the loyalists must have Misrata, so they won't call for a ceasefire until they have it. Getting Ajdabiya would be nice, since it would put loyalists in a position to launch an offensive some time in the future either north toward Bengazi, east toward Tobruk and the Egyptian border, or southeast toward rebel oil assets.
I think NATO would be relieved if the loyalists just got it over with and captured Misrata and Ajdabiya. Then NATO could say that further fighting is pointless and the rebels should just focus on defending what they have left by ending the fighting.
If rebels in Misrata manage to hold on despite loyalist bombardment and Ajdabiya falls quickly to the loyalists (or the loyalists capture enough to move past the rebel defenders to open a corridor to move north to Benghazi if they want to run the gauntlet of NATO air strikes), NATO will face a lot of pressure to put a brigade of troops into each of Misrata and Benghazi to directly protect civilians under the UN mandate to protect civilians. Air power will be shown to be insufficient to do the job. If that happens, it will also be clear proof that NATO should have gone in early with a full division aimed right at Tripoli to end the conventional war quickly.
There is also the possibility that Khaddafi will feel emboldened by future successes at Misrata and Ajdabiya and decide to roll the dice for complete victory over the rebels right now. I don't think that would be his wisest strategy. Better to stop with a regime running from Tripoli to Ajdabiya, let the NATO stuff return to their bases, restart oil exports with contracts to China and Russia to provide a UN Security Council veto shield, and then quietly restart the war at some point in the future with a blitz of heavy armor designed to get into Benghazi before NATO can reassemble the air armada and relaunch strikes.
But you never know with nutcase dictators. Khaddafi might try for a city too far.