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Mr. al-Barasi noted that Libya’s constitution, written shortly after independence in 1951, had the country divided into three federal states — including Cyrenaica, each with strong powers in relation to the federal government. The rebels want that system, known locally as “federalism,” to return.

Weak central government

Under the Council’s plans, Cyrenaica would become a powerful state and Benghazi would become Libya’s capital. The federal government would retain executive, diplomatic, defensive and budgetary powers, and the rest of the governing powers would be given to the states.

For a revenue stream, the rebels are demanding the return of a 1950s law that earmarked 15 percent of crude oil revenue for the region where the petroleum is extracted — in this case, their new state.

Mr. al-Barasi, who calls himself the prime minister of Cyrenaica, has announced the creation of two resources companies, Libya Oil and Gas Corp. Both have been tasked with extracting petroleum in the region.

Many of these demands result from a sense of neglect and unfair treatment from Tripoli, the main cause of the rebellion in Benghazi two years ago that evolved into the Libyan revolution.

“The [Libyan] government hasn’t done anything here. They haven’t planted one flower,” said Bushea Bushea, a professor at Derna University, east of Benghazi.

At the same time, Benghazi’s push for power threatens Libya’s financial viability as a nation, as more tribes seek to capture their cut of oil revenue.

In October, Col. Barca Wardougou, head of the Murzuk region in southern Libya, discreetly met with Mr. Zeidan to demand a more equitable geographic division of oil revenue.

Cyrenaica inspired Col. Wardougou’s trip after Benghazi rebels made several trips to Murzuk to sell locals on the idea of federalism.

“If our demands aren’t heeded by the government in Tripoli, then we’ll proclaim a federal state,” Col. Wardougou said he told the prime minister.

Defending states’ rights

In spite of their gains, Mr. Jedran’s rebels have problems of their own.

First, there are divisions among the rebels. Second, the campaign has attracted extremists, partially because of its leader’s pedigree: At the start of the revolution, Mr. Jedran was part of the Libyan Islamic Fighter Group led by Abdelhakim Belhaj.

Mr. Jedran’s critics say his movement also is supported by former Defense Minister Saddiq al-Gheiti, an ex-jihadist who is suspected of embezzling $150 million from public coffers to fund the strikes against oil refineries.

Story Continues →