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Tribal and political leaders in Libya's eastern city of Benghazi on Tuesday declared the region of Cyrenaica autonomous and called for a return to federalism.
"A federal system is the choice of the region" of Cyrenaica, which stretches from the central coastal city of Sirte to the Libyan-Egyptian border in the east, they said in a joint statement.
Sheikh Ahmed Zubair was elected as leader of the region, the statement said.
Libya's interim rulers have rejected the federalist project, promoting a program of decentralization instead.
The declaration does not carry official force, but it puts the province — home to most of the country’s oil and unhappy for many years at what it regards as neglect by rulers in Tripoli — on course for confrontation with the interim National Transitional Council.
About 3,000 delegates at a congress in the eastern city of Benghazi installed Ahmed al-Senussi, a relative of Libya's former king and a political prisoner under ousted leader Muammar Qadhafi, as head of the new council.
Moves toward greater autonomy for Cyrenaica will worry international oil companies operating in Libya, because it raises the prospect of them having to re-negotiate their contracts with a new entity.
The declaration by the congress did not make clear whether the new provincial council would exist within the NTC's institutions, or be a rival to it.
Asked to clarify that point, Mohammed Buisier, one of the organizers of Tuesday's congress, told Reuters: "I've been in contact with people in Tripoli and I told them 'come here and negotiate.' ... It should be through negotiation."