BANI WALID, Libya (Reuters) - Elders of a powerful tribe that defended the regime of former leader Muammar Gaddafi have a message for the United Nations as it tries to broker peace in Libya - talk to us or you will fail.

War relics are seen in the Libyan town of Bani Walid, Libya October 29, 2017. Text reads “Remnants of the Benevolence Campaign. REUTERS/Aidan Lewis

The U.N. launched a new round of negotiations in September to unite a country that splintered along political, ideological and tribal lines during and after the 2011 NATO-backed uprising that unseated Gaddafi.

Western officials hope the talks will pave the way for elections next year and produce a functioning government that could curb militant activity, tackle migrant smuggling and stabilize the oil-rich nation’s rapidly deteriorating economy.

But conversations with the robed elders of the Warfalla tribe at their meeting in a hall in the former Gaddafi stronghold of Bani Walid show how difficult that will be.

Located 145km (90 miles) southeast of Tripoli, the isolated hilltop town did not accept the fall of Gaddafi in 2011 and held out against rebels two months longer than the capital.

“We are for dialogue... but the U.N. has never contacted us,” said Muftah Eftais, leader of the council of elders.

Winning over losers of the 2011 revolution will be key to stabilizing the North African country. The Warfalla account for 1.5 million out of six million Libyans, according to the elders council.

“We are represented in all regions. If the U.N. wants a solution for Libya you need to talk (to us) the tribes,” said Eftais, drawing words of support from the assembled tribesmen.

The U.N. Libya office said its envoy, Ghassan Salame, met a group of Libyan notables including a Warfalla representative from Bani Walid in late October, and that other members of the U.N. mission had been in touch with town officials on political, human rights, humanitarian and economic matters.

At least two Warfalla delegates have also taken part in the latest talks in Tunis, a U.N. official said, but Eftais said the elders did not feel represented by them, highlighting Libya’s multi-layered divisions.

“WE WERE IN PARADISE”

Bani Walid residents express their loyalty to the old regime much more openly than they did on a Reuters visit to the town in 2014.

In the main square a Gaddafi-era green flag is hoisted next to pictures of “martyrs” killed in the 2011 violence and subsequent fighting.

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The elders govern Bani Walid and control their own armed force, in the absence of any national authority or army. Asked if life was better under Gaddafi, several exclaimed: “We were in paradise.”

Cut off from Tripoli, they said their town has suffered even more than others from late public salary payments that have left people across the country struggling to get by, and from what they say are arbitrary detentions for their support of Gaddafi.

“None of us 60 elders have been to Tripoli since 2011 because we fear getting arrested,” Eftais said.

Two elders died in an ambush by unidentified gun men on the way home from peace talks in a town west of Bani Walid.

Some say claims of isolation and discrimination are exaggerated.

“The problem with Bani Walid is that they sided with Gaddafi and Gaddafi lost, and they can’t live with that,” said Abdulrahman Swehli, the head Tripoli’s High State Council who is from the rival town of Misrata.

“MUSICAL CHAIRS”

Economic troubles have deepened in Libya since 2014, when a battle for the capital led to rival parliaments and governments being set up in Tripoli and the east.

A 2015 agreement sought to unite the two camps but instead created a third, U.N.-selected government, led by Prime Minister Fayez Seraj. It has struggled to make an impact after failing to win approval from military commander Khalifa Haftar, the dominant figure in eastern Libya.

The new U.N. talks, held in Tunis, were suspended last month as neither side could agree on what role Haftar should play. He is said to have presidential ambitions but is a divisive figure.

The Bani Walid elders say they do not support either camp.

“We are neither with Seraj nor with Haftar. Since 2011 the same people have been... in the GNC (parliament), government, playing musical chairs,” said Eftais.

The elders want the talks to take place in Libya, under the supervision of Libyans.

After negotiations between rival parliaments, the U.N. says it is planning a “national conference” that would gather hundreds of representatives from across Libya and make any deal as inclusive as possible, bridging deep communal rifts.

Bani Walid’s enmity with Misrata, a wealthy port city 125 km to the northeast, shows how deep such divisions can run.

Historical hostility between two communities that fought in the early 20th century was reignited when Misrata was shelled for weeks by Gaddafi forces in 2011.

The following year, Bani Walid was attacked by fighters from Misrata and other towns, who daubed slogans on the walls that can still be seen today.

In 2014 Misratans became the dominant force in Tripoli and the main source of military opposition to Haftar.

But Misratan Islamist-leaning armed groups have been sidelined, while Haftar has managed to consolidate power in the east with help from tribal allies and foreign backers including Egypt and the United Arab Emirates.

NOSTALGIA

As in other towns that forged alliances with Gaddafi during his 42-year rule, many in Bani Walid are nostalgic.

State employees are often unpaid, schools and hospitals have been run down, and citizens have been caught up in the intermittent conflict.

Several residents said they would vote for the late Gaddafi’s most prominent son, Saif al-Islam, who made a last stand in Bani Walid before disappearing into the desert. His whereabouts are not clear.

“Life was 100 times better under the old system. We had security, a salary, health care,” said Mohamed Hussein, a 40-year old who was searching with his cousin for iron in the ruins of hotel.

“We are trying to sell the iron for maybe 10 dinars $1.2 on the black market) because our salaries have not come through.”

The hotel has not been rebuilt as a drop in oil revenues due to armed group blockades has left little spare cash in what was once one of the richest countries in the Middle East.