By Ahmed Elumami
BANI WALID, Libya (Reuters) - In Libya's Bani Walid, flags of ousted autocrat Muammar Gaddafi still fly in some places and streets are ragged with neglect, but its residents have new hope for their town and country.
During a recent visit by Prime Minister Abdulhamid Dbeibeh, head of a new unity government, people waved olive branches as his armoured motorcade passed through the town, which has long been isolated by political disputes. Children raised two fingers in a 'v' for victory and peace.
Dbeibeh was appointed in March, sworn in by Libya's divided parliament after his selection via a U.N. talks process, a step widely seen as offering the best chance for peace in years - slender though it might be.
His interim government replaced two warring administrations in eastern and western areas, and has brought an array of factional and regional interests into positions of power or patronage.
It still faces huge challenges, including myriad armed groups on the ground, mistrust between communities and disputes over access to oil wealth.
Those problems were evident in Bani Walid, where the legacy of a decade of fighting, isolation and division is carved into potholed streets and scorched, bullet-pocked buildings.
"The city is marginalised and isolated and needs a lot of support," said Abdel Fattah Jabara, a teacher and coffee maker in the city centre.
As Dbeibeh's column rolled into Bani Walid last week, the presence of the armoured vehicles of the Tripoli-based "444 Brigade" forces protecting him and government ministers underscored fears of violence.
The fighters, wearing uniforms and balaclavas, had taken over every checkpoint from Tripoli's suburbs to the outskirts of Bani Walid.
When Libyans rose against Gaddafi in a 2011 NATO-backed revolt, Bani Walid was a stronghold for the ousted leader. A year later, it fought off forces angered at the protection townsfolk gave a fighter accused of abuses.
Those battles began Bani Walid's decade of isolation - cut off from the main factions that had ruled most of Libya from the capital Tripoli and the eastern city of Benghazi.
Some buildings still have shell holes. Windows are shattered. Walls show scorch marks. At the town entrance, Libya's pre-revolution green flag flutters on a pedestal. A poster of Gaddafi shows on a billboard.
Roads are unpaved or full of holes. Weeds grow in abandoned buildings' doorways and algae-covered pools of sewage stagnate near some apartment blocks.
'WE NEED URGENT SUPPORT'
Dbeibeh is the first leading government figure to travel the 180 hot kilometres (112 miles) from Tripoli into the hills of Bani Walid for almost a decade.
His unity government has papered over internal problems with largesse - using Libya's oil revenues to award contracts, repair infrastructure and start projects.
In a carpet factory known before 2011 for high-quality natural wool products, spider webs and dust shroud idle spinning machines that stretch into the darkness. Only a few still operate.
"The factory needs support," said Fatima Masoud, 50, who has worked there for 20 years. "There is nothing in the city that can provide good salaries."
Dbeibeh promised a 70% pay increase for workers and money for upgrades, saying: "Bani Walid will not be an arena for war... We will create job opportunities for young people."
The focus on spending risks leave the unity government vulnerable as the eastern-based parliament challenges its budget, political analysts say.
The opportunity for patronage and wealth could also discourage Dbeibeh from keeping his commitment to hold elections for a permanent government to replace his own, they say.
But in Bani Walid, people welcomed Dbeibeh's visit.
"It's almost lifeless in the city. We need urgent support," said one resident, Ali Abulqader, at a students' graduation ceremony attended by the prime minister.
(Reporting by Ahmed Elumami, writing by Angus McDowall, editing by Timothy Heritage)